SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-QSB
(Mark One)
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 UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 000-22517
COMMUNITY BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
North Carolina 56-1693841
(State of Incorporation) (I.R.S. Employer Identification No.)
1600 Curtis Bridge Road Wilkesboro, North Carolina 28697
(Address of Principal Executive Offices)
(336) 838-4100
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer (1) 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 issuer was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.
Common stock, $3.00 par value per share 1,445,984 shares issued and
outstanding as of August 11, 1998.
Transitional Small Business Disclosure Format (Check one):
Yes No X
(Page 1 of 17)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Consolidated Balance Sheets
ASSETS:
June 30, December 31,
1998 1997
(Unaudited) (Unaudited)
Cash and due from banks $ 3,823,091 $ 2,534,421
Federal funds sold - - 1,500,000
Total cash and cash equivalents $ 3,823,091 $ 4,034,421
Securities:
Available-for-sale,
at estimated market values 18,451,704 13,592,071
Held-to-maturity (Estimated market
values of $3,415,000 (06-30-98))
and $3,644,394 (12-31-97) 3,406,000 3,627,805
Loans, net 70,481,923 69,194,004
Property and equipment 1,840,137 1,806,059
Goodwill 23,315 26,645
Other assets 933,999 794,652
Total Assets $ 98,960,169 $93,075,657
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 5,544,594 $ 5,910,213
Interest bearing deposits 80,878,745 75,869,351
Total deposits $ 86,423,339 $81,779,564
Other liabilities 1,167,751 1,191,085
Total Liabilities $ 87,591,090 $82,970,649
Commitments & Contingencies
Shareholders' Equity:
Common stock - $3.00 par value,
10 million shares authorized;
1,445,584 and 1,297,156
shares issued and outstanding
at June 30, 1998 and
December 31, 1997, respectively $ 4,336,752 $ 3,891,468
Paid-in-capital 5,756,693 5,380,223
Retained earnings 1,242,727 791,381
Unrealized gain on
securities available-for-sale 32,907 41,936
Total Shareholders' Equity $ 11,369,079 $10,105,008
Total Liabilities
and Shareholders' Equity $ 98,960,169 $93,075,657
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Income Statements
(Unaudited)
For the six months
ended June 30,
1998 1997
Interest and fees
on loans and investments $4,353,731 $3,416,896
Interest expense 2,156,205 1,693,734
Net interest income $2,197,526 $1,723,162
Provision for possible loan losses 130,000 275,000
Net interest income (loss) after
provision for possible loan losses $2,067,526 $1,448,162
Other income:
Service fees and other charges $ 119,076 $ 72,185
Gain on sale of assets 34,954 - -
Gain/(loss) on sale of securities 1,360 (4,618)
Total Other Income $ 155,390 $ 67,567
Operating expenses:
Salaries and benefits $ 704,601 $ 492,006
Legal and professional 168,145 53,849
Depreciation 41,103 25,481
Amortization 3,331 5,807
Courier and postage 46,924 28,791
Rent and land lease 46,597 39,416
Data processing 94,321 64,057
Regulatory assessments 31,704 25,347
Other operating expenses 297,944 183,757
Total operating expenses $1,434,670 $ 918,511
Income before taxes $ 788,246 $ 597,218
Income tax 336,900 283,620
Net Income $ 451,346 $ 313,598
Basic income per share $ .33 $ .21
Diluted income per share $ .30 $ .19
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Income Statements
(Unaudited)
For the three months
ended June 30,
1998 1997
Interest and fees
on loans and investments $2,212,910 $1,778,196
Interest expense 1,093,499 878,419
Net interest income $1,119,411 $ 899,777
Provision for possible loan losses 25,000 150,000
Net interest income after
provision for possible loan losses $1,094,411 $ 749,777
Other income:
Service fees and other charges $ 58,956 $ 36,732
Gain (loss) on sale of securities 1,360 (5,261)
Total other income $ 60,316 $ 31,471
Operating expenses:
Salaries and benefits $ 360,296 $ 258,976
Legal and professional 105,166 35,528
Depreciation 21,813 13,061
Amortization 1,666 2,136
Courier and postage 22,060 15,246
Rent expense 23,279 19,218
Data processing 52,672 32,897
Regulatory assessments 15,954 11,674
Other operating expenses 165,616 84,067
Total operating expenses $ 768,522 $ 472,803
Net Income before taxes $ 386,205 $ 308,445
Income taxes 168,000 155,000
Net Income $ 218,205 $ 153,445
Basic income per share $ .15 $ .10
Diluted income per share $ .15 $ .09
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Statements of Cash Flows
(Unaudited)
Six months ended
June 30,
1998 1997
Cash flows from operating activities: $ 495,552 $ (394,176)
Cash flows from investing activities
Purchase of equipment (75,181) (391,846)
(Increase) in loans, net (1,417,919) (9,706,147)
Securities, available-for-sale
Sale of securities 504,687 2,051,632
Purchase of securities (7,569,020) (2,918,028)
