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 JUNE 30, 1998
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.
2,938,982 SHARES OF COMMON STOCK, $1.00 PAR VALUE
PAGE 1 OF 23
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, 1998
and December 31, 1997 ....................................... 3
Condensed Consolidated Statements of Operations - Six months
and three months ended June 30, 1998 and 1997................ 4
Condensed Consolidated Statements of Comprehensive Income -
Six months and three months ended June 30, 1998 and 1997..... 5
Condensed Consolidated Statement of Changes in Shareholders'
Equity - Six months ended June 30, 1998...................... 6
Condensed Consolidated Statements of Cash Flows - Six months
ended June 30, 1998 and 1997................................. 7
Notes to Condensed Consolidated Financial Statements......... 8-12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. .............................. 13-20
Item 3. Quantitative and Qualitative Disclosures
About Market Risk............................................ 20
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.................... 21
Item 4. Submission of Matters to a Vote of Security Holders.......... 21
Item 6. Exhibits and Reports on Form 8-K ............................ 21
(a) Exhibits ................................................ 21
27. Financial Data Schedule.............................. 23
(b) Reports on Form 8-K ..................................... 21
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30, 1998 Dec.31, 1997
----------------- ------------------
ASSETS: (Unaudited)
Cash and cash equivalents:
<S> <C> <C>
Cash and due from banks $ 8,190 $ 7,347
Interest-bearing deposit accounts 489 415
Federal funds sold 13,240 350
------------------ ------------------
Total cash and cash equivalents 21,919 8,112
------------------ ------------------
Securities:
Securities available-for-sale 103,197 73,581
Securities held-to-maturity (estimated fair value
of $675 at June 30, 1998 and December 31, 1997) 675 675
Nonmarketable equity securities 3,798 3,224
------------------ ------------------
Total securities 107,670 77,480
------------------ ------------------
Loans receivable 165,312 149,127
Less allowance for loan losses (2,002) (1,531)
------------------ ------------------
Loans, net 163,310 147,596
------------------ ------------------
Premises, furniture, and equipment, net 8,448 8,293
Intangible assets 5,751 3,119
Other assets 4,700 4,261
------------------ ------------------
Total assets $ 311,798 $ 248,861
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing $ 22,409 $ 19,460
Interest-bearing 233,382 167,401
------------------ ------------------
Total deposits
255,791 186,861
Federal funds purchased and securities
sold under agreements to repurchase 1,445 11,943
Advances from the Federal Home Loan Bank 15,849 16,350
Other borrowed funds 3,275 -
Other liabilities 2,444 1,779
------------------ ------------------
Total liabilities 278,804 216,933
------------------ ------------------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 10,000,000 shares authorized; 2,935,589 and
2,905,303 shares issued and outstanding at June 30, 1998
and December 31, 1997, respectively 2,935 2,905
Capital surplus 27,826 27,492
Accumulated other comprehensive income 461 467
Retained earnings 1,772 1,064
------------------ ------------------
Total shareholders' equity 32,994 31,928
------------------ ------------------
Total liabilities and shareholders' equity $ 311,798 $ 248,861
================== ==================
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands except for per share data)
Six Months Ended Three Months Ended
June 30, June 30,
------------------------------- -------------------------------
1998 1997 1997 1998
-------------- -------------- -------------- ---------------
1997
Interest income:
<S> <C> <C> <C> <C>
Loans, including fees $ 7,174 $ 4,452 $ 3,703 $ 2,561
Securities, taxable 2,069 1,092 1,046 743
Securities, nontaxable 345 182 174 120
Other interest income 189 137 111 90
-------------- -------------- -------------- ---------------
9,777 5,863 5,034 3,514
--------------- ------------- - -------------- ---------------
Interest expense:
Deposits 4,565 2,504 2,391 1,572
FHLB advances 489 163 232 78
Other interest expense 111 123 38 22
-------------- -------------- -------------- ---------------
5,165 2,790 2,661 1,672
-------------- -------------- -------------- ---------------
Net interest income 4,612 3,073 2,373 1,842
Provision for loan losses 593 224 286 136
-------------- -------------- -------------- ---------------
Net interest income after provision
for loan losses 4,019 2,849 2,087 1,706
-------------- -------------- -------------- ---------------
Other operating income:
Service charges on deposit accounts 567 375 322 237
Residential mortgage origination fees 302 108 172 57
Commissions from sales of mutual funds 77 12 32 5
Fees for trust services 33 12 20 10
Gain on sales of securities 19 - 19 -
Gain on sale of branch 130 - 130 -
Other income 349 226 155 128
-------------- -------------- -------------- ---------------
1,477 733 850 437
-------------- -------------- -------------- ---------------
Other operating expenses:
Salaries and benefits 2,104 1,606 1,132 1,023
Net occupancy expense 322 199 163 113
Amortization of intangible assets 175 81 92 71
Furniture and equipment expense 433 284 226 164
Other operating expenses 1,526 801 837 402
-------------- -------------- -------------- ---------------
4,560 2,971 2,450 1,773
-------------- -------------- -------------- ---------------
Income before taxes 936 611 487 370
Income tax provision 228 183 91 101
-------------- -------------- -------------- ---------------
Net income $ 708 $ 428 $ 396 $ 269
============== ============== ============== ===============
Basic net income per share $ 0.24 $ 0.18 $ 0.13 $ 0.09
Diluted net income per share $ 0.23 $ 0.17 $ 0.13 $ 0.09
