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 September 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.
3,087,736 shares of common stock, $1.00 par value
PAGE 1 OF 26
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 - September 30, 1998
and December 31, 1997 ....................................... 3
Condensed Consolidated Statements of Operations - Nine months
and three months ended September 30, 1998 and 1997................ 4
Condensed Consolidated Statements of Comprehensive Income -
Nine months and three months ended September 30, 1998 and 1997..... 5
Condensed Consolidated Statement of Changes in Shareholders'
Equity - Nine months ended September 30, 1998...................... 6
Condensed Consolidated Statements of Cash Flows - Nine months
ended September 30, 1998 and 1997................................. 7
Notes to Condensed Consolidated Financial Statements......... 8-13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. .............................. 14-22
Item 3. Quantitative and Qualitative Disclosures
About Market Risk........................................ 23
PART II. Other Information
Item 2. Changes in Securities and Use of Proceeds................ 24
Item 6. Exhibits and Reports on Form 8-K ........................ 24
(a) Exhibits ............................................ 24
27. Financial Data Schedule.......................... 26
(b) Reports on Form 8-K ................................. 24
</TABLE>
2
<PAGE>
COMMUNITY CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
Sept. 30, 1998 Dec.31, 1997
-------------- ------------
ASSETS: (Unaudited)
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks $ 15,621 $ 7,347
Interest-bearing deposit accounts 248 415
Federal funds sold 870 350
------------- -------------
Total cash and cash equivalents 16,739 8,112
------------- -------------
Securities:
Securities available-for-sale 108,676 73,581
Securities held-to-maturity (estimated fair value
of $675 at September 30, 1998 and December 31, 1997) 675 675
Nonmarketable equity securities 4,712 3,224
------------- -------------
Total securities 114,063 77,480
------------- -------------
Loans receivable 170,103 149,127
Less allowance for loan losses (2,114) (1,531)
------------- -------------
Loans, net 167,989 147,596
------------- -------------
Premises, furniture, and equipment, net 8,396 8,293
Intangible assets 5,676 3,119
Other assets 5,583 4,261
------------- -------------
Total assets $ 318,446 $ 248,861
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing $ 27,362 $ 19,460
Interest-bearing 233,270 167,401
------------- -------------
Total deposits 260,632 186,861
Federal funds purchased and securities
sold under agreements to repurchase 9,194 11,943
Advances from the Federal Home Loan Bank 9,434 16,350
Other borrowed funds 2,775 -
Other liabilities 2,924 1,779
------------- -------------
Total liabilities 284,959 216,933
------------- -------------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 10,000,000 shares authorized;
3,087,736 and 2,905,303 shares issued and outstanding at
September 30, 1998 and December 31, 1997, respectively 3,088 2,905
Capital surplus 29,555 27,492
Accumulated other comprehensive income 553 467
Retained earnings 291 1,064
------------- -------------
Total shareholders' equity 33,487 31,928
------------- -------------
Total liabilities and shareholders' equity $ 318,446 $ 248,861
============= =============
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands except for per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 11,091 $ 7,367 $ 3,917 $ 2,915
Securities, taxable 3,440 1,992 1,371 900
Securities, nontaxable 535 322 190 140
Other interest income 289 177 100 40
--------- --------- --------- -----------
15,355 9,858 5,578 3,995
--------- --------- --------- -----------
Interest expense:
Deposits 7,420 4,312 2,855 1,808
FHLB advances 627 284 138 121
Other interest expense 194 217 83 94
--------- --------- --------- -----------
8,241 4,813 3,076 2,023
--------- --------- --------- -----------
Net interest income 7,114 5,045 2,502 1,972
Provision for loan losses 932 332 339 108
--------- --------- --------- -----------
Net interest income after provision
for loan losses 6,182 4,713 2,163 1,864
--------- --------- --------- -----------
Other operating income:
Service charges on deposit accounts 903 601 336 226
Residential mortgage origination fees 436 179 134 71
Commissions from sales of mutual funds 89 23 12 11
Fees for trust services 96 24 63 24
Gain on sales of securities 220 - 201 -
Gain on sale of branch 130 - - -
Other income 537 356 188 118
--------- --------- --------- -----------
2,411 1,183 934 450
--------- --------- --------- -----------
Other operating expenses:
Salaries and benefits 3,355 2,376 1,251 770
Net occupancy expense 498 341 176 142
Amortization of intangible assets 309 160 134 79
Furniture and equipment expense 663 484 230 200
Other operating expenses 2,385 1,703 859 902
--------- --------- --------- -----------
7,210 5,064 2,650 2,093
--------- --------- --------- -----------
Income before taxes 1,383 832 447 221