Maturities and pay-downs 2,195,375 504,875
Securities, held-to-maturity
Purchase of securities (538,462) - -
Maturities and pay-downs 728,109 974,238
Net cash used in investing activities $(6,172,411) $(9,485,276)
Cash flows from financing activities
Increase in deposits $ 4,643,775 $ 7,794,374
Proceeds from exercise
of warrants/options 821,754 102,055
Net cash provided from financing activities $ 5,465,529 $ 7,896,429
Net (decrease) in cash and cash equivalents $ (211,330) $(1,983,023)
Cash and cash equivalents
at beginning of period 4,034,421 4,213,882
Cash and cash equivalents at end of period $ 3,823,091 $ 2,230,859
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1998
Note 1 - Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six-month period ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1998. For further information, refer to the financial statements and
footnotes thereto included in Form 10-KSB for the year ended December 31,
1997.
Note 2 - Summary of Organization
Community Bancshares, Inc., Wilkesboro, North Carolina (the "Company"),
was incorporated under the laws of the State of North Carolina on June 11,
1990, for the purpose of becoming a bank holding company with respect to a
proposed national bank, Wilkes National Bank (the "Bank"), located in
Wilkesboro, North Carolina. Upon commencement of the Bank's planned principal
operations on January 17, 1992, the Company acquired 100 percent of the voting
stock of the Bank by injecting $3,750,000 into the Bank's capital accounts.
The Company offered warrants to its organizers and to a group of initial
subscribers. Each warrant, when surrendered with $5.50 to the Company, is
convertible into one share of common stock. The warrants expire ten years
from January 17, 1992. At June 30, 1998 and December 31, 1997, there were
235,436 and 382,664 warrants outstanding, respectively. The Company also has
a stock option plan with 167,296 and 168,496 options outstanding at June 30,
1998 and December 31, 1997, respectively.
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation and Reclassification. The consolidated financial
statements include the accounts of the Company and the Bank. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Certain prior year amounts have been reclassified to conform to the current
year presentation. Such reclassifications had no impact on net income or
shareholders' equity.
Basis of Accounting. The accounting and reporting policies of the
Company conform to generally accepted accounting principles
and to general practices in the banking industry. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
balance sheet and revenues and expenses for the period. Actual results could
differ significantly from those estimates. Material estimates that are
particularly susceptible to significant change in the near term relate to the
determination of the allowance for loan losses and the valuation of real
estate acquired in connection with foreclosures or in satisfaction of loans.
Investment Securities. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities" ("SFAS 115"). SFAS 115 requires investments in equity and
debt securities to be classified into three categories:
1. Held-to-maturity securities: These are securities which the Company
has the ability and intent to hold until maturity. These
securities are stated at cost, adjusted for amortization of
premiums and the accretion of discounts.
2. Trading securities: These are securities which are bought and held
principally for the purpose of selling in the near future.
Trading securities are reported at fair market value, and related
unrealized gains and losses are recognized in the income
statement. As of December 31, 1997 and June 30, 1998, the Company
had no securities in this category.
3. Available-for-sale securities: These are securities which are not
classified as either held-to-maturity or as trading securities.
These securities are reported at fair market value. Unrealized
gains and losses are reported, net of tax, as separate components
of shareholders' equity. Unrealized gains and losses are excluded
from the income statement.
A decline below cost in the fair value of any available-for sale or
held-to-maturity security that is deemed other than temporary, results in a
charge to income and the establishment of a new cost basis for the security.
Purchase premiums and discounts on investment securities are amortized
and accreted to interest income using the level yield method on the
outstanding principal balances. In establishing the accretion of discounts
and amortization of premiums, the Company utilizes market based prepayment
assumptions. Interest and dividend income are recognized when earned.
Realized gains and losses for securities sold are included in income and are
derived using the specific identification method for determining the costs of
securities sold.