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Dollars in thousands)
Six Months Ended Three Months Ended
June 30, June 30,
------------------------------- --------------------------------
1998 1997 1998 1997
-------------- ------------- --------------- -------------
Net income $ 708 $ 428 $ 396 $ 269
-------------- -------------- -------------- ---------------
Other comprehensive income, net of tax:
Unrealized gains (losses)
on securities during
the period 7 (128) 36 (2)
Less: reclassification
adjustment for gains
included in net income (13) - (13) -
-------------- -------------- -------------- ---------------
Other comprehensive income (6) (128) 23 (2)
-------------- -------------- -------------- ---------------
Comprehensive income $ 702 $ 300 $ 419 $ 267
============== ============== ============== ===============
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Common Stock Other Total
----------------------- Capital Comprehensive Retained Shareholders'
Shares Amount Surplus Income Earnings Equity
------ ------ ------- ------ -------- ------
Balance,
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997 2,905,303 $ 2,905 $ 27,492 $ 467 $ 1,064 31,928
Proceeds from sales
of stock to ESOP 9,067 9 144 153
Proceeds from
exercise of
stock options 21,219 21 190 211
Other comprehensive
income (6) (6)
Net income
for the period 708 708
---------- ---------- ---------- ---------- ------------- ------------
Balance,
June 30, 1998 2,935,589 $ 2,935 $ 27,826 $ 461 $ 1,772 $ 32,994
========== ========== ========== ========== ============= ============
</TABLE>
See notes to condensed consolidated financial statements
6
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 708 $ 428
Adjustments to reconcile net income to
net cash (used) provided by operating activities:
Depreciation 426 351
Provision for possible loan losses 593 224
Amortization of intangible assets 175 81
Amortization less accretion on investments 16 19
Amortization of deferred loan costs 206 76
Gain on sales of securities available-for-sale (19) -
Gain on sale of branch (130) -
Loss on sales of premises and equipment 20 -
Disbursements for mortgages held for sale (12,980) (3,709)
Proceeds of sales of residential mortgages 12,542 3,608
Increase in interest receivable (192) (683)
Increase in interest payable 69 241
Increase in other assets (228) (2,501)
Increase in other liabilities 240 56
-------- --------
Net cash (used) provided by operating activities 1,446 (1,809)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans to customers (13,937) (20,211)
Purchases of securities available-for-sale (47,723) (42,875)
Sales of securities available-for-sale 3,531 500
Maturities of securities available-for-sale 14,570 4,670
Purchases of securities held-to-maturity - (700)
Purchases of nonmarketable equity securities (574) (489)
Purchases of premises and equipment (442) (2,005)
Proceeds from sales of premises and equipment 477 -
Acquisition of branches 38,423 35,761
Net cash outflow from sale of branch (2,049) -
-------- --------
Net cash used by investing activities (7,724) (25,349)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of capital stock - 16,948
Proceeds from exercise of stock options 211 48
Proceeds from stock sales to ESOP 153 52
Net increase in deposit accounts 27,445 13,036
Proceeds from FHLB borrowings 5,049 5,675
Repayments of FHLB borrowings (5,550) (5,483)
Proceeds from other borrowings 3,275 -
Net decrease in fed funds purchased and repos (10,498) (1,895)
-------- --------
Net cash provided by financing activities 20,085 28,381
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 13,807 1,223
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,112 4,627
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,919 $ 5,850
======== ========
</TABLE>
See notes to condensed consolidated financial statements
7
<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 shareholders. The
financial statements as of June 30, 1998 and for the interim periods ended June
30, 1998 and 1997 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, 1997 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 1997 Annual Report.
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Six Months Ended
June 30
--------------------------
(Dollars in thousands) 1998 1997
---- ----
CASH PAID DURING THE PERIOD FOR:
Income taxes $ 127 $ 177
Interest 5,096 2,549
NONCASH INVESTING AND FINANCING ACTIVITIES:
Foreclosure on loans -- 262
DETAILS OF ACQUISITIONS OF NEW BRANCHES:
Loans, including accrued interest receivable $ 2,197 $ 15,110
Allowance for loan losses from acquisition (38) (255)
Premises and equipment 636 2,007
Intangible core deposit premiums 2,807 2,502
Deposits, including accrued interest payable (44,015) (55,051)
Other, net (10) (74)
-------- --------
Cash received for net liabilities assumed $(38,423) $(35,761)
======== ========
</TABLE>
NOTE 3 - LONG-TERM DEBT
Advances from the Federal Home Loan Bank of Atlanta to the banking subsidiaries
were $15,849,000 as of June 30, 1998. Of this amount, the following have
scheduled maturities greater than one year:
Maturing on Interest Rate Principal
----------- ------------------------------- -----------
(Dollars in thousands)
5/23/2000 5.55% - variable $ 800
9/25/2000 6.38% - fixed 600
1/30/2001 5.85% - fixed 1,000
9/24/2002 5.66% - fixed, callable 9/24/99 1,000
2/03/2003 5.97% - fixed 149
3/26/2008 5.51% - fixed 1,500
-----------
Total long-term debt $ 5,049
===========
8
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - LONG-TERM DEBT - CONTINUED
The parent company has drawn $3,250,000 of a $3,500,000 line of credit from The
Bankers Bank pursuant to the terms of a note dated June 12, 1998. The proceeds
were used for capital infusion in The Bank of Belton which were needed to
maintain its minimum capital ratios (see Note 8). The outstanding principal
balance plus interest accrued at a rate of 7.65% are payable on August 12, 1998.