Income tax provision 336 204 108 21
--------- --------- --------- -----------
Net income $ 1,047 $ 628 $ 339 $ 200
========= ========= ========= ===========
Basic net income per share $ .34 $ .23 $ .11 $ .07
Diluted net income per share $ .32 $ .22 $ .11 $ .07
</TABLE>
See notes to condensed consolidated financial statements
4
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 1,047 $ 628 $ 339 $ 200
--------- --------- --------- ----------
Other comprehensive income, net of tax:
Unrealized gains (losses)
on securities during
the period 237 225 230 353
Less: reclassification
adjustment for gains
included in net income (151) - (138) -
--------- --------- --------- ----------
Other comprehensive income 86 225 92 353
--------- --------- --------- ----------
Comprehensive income $ 1,133 $ 853 $ 431 $ 553
========= ========= ========= ==========
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the nine months ended September 30, 1998
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Other Total
Common Stock Capital Comprehensive Retained Shareholders'
Shares Amount Surplus Income Earnings Equity
------ ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 2,905,303 $ 2,905 $ 27,492 $ 467 $ 1,064 $ 31,928
Proceeds from sales
of stock to ESOP 9,762 10 149 159
Proceeds from
exercise of
stock options 26,045 26 246 272
5% stock dividend 146,626 147 1,668 (1,820) (5)
Other comprehensive
income 86 86
Net income
for the period 1,047 1,047
--------- --------- --------- --------- --------- -----------
Balance,
Sept. 30, 1998 3,087,736 $ 3,088 $ 29,555 $ 553 $ 291 $ 33,487
========= ========= ========= ========= ========= ===========
</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>
Nine Months Ended
Sept. 30,
---------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,047 $ 628
Adjustments to reconcile net income to
Net cash (used) provided by operating activities:
Depreciation 641 594
Provision for possible loan losses 932 332
Amortization of intangible assets 309 160
Amortization less accretion on investments 64 30
Amortization of deferred loan costs 196 132
Gain on sales of securities available-for-sale (220) -
Gain on sale of branch (130)
Loss on sales of premises and equipment 22
Disbursements for mortgages held for sale (16,983) (6,555)
Proceeds of sales of residential mortgages 16,395 6,185
Increase in interest receivable (605) (959)
Increase in interest payable 240 181
Increase in other assets (976) (183)
Increase in other liabilities 720 53
--------- ----------
Net cash provided by operating activities 1,652 598
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans to customers (18,795) (38,179)
Purchases of securities available-for-sale (95,218) (54,088)
Sales of securities available-for-sale 37,711 1,998
Maturities of securities available-for-sale 22,699 7,660
Purchases of securities held-to-maturity - (700)
Purchases of nonmarketable equity securities (1,488) (738)
Purchases of premises and equipment (861) (2,536)
Proceeds from sales of premises and equipment 731
Acquisition of branches 38,423 35,761
Net cash outflow from sale of branch (2,049)
--------- ----------
Net cash (used) by investing activities (18,847) (50,822)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of capital stock - 16,948
Proceeds from exercise of stock options 272 48
Proceeds from stock sales to ESOP 159 123
Stock dividend fractional shares paid in cash (5) -
Net increase in deposit accounts 32,286 28,986
Proceeds from FHLB borrowings 8,049 12,275
Repayments of FHLB borrowings (14,965) (6,214)
Proceeds from other borrowings 3,275 -
Repayment of other borrowings (500) -
Net increase (decrease) in fed funds purchased and repos (2,749) 3,704
--------- ----------
Net cash provided by financing activities 25,822 55,870
--------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 8,627 5,646
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,112 4,627
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,739 $ 10,273
========= ==========
</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 September 30, 1998 and for the interim periods ended
September 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>
Nine Months Ended
September 30
(Dollars in thousands) 1998 1997
------------- -------------
<S> <C> <C>
Cash paid during the period for:
Income taxes $ 203 $ 260
Interest 8,001 4,632
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 $9,434,000 as of September 30, 1998. Of this amount, the following have
scheduled maturities greater than one year:
<TABLE>
<CAPTION>
Maturing on Interest Rate Principal
----------- ------------- ---------
(Dollars in thousands)
<S> <C> <C>
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 134
9/22/2003 4.70% - fixed 3,000
3/26/2008 5.51% - fixed 1,500
------------
Total long-term debt $ 8,034
============
</TABLE>
8
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3 - Long-term Debt - continued
The parent company has drawn $2,775,000 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 October 12,
1998. Currently, the Company is in the process of converting this loan with
long-term financing.