Loans, Interest and Fee Income on Loans. Loans are stated at the
principal balance outstanding. Unearned discount, unamortized loan fees and
the allowance for possible loan losses are deducted from total loans in the
statement of condition. Interest income is recognized over the term of the
loan based on the principal amount outstanding. Points on real estate loans
are taken into income to the extent they represent the direct cost of
initiating a loan. The amount in excess of direct costs is deferred and
amortized over the expected life of the loan.
Accrual of interest on loans is discontinued either when reasonable
doubt exists as to the full or timely collection of interest or principal or
when a loan becomes contractually past due by 90 days or more with respect to
interest or principal. When a loan is placed on non-accrual status, all
interest previously accrued but not collected is reversed against current
period interest income. Income on such loans is then recognized only to the
extent that cash is received and where the future collection of principal is
probable. Loans are returned to accrual status only when they are brought
fully current with respect to interest and principal and when, in the judgment
of management, the loans are estimated to be fully collectible as to both
principal and interest.
The Company adopted Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS 118,
"Accounting for Impairment of a Loan - Income Recognition and Disclosure".
These standards require impaired loans to be measured based on the present
value of expected future cash flows discounted at the loan's original
effective interest rate, or at the loan's observable market price, or the fair
value of the collateral if the loan is collateral dependent. A loan is
considered impaired when, based on current information and events, it is
probable that the Company will be
unable to collect all amounts due according to the contractual terms of the
note agreement. Cash receipts on impaired loans which are accruing interest
are applied to principal and interest under the contractual terms of the loan
agreement. Cash receipts on impaired loans for which the accrual of interest
has been discontinued are applied to reduce the principal amount of such loans
until the principal has been recovered and are recognized as interest income
thereafter.
Allowance for Possible Loan Losses. The allowance for loan losses is
established through provisions charged to operations. Such provisions are
based on management's evaluation of the loan portfolio under current economic
conditions, past loan loss experience, adequacy of underlying collateral,
changes in the nature and volume of the loan portfolio, review of specific
problem loans, and such other factors which, in management's judgment, deserve
recognition in estimating loan losses. Loans are charged-off when, in the
opinion of management, such loans are deemed to be uncollectible. Subsequent
recoveries are added to the allowance.
Management believes that the allowance for loan losses is adequate.
While management uses available information to recognize losses of loans,
future additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Company's allowance
for loan losses. Such agencies may require the Company to recognize additions
to the allowance for loan losses based on their judgments about information
available to them at the time of their examination.
Property and Equipment. Building, furniture and equipment are stated at
cost, net of accumulated depreciation. Depreciation is computed using the
straight line method over the estimated useful lives of the related assets.
Maintenance and repairs are charged to operations, while major improvements are
capitalized. Upon retirement, sale or other disposition of property and
equipment, the cost and accumulated depreciation are eliminated from the
accounts, and gain or loss is included in income from operations.
Income Taxes. The consolidated financial statements have been prepared
on the accrual basis. When income and expenses are recognized in different
periods for financial reporting purposes and for purposes of computing income
taxes currently payable,deferred taxes are provided on such temporary
differences. The Company files a consolidated income tax return. Taxes are
accounted for in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred tax
assets and liabilities are recognized for the expected future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using the enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be realized or settled. Under SFAS 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Statement of Cash Flows. For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from banks and federal
funds sold. Generally, federal funds are purchased or sold for one day periods.
Earnings Per Share ("EPS"). The Company adopted Statement of Financial
Accounting Standard No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128
establishes standards for computing and presenting EPS. Because the Company
has a complex capital structure, it is required to report: (i) basic EPS and
(ii) diluted EPS. Basic EPS is defined as the amount of earnings available to
each share of common stock outstanding during the reporting period. Diluted
EPS is defined as the amount of earnings available both to each share of
common stock outstanding during the reporting period and to each share that
would have been outstanding assuming the issuance of common stock for all
dilutive potential common stock outstanding during the reporting period.
Basic EPS is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding
during the period. Diluted EPS is computed assuming the conversion of all
warrants and options.
For the six-month period ended June 30, 1998, basic and diluted EPS
amounted to $.33 and $.30, respectively. For the six-month period ended
June 30, 1997, basic and diluted EPS amounted to $.21 and $.19, respectively.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company commenced its planned principal operations on January 17, 1992
when its subsidiary Bank opened for business. During the period from February
1, 1990 to January 17, 1992, the Company was in the development stage as it
devoted most of its efforts to organizing, incorporating, planning, raising
capital and recruiting personnel. During the development stage, the Company
funded its operations principally through borrowings. However, by December
31, 1991, all outstanding loans were paid-off with funds raised through the
sale of the Company's common stock.