At maturity, the Company expects the loan to be renewed with long-term
financing.
NOTE 4 - SHAREHOLDERS' EQUITY
During the first six months of 1998, there were 9,067 shares of stock sold to
the Employee Stock Ownership Plan at market prices in the amount of $153,000,
and there were 21,219 options exercised by the employees and directors of the
Company providing $211,000 of additional capital for the Company.
NOTE 5 - STOCK OPTIONS
At the annual shareholders' meeting on May 27, 1998, the shareholders approved
the Company's 1997 Stock Incentive Plan which provides for the granting of
awards of stock options, stock appreciation rights, or restricted stock of up to
2,000,000 shares, adjusted for stock dividends of the Company's common stock, to
officers, employees, and directors of and consultants for the Company. The
Company may grant awards for a term of up to ten years from the effective date
of grant. The per-share exercise price of incentive stock options may not be
less than the fair market value of a share of common stock on the date the
option is granted. The per-share exercise price of nonqualified stock options
may not be less than 50% of the fair market value of a share on the effective
date of grant.
On June 24, 1998, the Company granted 132,600 options pursuant to the terms of
the Company's 1997 Stock Incentive Plan. The options are exercisable one year
from the date of grant at a price of $16.63 per share and expire June 24, 2003.
NOTE 6 - EARNINGS PER SHARE
A reconciliation of the numerators and denominators used to calculate basic and
diluted earnings per share for the six- and three-month periods ended June 30,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C>
(Dollars in thousands except for Six Months Ended Three Months Ended
per share data) June 30 June 30
----------------------------- -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
BASIC EARNINGS PER SHARE:
NUMERATOR:
Income available to shareholders,
as reported $ 708 $ 428 $ 396 $ 269
---------- ---------- ---------- ----------
DENOMINATOR:
Average number of shares of common
stock outstanding 2,922,937 2,443,136 2,929,802 2,894,995
---------- ---------- ---------- ----------
BASIC EARNINGS PER SHARE $ 0.24 $ 0.18 $ 0.13 $ 0.09
========== ========== ========== ==========
</TABLE>
9
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - EARNINGS PER SHARE - CONTINUED
<TABLE>
<CAPTION>
<S> <C>
(Dollars in thousands except for Six Months Ended Three Months Ended
per share data) June 30 June 30
----------------------------- -----------------------------
1998 1997 1998 1997
---- ---- ---- ----
DILUTED EARNINGS PER SHARE:
NUMERATOR:
Income available to stockholders,
as reported $ 708 $ 428 $ 396 $ 269
---------- ---------- ---------- ----------
DENOMINATOR:
Average number of shares of common
stock outstanding 2,922,937 2,443,136 2,929,802 2,894,995
Shares issuable upon exercise
of stock options 202,680 78,545 213,470 84,506
---------- ---------- ---------- ----------
Total shares 3,125,617 2,521,681 3,143,272 2,979,501
---------- ---------- ---------- ----------
DILUTED EARNINGS PER SHARE $ 0.23 $ 0.17 $ 0.13 $ 0.09
Weighted average of antidilutive
stock options not included in
above computation -- 108,949 -- 125,802
========== ========== ========== ==========
</TABLE>
NOTE 7 - ADOPTION OF ACCOUNTING PRINCIPLE
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130
establishes standards for reporting comprehensive income. Comprehensive income
includes net income and other comprehensive income which is defined as non-owner
related transactions in equity. Prior periods have been reclassified to reflect
the application of the provisions of SFAS 130. The following tables set forth
the amounts of other comprehensive income included in equity along with the
related tax effects for the six- and three-month periods ended June 30, 1998
and 1997.