Note 4 - Shareholders' Equity
During the first nine months of 1998, there were 9,762 shares of stock sold to
the Employee Stock Ownership Plan at market prices in the amount of $159,000,
and there were 26,045 options exercised by the employees and directors of the
Company providing $272,000 of additional capital for the Company.
On August 26, 1998 the board of directors declared a 5% stock dividend.
Accordingly, amounts equal to the fair market value of the additional shares
issued have been charged to retained earnings and credited to common stock and
capital surplus. Earnings per share, weighted average shares outstanding and
outstanding stock options, have been restated to reflect the 5% stock dividend.
Cash was paid for fractional shares.
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
2,100,000 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 139,200 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 $15.83 per share and expire June 24, 2003.
9
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 6 - Earnings Per Share
A reconciliation of the numerators and denominators used to calculate basic and
diluted earnings per share for the nine- and three-month periods ended September
30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands except for Nine Months Ended Three Months Ended
per share data) September 30 September 30
1998 1997 1998 1997
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Numerator:
Income available to shareholders,
as reported $ 1,047 $ 628 $ 339 $ 200
--------- --------- --------- -----------
Denominator:
Average number of shares of common
stock outstanding 3,074,183 2,726,672 3,085,485 3,044,164
--------- --------- --------- -----------
Basic earnings per share $ .34 $ .23 $ .11 $ .07
========= ========= ========= ===========
(Dollars in thousands except for Nine Months Ended Three Months Ended
per share data) September 30 September 30
1998 1997 1998 1997
--------- --------- --------- -----------
DILUTED EARNINGS PER SHARE:
Numerator:
Income available to stockholders,
as reported $ 1,047 $ 628 $ 339 $ 200
--------- --------- --------- -----------
Denominator:
Average number of shares of common
stock outstanding 3,074,183 2,726,672 3,085,485 3,044,164
Shares issuable upon exercise
of stock options 185,893 95,724 138,711 130,855
--------- --------- --------- -----------
Total shares 3,260,076 2,822,396 3,224,196 3,175,019
--------- --------- --------- -----------
Diluted earnings per share $ .32 $ .22 $ .11 $ .07
========= ========= ========= ===========
Weighted average of antidilutive
stock options not included in
above computation 49,618 127,158 136,973 -
========= ========= ========= ===========
</TABLE>
10
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 nine- and three-month periods ended September 30,
1998 and 1997:
<TABLE>
<CAPTION>
(Dollars in thousands) Pre-tax (Expense) Net of tax
For the Nine Months Ended Sept. 30, 1998: Amount Benefit Amount
------ ------- ------
<S> <C> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ 359 $ 122 $ 237
Less: reclassification adjustment
for gains realized in net income (220) 69 (151)
------------- ------------- -----------
Net unrealized gains (losses) on
securities 139 53 86
------------- ------------- -----------
Other comprehensive income $ 139 $ 53 $ 86
============= ============= ===========
(Dollars in thousands)
For the Nine Months Ended Sept. 30, 1997:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ 341 $ 116 $ 225
Less: reclassification adjustment for
gains realized in net income - - -
------------- ------------- -----------
Net unrealized gains (losses) on
securities 341 116 225
------------- ------------- -----------
Other comprehensive income $ 341 $ 116 $ 225
============= ============= ===========
For the Three Months Ended Sept. 30, 1998:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ 348 $ 118 $ 230
Less: reclassification adjustment for
gains realized in net income (201) 63 (138)
------------- ------------- -----------
Net unrealized gains (losses) on
securities 147 55 92
------------- ------------- -----------
Other comprehensive income $ 147 $ 55 $ 92
============= ============= ===========
For the Three Months Ended Sept. 30, 1997:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during the period $ 527 $ 174 $ 353
Less: reclassification adjustment for
gains realized in net income - - -
------------- ------------- -----------
Net unrealized gains (losses) on
securities 527 174 353
------------- ------------- -----------
Other comprehensive income $ 527 $ 174 $ 353
============= ============= ===========
</TABLE>
11
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 Assumption 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.