<TABLE>
<CAPTION>
<S> <C>
(Dollars in thousands) Pre-tax (Expense) Net of tax
FOR THE SIX MONTHS ENDED JUNE 30, 1998: Amount Benefit Amount
- --------------------------------------- ------ ------- ------
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ 9 $ 2 $ 7
Less: reclassification adjustment
for gains realized in net income (19) 6 (13)
----------- ----------- ---------
Net unrealized gains (losses) on
securities (10) 4 (6)
----------- ----------- ---------
Other comprehensive income $ (10) $ 4 $ (6)
=========== =========== =========
</TABLE>
10
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7 - ADOPTION OF ACCOUNTING PRINCIPLE - CONTINUED
<TABLE>
<CAPTION>
<S> <C>
(Dollars in thousands) Pre-tax (Expense) Net of tax
FOR THE SIX MONTHS ENDED JUNE 30, 1997: Amount Benefit Amount
----- ----- -----
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $(194) $ 66 $(128)
Less: reclassification adjustment for
gains realized in net income -- -- --
----- ----- -----
Net unrealized gains (losses) on
securities (194) 66 (128)
----- ----- -----
Other comprehensive income $(194) $ 66 $(128)
===== ===== =====
FOR THE THREE MONTHS ENDED JUNE 30, 1998:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ 55 $ (19) $ 36
Less: reclassification adjustment for
gains realized in net income (19) 6 (13)
----- ----- -----
Net unrealized gains (losses) on
securities 36 (13) 23
----- ----- -----
Other comprehensive income $ 36 $ (13) $ 23
===== ===== =====
FOR THE THREE MONTHS ENDED JUNE 30, 1997:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ (3) $ 1 $ (2)
Less: reclassification adjustment for
gains realized in net income -- -- --
----- ----- -----
Net unrealized gains (losses) on
securities (3) 1 (2)
----- ----- -----
Other comprehensive income $ (3) $ 1 $ (2)
===== ===== =====
</TABLE>
NOTE 8 - ACQUISITION OF BRANCHES
On February 25, 1998, The Bank of Belton (the Belton Bank) and Clemson Bank &
Trust (the Clemson Bank) each entered into Purchase and Assumptions Agreements
to acquire certain assets and deposits associated with three branch offices of
Carolina First Bank. On June 15, 1998, the Clemson Bank acquired a branch
located in Abbeville County, South Carolina which had approximately $4,700,000
in deposits and $580,000 in loans (unaudited), and the Belton Bank acquired two
branches in Anderson County, South Carolina which had approximately $39,000,000
in deposits and $1,600,000 in loans (unaudited).
At the closing, and subject to the terms of the Purchase and Assumption
Agreements, the Belton Bank and the Clemson Bank paid Carolina First a premium
of 6.50% on the assumed Carolina First Bank's deposits other than certificates
of deposit greater than or equal to $100,000. The assets acquired and the
liabilities assumed were recorded at fair value. The premium is being amortized
over fifteen years on a straight-line basis.
11
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8 - ACQUISITION OF BRANCHES - CONTINUED
In order to maintain the minimum capital requirements of the Belton Bank, the
Company injected $4,775,000 additional capital. To fund this capitalization, the
Company used a combination of dividends from its subsidiaries, loans from the
subsidiary banks, loans from a third party (see Note 3), and utilization of
liquid assets of the parent. The Clemson Bank's current capital structure was
able to support the acquisition with no capital infusion by the Company.
The principal assets acquired and liabilities assumed in the purchase are
summarized as follows:
(Dollars in thousands)
Loans, including accrued interest receivable $ 2,197
Allowance for loan losses from acquisition (38)
Premises and equipment 636
Intangible core deposit premiums 2,807
Deposits, including accrued interest payable (44,015)
Other, net (10)
--------
Cash received for net liabilities assumed $(38,423)
========
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 9 - SALE OF BRANCH
Greenwood Bank & Trust (the Greenwood Bank) sold the office located in Ninety
Six, South Carolina to The Palmetto Bank of Laurens, South Carolina. The
transaction was completed in April, 1998 and consisted of the sale of deposits
only, on which the Greenwood Bank received a 6% premium and the assumption by
The Palmetto Bank of a ground lease. The total deposits were approximately $2.2
million and resulted in a corresponding reduction of assets by the Greenwood
Bank. The loans, equipment, and building were retained by the Greenwood Bank.
The $130,000 gain from the sale of the branch is included in the statements of
operations.
NOTE 10 - CONTINGENCIES
The Greenwood Bank has been named as a defendant in a lawsuit brought by a
residential homebuilder. The lawsuit centers on a contract to construct a house
for a bank officer. Causes of action are alleged for intentional infliction of
emotional distress, unfair trade practices, fraud and civil conspiracy. The
Greenwood Bank intends to vigorously defend the lawsuit. No estimate can be made
at this early stage of the litigation of the amount of a potential verdict, if
any. Liability insurance may be available, but the existence and amount of
available liability insurance is unknown at present.
12
<PAGE>
COMMUNITY CAPITAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion of the Company's financial condition as of June
30, 1998 compared to December 31, 1997, and the results of operations for the
three and six months ended June 30, 1998 compared to the three and six months
ended June 30, 1997. These comments should be read in conjunction with the
Company's condensed consolidated financial statements and accompanying footnotes
appearing in this report.
Effective June 15, 1998, the Belton Bank and the Clemson Bank acquired certain
assets and assumed certain liabilities of three branch offices of Carolina First
Bank pursuant to the terms of Purchase and Assumption Agreements dated February
25, 1998 (the "Purchase of the Branches").
RESULTS OF OPERATIONS
NET INTEREST INCOME
For the six months ended June 30, 1998, net interest income, the major component
of the Company's net income, was $4,612,000 compared to $3,073,000 for the same
period of 1997, an increase of $1,539,000. For the three months ended June 30,
1998, net interest income was $2,373,000 compared to $1,842,000 for the
comparable period of 1997. The improvements in the 1998 periods were
attributable to the increase in the volume of average earning assets,
particularly loans and investment securities, primarily due to the increased
number of banks in the Company and growth from branch purchases. The positive
influences of Company growth on net interest income have been partially offset
by an increase in the cost of funds. The average rate paid on interest-bearing
liabilities increased to 4.99% from 4.75% for the six-month periods ended June
30, 1998 and 1997, respectively. The increase is primarily attributable to the
new banks, whose principle source of new funds has been certificates of deposit
which pay higher rates than either transaction or savings accounts and to
increased use of borrowings from the Federal Home Loan Bank to fund loan growth
at the Greenwood Bank, the Clemson Bank, and Bank of Barnwell County (the
Barnwell Bank).
The net interest spread and net interest margin were 3.29% and 3.90%,
respectively, for the six-month period ended June 30, 1998, compared to 3.60%
and 4.38% for the six-month period ended June 30, 1997.
13
<PAGE>
COMMUNITY CAPITAL CORPORATION
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 ended June 30, 1998 and 1997, the
provision was $593,000 and $224,000, respectively. For the three months ended
June 30, 1998 and 1997, the provision for loan losses was $286,000 and $136,000,
respectively. The Greenwood and Barnwell Banks experienced increases in
nonperforming loans for the period ended June 30, 1998. The Company's
nonperforming loans totaled $780,000 compared to $198,000 in 1997. As a result,
the Greenwood and Barnwell Banks provided $441,000 of the $593,000 provision to
cover loan growth and the increase in the level of nonperforming loans. The
increase in the level of nonperforming loans at the Barnwell Bank was
attributable to a large number of small-dollar consumer loans originated during
the fourth quarter of 1997 and the beginning of 1998. Management believes that
it has identified and addressed the loan problems at the Barnwell Bank and that
it has implemented procedures to deter these problems in the future; however,
there is no guarantee that future chargeoffs and provisions charged to expense
will not be required. Based on present information, management believes the
allowance for loan losses is adequate at June 30, 1998 to meet presently known
and inherent risks in the loan portfolio.
NONINTEREST INCOME
Total noninterest income for the six months ended June 30, 1998 was $1,477,000,
an increase of $744,000 compared to $733,000 for the six months ended June 30,
1997. Total noninterest income for the quarter ended June 30, 1998 was $850,000,
or 94.5% higher than the second quarter of 1997.
The increases for both the six- and three-month periods ending June 30, 1998
were due to the $130,000 gain realized on the sale of the Greenwood Bank's
branch in Ninety Six, South Carolina on April 18, 1998 and the increase in fees
on residential mortgage originations to $302,000 and $172,000 for the six and
three months ended June 30, 1998 from $108,000 and $57,000 for the comparable
periods of 1997. The increase in mortgage origination fees was due to the
industry-wide decrease in residential mortgage rates resulting in home
refinancing. Service charges on deposit accounts were $567,000 and $375,000
during the six months ending June 30, 1998 and 1997, respectively and were
$322,000 and $237,000 for the three months ending June 30, 1998 and 1997,
respectively. The increases were primarily attributable to the opening and
capitalization of three new banks during 1997 and the assumption of
approximately $98,000,000 in deposits from branch acquisitions during the past
16 months.
NONINTEREST EXPENSE
Total noninterest expense for the first six months of 1998 was $4,560,000, an
increase of $1,589,000, or 53.5%, when compared to the first six months of 1997.
For the quarter ended June 30, 1998, noninterest expense was $2,450,000, an
increase of $677,000, or 38.2%, over the comparable period of 1997.
14
<PAGE>
COMMUNITY CAPITAL CORPORATION
NONINTEREST EXPENSE - CONTINUED
The primary component of noninterest expense is salaries and benefits which was
$2,104,000 and $1,606,000 for the six months ended June 30, 1998 and 1997,
respectively and $1,132,000 and, $1,023,000 for the three months ending June 30,
1998 and 1997, respectively. The increases are the result of the operation of
more banks during 1998 compared to 1997. Furniture and equipment expense
increased to $433,000 for the six-month period from $284,000 due to an increase
in depreciation charges on additional equipment operating throughout the Company
due to the new banks. Net occupancy expense, amortization of intangible assets,
and other operating expenses also increased due to the growth of the Company
through the opening of the new banks and the purchase of additional branches.
INCOME TAXES
For the six months ended June 30, 1998 and 1997, the effective income tax rate
was 24.4% and 30.0%, respectively, and the income tax provision was $228,000 and
$183,000, respectively. For the quarter ended June 30, 1998, the effective tax
rate was 18.7% compared to 27.3% for the second quarter of 1997. The decreases
in the effective tax rate was partially due to an increase in tax-exempt income.
NET INCOME
The combination of the above factors resulted in net income of $708,000 for the
six months ended June 30, 1998 compared to $428,000 for the comparable period in
1997. For the quarter ended June 30, 1998, net income was $396,000, an increase
of $127,000 when compared to the second quarter of 1997.
The profitability of the Greenwood Bank continues to be supplemented by profits
from the Clemson, Belton and Barnwell Banks for the six months ended June 30,
1998. The Bank of Newberry County and Community Trust Company (formerly
Community Trust Services Company) experienced year-to-date losses.