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.
12
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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.
13
<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
September 30, 1998 compared to December 31, 1997, and the results of operations
for the three and nine months ended September 30, 1998 compared to the three and
nine months ended September 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 nine months ended September 30, 1998, net interest income, the major
component of the Company's net income, was $7,114,000 compared to $5,045,000 for
the same period of 1997, an increase of $2,069,000. For the three months ended
September 30, 1998, net interest income was $2,502,000 compared to $1,972,000
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 4.97% from 4.83% for the nine-month periods ended
September 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 3.20% and 3.79%,
respectively, for the nine-month period ended September 30, 1998, compared to
3.52% and 4.28% for the nine-month period ended September 30, 1997.
14
<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 nine months ended September 30, 1998 and 1997, the provision was
$932,000 and $332,000, respectively. For the three months ended September 30,
1998 and 1997, the provision for loan losses was $339,000 and $108,000,
respectively.
The Greenwood and Barnwell Banks experienced increases in nonperforming loans
for the period ended September 30, 1998. The Company's nonperforming loans
totaled $870,000 compared to $321,000 in 1997. As a result, the Greenwood and
Barnwell Banks provided $706,000 of the $932,000 provision to cover loan growth
and the increase in the level of nonperforming loans at September 30, 1998.
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 is in
the process of implementing 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 September 30, 1998 to meet presently known and inherent risks in
the loan portfolio.
Noninterest Income
Total noninterest income for the nine months ended September 30, 1998 was
$2,411,000, an increase of $1,228,000 compared to $1,183,000 for the nine months
ended September 30, 1997. Total noninterest income for the quarter ended
September 30, 1998 was $934,000, or 107.56% higher than the second quarter of
1997.
The increases for both the nine- and three-month periods ending September 30,
1998 were significantly impacted by the $201,000 gain realized on the
restructuring of the investment securities portfolio and the increase in fees on
residential mortgage originations to $436,000 and $134,000 for the nine and
three months ended September 30, 1998 from $179,000 and $71,000 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 an
increase in home refinancing. Service charges on deposit accounts were $903,000
and $601,000 during the nine months ending September 30, 1998 and 1997,
respectively and were $336,000 and $226,000 for the three months ending
September 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 19 months.
Noninterest Expense
Total noninterest expense for the first nine months of 1998 was $7,210,000, an
increase of $2,146,000, or 42.38%, when compared to the first nine months of
1997. For the quarter ended September 30, 1998, noninterest expense was
$2,650,000, an increase of $557,000, or 26.61%, over the comparable period of
1997.