ASSETS AND LIABILITIES
During the first six months of 1998, total assets grew $62,937,000, or 25.3%,
when compared to December 31, 1997. Much of the growth was attributable to the
Purchase of the Branches by the Clemson Bank and the Belton Bank. The principal
assets acquired and liabilities assumed are summarized in Note 8 of the
Condensed Consolidated Financial Statements included with this filing.
The cash received for the net liabilities assumed were mainly used to acquire
investment securities or have been temporarily invested in federal funds sold
until management is able to deploy the funds to achieve its desired mix of
assets and liabilities.
Asset growth has also been funded by an increase in deposits, excluding those
purchased, of $27,445,000.
INVESTMENT SECURITIES
Investment securities increased $30,190,000 during the six-month period. The
increase is due to the investment of the cash received for the net liabilities
assumed, upon the Purchase of the Branches, in securities issued by U.S.
government agencies and corporations and by local governments.
15
<PAGE>
COMMUNITY CAPITAL CORPORATION
LOANS
Loans receivable increased $16,185,000, or 10.85%, since December 31, 1997. This
increase was primarily due to loan growth at all the banking subsidiaries.
Balances within the major loan receivable categories as of June 30, 1998 and
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
(Dollars in thousands) 1998 1997
----------- ---------
Commercial and agricultural $ 34,538 $ 33,479
Real estate 83,253 71,950
Home equity 15,161 14,383
Consumer, installment 27,822 24,318
Consumer, credit card and checking 2,103 1,429
Loans to financial institutions -- 2,600
Residential mortgages held for sale & other 2,435 968
--------- ---------
$ 165,312 $ 149,127
========= =========
RISK ELEMENTS IN THE LOAN PORTFOLIO
The following is a summary of risk elements in the loan portfolio:
June 30,
---------------------------
1998 1997
---- ----
Loans: (Dollars in thousands)
Nonaccrual loans $ 706 $ 116
Accruing loans more than 90
days past due $ 74 $ 82
Loans identified by the internal review mechanism, including nonaccrual loans
and accruing loans more than 90 days past due:
Criticized $ 3,488 $ 2,712
Classified $ 3,793 $ 2,191
Activity in the Allowance for Loan Losses
is as follows: 1998 1997
---- ----
(Dollars in thousands)
Balance, January 1, $ 1,531 $ 837
Provision for loan losses for the period 593 224
Chargeoffs (170) (105)
Recoveries 10 --
Reserves related to acquisitions 38 255
--------- ---------
Balance, end of period $ 2,002 $ 1,211
========= =========
Gross loans outstanding, end of period $ 165,312 $ 114,192
Allowance for loan losses to loans
outstanding 1.21% 1.06%
</TABLE>
PREMISES AND EQUIPMENT
Purchases of fixed assets during the second quarter of 1998, including those
acquired from the branch purchases, were $1,113,000 for all institutions. The
computer main frame will need upsizing during 1998 as new accounts are added,
and there will be additional equipment purchases related to this upgrade.
16
<PAGE>
COMMUNITY CAPITAL CORPORATION
DEPOSITS
Total deposits increased $68,930,000 or 36.89% from December 31, 1997. Expressed
in percentages, noninterest-bearing deposits increased 15.2% and
interest-bearing deposits increased by 39.4%.
Balances within the major deposit categories as of June 30, 1998 and December
31, 1997 are as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- --------
(Dollars in thousands)
<S> <C> <C>
Noninterest-bearing demand deposits $ 22,409 $ 19,460
Interest-bearing demand deposits 44,193 30,562
Money market accounts 25,053 20,812
Savings deposits 24,738 15,127
Certificates of deposit 139,398 100,900
-------- --------
$255,791 $186,861
======== ========
Upon the purchase of the Carolina First Branches on June 15, 1998, the Company
assumed deposit liabilities of $43,643,000 as follows:
(Dollars in thousands)
Certificates of deposits $100M and over $ 1,798
Other time deposits 30,053
Other deposits 11,792
-------
Total deposits assumed $43,643
=======
</TABLE>
LONG-TERM DEBT
Advances from the Federal Home Loan Bank were $15,849,000 as of June 30, 1998.
Of this amount, the following have scheduled maturities greater than one year:
Maturing on Interest Rate Principal
----------------------------------------------------- -----------
(Dollars in thousands)
5/23/2000 5.55% - variable $ 800
9/25/2000 6.38% - fixed 600
1/30/2001 5.85% - fixed 1,000
9/24/2002 5.66% - fixed, callable 9/24/99 1,000
2/03/2003 5.97% - fixed 149
3/26/2008 5.51% - fixed 1,500
-------
Total long-term debt $ 5,049
=======
The parent company has drawn $3,250,000 of a $3,500,000 line of credit from The
Bankers Bank pursuant to the terms of a note dated June 12, 1998. The proceeds
were used for capital infusions to the Belton Bank in order to maintain minimum
capital requirements due to an increase in the asset base resulting from the
purchase of two branch offices of Carolina First Bank. The outstanding principal
balance plus interest accrued at a rate of 7.65% are payable on August 12, 1998.
At maturity, the Company expects the loan to be renewed with long-term
financing.