15
<PAGE>
COMMUNITY CAPITAL CORPORATION
Noninterest Expense - continued
The primary component of noninterest expense is salaries and benefits which was
$3,355,000 and $2,376,000 for the nine months ended September 30, 1998 and 1997,
respectively and $1,251,000 and, $770,000 for the three months ending September
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 $663,000 for the nine-month period from $484,000 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 nine months ended September 30, 1998 and 1997, the effective income tax
rate was 24.3% and 24.5%, respectively, and the income tax provision was
$336,000 and $204,000, respectively. For the quarter ended September 30, 1998,
the effective tax rate was 24.2% compared to 9.5% for the third quarter of 1997.
The effective tax rate for the third quarter of 1997 was partially due to a
change made during the quarter of the 1997 annualized estimated income.
Net Income
The combination of the above factors resulted in net income of $1,047,000 for
the nine months ended September 30, 1998 compared to $628,000 for the comparable
period in 1997. For the quarter ended September 30, 1998, net income was
$339,000, an increase of $139,000 when compared to the third quarter of 1997.
The Company's profit continues to be derived mainly from the Greenwood, Clemson
and Belton Banks for the nine months ended September 30, 1998. The Company's
other subsidiaries experienced year-to-date net losses.
Assets and Liabilities
During the first nine months of 1998, total assets grew $69,585,000 or 28.0%,
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.
Asset growth has also been funded by an increase in deposits, excluding those
purchased, of $32,286,000.
Investment Securities
During the third quarter of 1998 the Company recognized a gain of $201,000 on
the sale of approximately $33,000,000 of securities consisting of short-term and
callable U.S. treasuries and agencies. The weighted average yield of the
securities sold was 5.97% and they were replaced with similar securities having
weighted average yield of 5.54%. Although yields received were less than before,
the securities that were sold would all have matured or had a high probability
of being called within the year. It was anticipated that the funds from these
maturities and calls would have been reinvested at lower rates than were
available in the current market.
16
<PAGE>
COMMUNITY CAPITAL CORPORATION
Investment Securities - continued
Investment securities increased $36,583,000 during the nine-month period. The
increase is due primarily to the investment of the cash received for the net
liabilities assumed, upon the Purchase of the Branches, in securities issued by
in federal and local governments obligations.
Loans
Loans receivable increased $20,976,000, or 14.1%, 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 September 30, 1998
and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
(Dollars in thousands) 1998 1997
------------- --------------
<S> <C> <C>
Commercial and agricultural $ 33,128 $ 33,479
Real estate 88,402 71,950
Home equity 16,361 14,383
Consumer, installment 29,052 24,318
Consumer, credit card and checking 2,145 1,429
Loans to financial institutions - 2,600
Residential mortgages held for sale & other 1,015 968
------------- --------------
$ 170,103 $ 149,127
============= ==============
Risk Elements in the Loan Portfolio
The following is a summary of risk elements in the loan portfolio:
September 30,
-------------
1998 1997
---- ----
Loans: (Dollars in thousands)
Nonaccrual loans $ 685 $ 149
Accruing loans more than 90
days past due $ 185 $ 172
Loans identified by the internal review mechanism,
including nonaccrual loans and accruing loans
more than 90 days past due:
Criticized $ 4,012 $ 2,512
Classified $ 4,718 $ 2,436
Activity in the Allowance for Loan Losses Nine Months Ended September 30,
-------------------------------
is as follows: 1998 1997
---- ----
(Dollars in thousands)
Balance, January 1, $ 1,531 $ 837
Provision for loan losses for the period 932 332
Chargeoffs (410) (122)
Recoveries 23 -
Reserves related to acquisitions 38 255
------------- --------------
Balance, end of period $ 2,114 $ 1,302
============= ==============
Gross loans outstanding, end of period $ 170,103 $ 131,836
Allowance for loan losses to loans
outstanding 1.24% .99%
</TABLE>
17
<PAGE>
COMMUNITY CAPITAL CORPORATION
Deposits
Total deposits increased $73,771,000 or 39.5% from December 31, 1997. Expressed
in percentages, noninterest-bearing deposits increased 40.6% and
interest-bearing deposits increased by 39.4%.