17
<PAGE>
COMMUNITY CAPITAL CORPORATION
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 at least 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, 1998:
<TABLE>
<CAPTION>
Tier 1 Total Tier 1
Risk Based Risk Based Leverage
Actual ratio: ---------- ---------- --------
<S> <C> <C> <C>
Community Capital Corporation 14.02% 15.07% 10.06%
Greenwood Bank & Trust 10.60 11.66 8.08
Clemson Bank & Trust 14.78 15.85 11.94
Bank of Barnwell County 13.20 14.29 8.06
The Bank of Belton 23.61 24.36 20.60
The Bank of Newberry County 23.07 22.16 14.43
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
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Shareholders' equity was increased by the $211,000 proceeds from the exercise of
stock options, the $153,000 proceeds from sales of stock to the Employee Stock
Ownership Plan, and net income of $708,000. 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 $6,000 net
of the deferred tax effects for the six months ended June 30, 1998 when compared
to December 31, 1997.
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 by the banks are not expected to be a primary
source of liquidity for the near term; however, the Company has approximately
$22,325,000 of unused lines of credit to purchase federal funds.
18
<PAGE>
COMMUNITY CAPITAL CORPORATION
LIQUIDITY AND CAPITAL RESOURCES - CONTINUED
On June 15, 1998, the Belton Bank and the Clemson Bank acquired certain assets
and deposits associated with three branch offices of Carolina First Bank. The
purchase provided additional deposits to the Company of approximately
$44,000,000 and loans of $2,100,000. The Clemson Bank did not require any
additional capital to absorb their increase in size while the Belton Bank
required $4,775,000 in additional capital from the parent company. During the
second quarter of 1998, Community Trust Company became a full-service trust
company. As a condition of approval, the parent company was required to inject
an additional $750,000 of capital. To fund the additional requirements of the
Belton Bank and Community Trust Company, the parent company first utilized
internal sources. The parent company received $500,000 in cash dividends from
the Greenwood Bank, borrowed $2,176,000 from its wholly-owned subsidiary banks
subject to the limitations and collateral requirements imposed by the Federal
Reserve Board, and utilized its liquid assets.
The parent company then borrowed $3,275,000 on a $3,500,000 line of credit with
The Bankers Bank for its additional cash needs. The parent company also used the
funds to acquire certain assets, from its subsidiaries, used for banking
operations. The subsidiaries pay rent for the use of the premises, and the
parent company may use the assets to collateralize borrowings within and outside
the Company subject to the requirements of the Federal Reserve Board.
In the near-term, the parent company expects to repay the line of credit, after
renewal, and internal borrowings from dividends from the Greenwood Bank. The
Company expects the other banks, after achieving the desired level of
profitability, to contribute to future debt service by means of cash dividends
to the parent company; however, there can be no guarantee that the banks will
achieve a level of profitability to allow cash dividends. Any dividends from the
banking subsidiaries are subject to regulatory approval.
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.
THE YEAR 2000
During 1997, the Company commenced a year 2000 date conversion project to
address all necessary code changes, testing and implementation. Failure to
address the issue could result in computer applications which fail or create
erroneous results by or at the year 2000. Bank regulators have established
minimum guidelines for banks in addressing the year 2000 issue. The regulators
are monitoring the progress of banks in complying with these guidelines and have
the option of taking regulatory action for banks which have not made
satisfactory progress in addressing the year 2000 issue. The regulators have
recently examined the Company for the year 2000 compliance issues and have
reported that the Company currently is on schedule at this time to meet year
2000 requirements.
The Company is utilizing both internal and external resources to identify,
correct and test the systems for the year 2000 compliance. The Company has
contacted its primary processing vendors, and the vendors have developed plans
to address processing transactions in the year 2000. Management does not expect
the year 2000 compliance expense to have a material effect on the Company's
earnings.
19
<PAGE>
COMMUNITY CAPITAL CORPORATION
THE YEAR 2000 - CONTINUED
Maintenance or modification costs will be expensed as incurred, while the costs
of new software will be capitalized over the software's useful life. While the
current mainframe is year 2000 compatible the Company plans to upgrade the
mainframe in order to meet the requirements generated by the growth of the
Company.
ACCOUNTING RULE CHANGES
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130
establishes standards for reporting comprehensive income. Comprehensive income
includes net income and other comprehensive income which is defined as non-owner
related transactions in equity. The Company reported comprehensive income in its
condensed consolidated financial statements as of March 31, 1998 and
reclassified prior periods to reflect the application of SFAS 130.
ADVISORY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this report on Form 10-Q that are not
historical facts are forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. The Company
cautions readers of this report that such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from those expressed or implied by such forward-looking statements.
Although the Company's management believes that their expectations of future
performance are based on reasonable assumptions within the bounds of their
knowledge of their business and operations, there can be no assurance that
actual results will not differ materially from their expectations.