Balances within the major deposit categories as of September 30, 1998 and
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- --------------
(Dollars in thousands)
<S> <C> <C>
Noninterest-bearing demand deposits $ 27,362 $ 19,460
Interest-bearing demand deposits 44,667 30,562
Money market accounts 25,099 20,812
Savings deposits 25,085 15,127
Certificates of deposit 138,419 100,900
------------- --------------
$ 260,632 $ 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 $9,434,000 as of September 30,
1998. Of this amount, the following have scheduled maturities greater than one
year:
<TABLE>
<CAPTION>
Maturing on Interest Rate Principal
(Dollars in thousands)
<S> <C> <C>
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 134
9/22/2003 4.70% - fixed 3,000
3/26/2008 5.51% - fixed 1,500
-------------
Total long-term debt $ 8,034
=============
</TABLE>
18
<PAGE>
COMMUNITY CAPITAL CORPORATION
Long-term Debt - continued
The parent company has drawn $2,775,000 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 October 12,
1998. Currently, the Company is in the process of converting this loan to
long-term financing.
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 September 30, 1998:
<TABLE>
<CAPTION>
Tier 1 Total Tier 1
Risk Based Risk Based Leverage
---------- ---------- --------
<S> <C> <C> <C>
Actual ratio:
Community Capital Corporation 13.95% 15.03% 9.10%
Greenwood Bank & Trust 10.55 11.62 8.40
Clemson Bank & Trust 15.82 17.03 10.85
Bank of Barnwell County 13.42 14.59 8.37
The Bank of Belton 24.91 25.81 9.19
The Bank of Newberry County 23.10 24.13 13.03
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
Since December 31, 1997 shareholders' equity was increased by the $272,000
proceeds from the exercise of stock options, the $159,000 proceeds from sales of
stock to the Employee Stock Ownership Plan, and net income of $1,047,000.
Additionally, shareholders' equity was increased by $86,000, net of income
taxes, due to the net change in the fair market value of the securities
available for sale. Finally, there was a $5,000 decrease to equity because of
cash paid for fractional shares held by stockholders when the 5% stock dividend
was consummated.
19
<PAGE>
COMMUNITY CAPITAL CORPORATION
Liquidity and Capital Resources - continued
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
$14,545,000 of unused lines of credit to purchase federal funds.
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
Like many financial institutions, the Company relies upon computers for the
daily conduct of its business and for information systems processing. There is
concern among industry experts that on January 1, 2000 computers will be unable
to read the new year, which may result in widespread computer malfunctions.
While the Company believes that it has available resources and has adopted a
plan to address Year 2000 compliance, it is still dependent to a certain degree
on third party vendors and service providers. During the third quarter of 1998,
the Company acquired, installed and successfully tested a new main frame
computer system. Although the decision to upgrade the computer system was based
primarily on capacity limits of the old system and expectations for future
processing needs, and not specifically to address Year 2000 concerns, its
implementation has had a positive impact on the
20
<PAGE>
COMMUNITY CAPITAL CORPORATION
The Year 2000 - continued
Company's Year 2000 readiness plans. However, Year 2000 testing of the new main
frame system and all related software applications will not be completed until
the first quarter of 1999, and there can be no assurances that the testing will
be successful. The Company anticipates incurring approximately $50,000 in
additional expenses to complete upgrading and testing its computer systems to
become Year 2000 compliant.
The Company anticipates that the cost to upgrade other ancillary systems will
not materially differ from normal costs incurred during prior years to upgrade
and maintain its computer systems. However, the Company has not completed an
evaluation of all its internal systems and software and the network connections
it maintains, and it may incur additional costs. The Company is seeking
assurances about the Year 2000 compliance with respect to the other third party
hardware and software systems it uses, and the Company believes that its
internal systems and software and network connections it maintains will be
adequately programmed to address the Year 2000 issue. The Company has
established time lines for testing all ancillary systems, such as telephone
systems and security devices, by March 31, 1999. There can be no assurances that
all hardware and software that the Company uses will be Year 2000 compliant, and
the Company cannot predict with any certainty the costs that it will incur to
respond to any Year 2000 issues. Factors which may affect the amount of these
costs include the Company's inability to control third party modification plans;
the Company's ability to identify and correct all relevant computer codes; the
availability and cost of engaging personnel in solving Year 2000 issues, and
other similar uncertainties.
Further, the business of many of the Company's customers may be negatively
affected by the Year 2000 issue, and any financial difficulties incurred by the
Company's customers in solving Year 2000 issues could negatively affect those
customer's ability to repay any loans which the affiliate banks may have
extended. Therefore, even if the Company does not incur significant direct costs
in connection with responding to the Year 2000 issue, there can be no assurance
that the failure or delay of the Company's customers or other third parties in
addressing the Year 2000 issue or the costs involved in such process will not
have a material adverse effect on the Company's business, financial condition,
or results of operation.
During the third quarter, the Company initiated a customer risk assessment to
identify any borrowing customers who may represent an increased credit risk due
to Year 2000 issues. As the degree of increased credit risk, if any, becomes
more evident, the Company plans to increase its allocations for Loan Losses
accordingly,
21
<PAGE>
COMMUNITY CAPITAL CORPORATION
The Year 2000 - continued
The Company is in the process of developing Contingency Plans to ensure its
ability to continue as a functioning entity after January 1, 2000. The Plan
includes remediation contingency planning and business resumptions contingency
planning. The remediation contingency plans are designed to ensure that
responsible personnel, vendors and service providers adhere to the Year 2000
plans and objectives. The business resumption contingency plans are designed to
provide assurance that mission critical functions will continue in the event
that systems or applications fail as a result of year 2000 problems.
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.
22
<PAGE>
COMMUNITY CAPITAL CORPORATION
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.
23
<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 September 30, 1998, the Company sold an aggregate of
4,826 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:
<TABLE>
<CAPTION>
Date Shares Proceeds
---- ------ --------
<S> <C> <C>
July 15, 1998 1,102 $ 16,794
August 9, 1998 1,596 22,145
September 8, 1998 2,128 21,876
</TABLE>
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 September 30, 1998 which were not registered under the 1933 Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Form 8-K - None filed during the third quarter of 1998.
Items 1, 3, 4, and 5 are not applicable.
24
<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: November 13, 1998 By:
James H. Stark
Chief Financial Officer
25
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000832847
<NAME> COMMUNITY CAPITAL CORPORATION
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,621,000
<INT-BEARING-DEPOSITS> 248,000
<FED-FUNDS-SOLD> 870,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 108,676,000
<INVESTMENTS-CARRYING> 675,000
<INVESTMENTS-MARKET> 675,000
<LOANS> 170,103,000
<ALLOWANCE> 2,114,000
<TOTAL-ASSETS> 318,446,000
<DEPOSITS> 260,632,000
<SHORT-TERM> 10,594,000
<LIABILITIES-OTHER> 2,924,000
<LONG-TERM> 10,809,000
0
0
<COMMON> 3,088,000
<OTHER-SE> 30,399,000
<TOTAL-LIABILITIES-AND-EQUITY> 318,446,000
<INTEREST-LOAN> 11,091,000
<INTEREST-INVEST> 3,975,000
<INTEREST-OTHER> 289,000
<INTEREST-TOTAL> 15,355,000
<INTEREST-DEPOSIT> 7,420,000
<INTEREST-EXPENSE> 8,241,000
<INTEREST-INCOME-NET> 7,114,000
<LOAN-LOSSES> 932,000
<SECURITIES-GAINS> 220,000
<EXPENSE-OTHER> 7,210,000
<INCOME-PRETAX> 1,383,000
<INCOME-PRE-EXTRAORDINARY> 1,383,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,047,000
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.32
<YIELD-ACTUAL> 3.79
<LOANS-NON> 685,000
<LOANS-PAST> 185,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,718,000
<ALLOWANCE-OPEN> 1,531,000
<CHARGE-OFFS> 410,000
<RECOVERIES> 23,000
<ALLOWANCE-CLOSE> 2,114,000
<ALLOWANCE-DOMESTIC> 211,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