Factors which could cause actual results to differ from expectations include,
among other things, the challenges, costs and complications associated with the
continued development of the Company's recently acquired community bank
subsidiaries (the "New Banks") as start-up operations with no history of
operating profits; the ability of the Company to effectively integrate and staff
the operations of the New Banks as well as the operations allocated to the base
of deposits acquired in connection with branch acquisitions; the ability of the
Company to retain and deploy in a timely manner the cash associated with branch
acquisitions into assets with satisfactory yields and credit risk profiles; the
potential that loan charge-offs may exceed the allowance for loan losses or that
such allowance will be increased as a result of factors beyond the control of
the Company; the Company's dependence on senior management; competition from
existing financial institutions operating in the Company's market areas as well
as the entry into such areas of new competitors with greater resources, broader
branch networks and more comprehensive services; the potential adverse impact on
net income of rapidly declining interest rates; adverse changes in the general
economic conditions in the geographic markets served by the Company; the
challenges and uncertainties in the implementation of the Company's expansion
and development strategies; the potential negative effects of future legislation
affecting financial institutions; and other factors described in this report and
in other reports filed by the Company with the Securities and Exchange
Commission.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable, as the Company qualifies as a "small business issuer" under
regulation S-B promulgated by the Securities and Exchange Commission.
20
<PAGE>
COMMUNITY CAPITAL CORPORATION
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
RECENT SALES OF UNREGISTERED SECURITIES
During the quarter ended June 30, 1998, the Company sold an aggregate of 4,356
shares of Common Stock to its Employee Stock Ownership Plan without registration
under the Securities Act of 1933, as amended (the "1933 Act"). The following
sets forth the dates and amount of such sales:
Date Shares Proceeds
------------ ------ --------
May 7, 1998 1,091 $ 18,809
June 1, 1998 3,265 55,505
In each case, all of the shares were sold at the quoted market price at the time
of sale and were issued pursuant to the exemption from registration contained in
Section 4(2) of the 1933 Act as a transaction, not involving a general
solicitation, in which the purchaser was purchasing for investment. The Company
believes that the purchaser was given and had access to detailed financial
information with respect to the Company and possessed requisite financial
sophistication. The Company did not sell any other equity securities during the
quarter ended June 30, 1998 which were not registered under the 1933 Act.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 27, 1998, the Company held its Annual Meeting of Shareholders for the
purpose of (a) electing eight members to the board of directors; (b) ratifying
the adoption of the Company's 1997 Stock Incentive Plan; and (c) ratifying the
appointment of Tourville, Simpson & Henderson, certified public accountants, as
the Company's independent auditors for the fiscal year ending December 31, 1998.
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 the Company's 1997 Stock Incentive Plan and Tourville,
Simpson & Henderson received the requisite number of affirmative votes required
for approval pursuant to the Bylaws of the Company. Of the 2,921,497 outstanding
shares of the Company, 2,492,483 shares were either voted in person or by proxy
for the three matters presented for shareholders' approval.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(1) Exhibits
27. Financial Data Schedule
(2) The Company filed a report on Form 8-K on June 25, 1998,
reporting the previously announced acquisitions of three branches
from Carolina First Bank on June 15, 1998 by Bank of Belton and
Clemson Bank & Trust, wholly owned subsidiaries of the Company.
The Form 8-K included, as exhibits, copies of the Purchase and
Assumption Agreements by and between The Bank of Belton and
Carolina First Bank and by and between Clemson Bank & Trust and
Carolina First Bank and a copy of the press release announcing
the acquisitions. No financial statements were filed with that
report.
Items 1, 3, and 5 are not applicable.
21
<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 13, 1998 By:
----------------------------
James H. Stark
Chief Financial Officer
22
<TABLE> <S> <C>
<ARTICLE>9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,190,000
<INT-BEARING-DEPOSITS> 489,000
<FED-FUNDS-SOLD> 13,240,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 103,197,000
<INVESTMENTS-CARRYING> 675,000
<INVESTMENTS-MARKET> 675,000
<LOANS> 165,312,000
<ALLOWANCE> 2,002,000
<TOTAL-ASSETS> 311,798,000
<DEPOSITS> 255,791,000
<SHORT-TERM> 12,245,000
<LIABILITIES-OTHER> 2,444,000
<LONG-TERM> 8,324,000
0
0
<COMMON> 2,935,000
<OTHER-SE> 30,059,000
<TOTAL-LIABILITIES-AND-EQUITY> 311,798,000
<INTEREST-LOAN> 7,174,000
<INTEREST-INVEST> 2,414,000
<INTEREST-OTHER> 189,000
<INTEREST-TOTAL> 9,777,000
<INTEREST-DEPOSIT> 4,565,000
<INTEREST-EXPENSE> 5,165,000
<INTEREST-INCOME-NET> 4,612,000
<LOAN-LOSSES> 593,000
<SECURITIES-GAINS> 19
<EXPENSE-OTHER> 4,560,000
<INCOME-PRETAX> 936,000
<INCOME-PRE-EXTRAORDINARY> 936,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 708,000
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.23
<YIELD-ACTUAL> 3.90
<LOANS-NON> 706,000
<LOANS-PAST> 74,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,793,000
<ALLOWANCE-OPEN> 1,531,000
<CHARGE-OFFS> 170,000
<RECOVERIES> 10,000
<ALLOWANCE-CLOSE> 2,002,000
<ALLOWANCE-DOMESTIC> 2,002,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