Total assets increased by $5.9 million to $99.0 million during the six-month
period ended June 30, 1998. The increase was generated primarily through a
$4.6 million increase in deposits, a $.5 million increase in retained earnings
and a $.8 million increase in equity capital from the exercise of stock
warrants. These funds were utilized to expand the securities portfolio by
$4.6 million and increase loans by $1.3 million.
Liquidity and Sources of Capital
Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The June
30, 1998 financial statements evidence a satisfactory liquidity position as
total cash and cash equivalents amounted to $3.8 million, representing 3.9% of
total assets. Investment securities, which amounted to $21.9 million or 22.1%
of total assets, provide a secondary source of liquidity because they can be
converted into cash in a timely manner. The subsidiary Bank is a member of
the Federal Reserve System and is maintaining relationships with several
correspondent banks and, thus, could obtain funds on short notice. The
Company's management closely monitors and maintains appropriate levels of
interest earning assets and interest bearing liabilities, so that maturities
of assets are such that adequate funds are provided to meet customer
withdrawals and loan demand. There are no trends, demands, commitments,
events or uncertainties that will result in or are reasonably likely to result
in the Company's liquidity increasing or decreasing in any material way. The
Bank maintains an adequate level of capitalization as measured by the
following capital ratios and the respective minimum capital requirements by
the Bank's primary regulator, the Office of the Comptroller of the Currency.
Bank's Minimum required
June 30, 1998 by regulator
Leverage ratio 8.2% 4.0%
Risk weighted ratio 12.1% 8.0%
With respect to the leverage ratio, the regulator expects a minimum of 5.0% to
6.0% ratio for banks that are not rated CAMEL 1. Although the Bank is not
rated CAMEL 1, its leverage ratio of 8.2% is well above the required minimum.
During the first six months of 1998, 148,428 warrants were exercised,
resulting in an $821,754 increase in the Company's capital accounts. These
funds can be injected into the Bank's capital accounts as management deems
appropriate.
Results of Operations
For the three-month periods ended June 30, 1998 and 1997, net income amounted
to $218,205 and $153,445, respectively. On a per share basis, both basic and
diluted income for the three-month period ended June 30, 1998 amounted to
$.15. For the three-month period ended June 30, 1997, basic and diluted
income per share amounted to $.10 and $.09, respectively. The improvement in
net income for the three-month period ended June 30, 1998 as compared to the
three-month period ended June 30, 1997, is primarily due to the following:
(i) Net interest margin increased by approximately $220,000, due to both a
higher level of earning assets and higher yields.
(ii) Provision for loan losses (an expense item) was $125,000 lower in 1998.
Management believes that the reserve for loan losses, at 1.49% of
gross loans, is adequate.
(iii) Non-interest income increased by approximately $29,000, due to a higher
level of transaction accounts.
(iv) The items above were more than adequate to cover a $296,000 increase in
other operating expenses. The increase in other operating expenses was
due to salaries and benefits as well as professional fees related to the
shareholder litigation.
Net income for the six-month period ended June 30, 1998 amounted to $451,346,
or $.30 per diluted share. For the six-month period ended June 30, 1997, net
income amounted to $313,598, or $.19 per diluted share. The following four
items are of significance when one compares the June 30, 1998 results to those
of June 30, 1997.
a. Net interest income, which represents the difference between interest
received on interest earning assets and interest paid on interest
bearing liabilities, has increased from $1,723,162 for the six-month
period ended June 30, 1997 to $2,197,526 for the same period one year
later, representing an increase of $474,364, or 27.5%. This increase
was attained primarily because of a $17.4 million increase in average
earning assets, from $76.2 million for the six-month period ended June
30, 1997 to $93.6 million for the six-month period ended June 30, 1998.
b. The net interest yield, defined as net interest income divided by
average interest earning assets, has increased from 4.52% for the six-
month period ended June 30, 1997 to 4.69% for the six-month period ended
June 30, 1998. Below is pertinent information concerning the yield on
earning assets and the cost of funds for the six month period ended June
30, 1998.
Avg. Assets/ Interest Yield/
Description Liabilities Income/Expense Cost
Federal funds $ 2,122,648 $ 57,902 5.45%
Securities 20,740,556 641,627 6.19%
Loans 70,727,334 3,654,202 10.33%
Total $93,590,538 $4,353,731 9.30%
Transactional
accounts $14,981,819 $ 257,659 3.44%
Savings 3,195,648 47,399 2.97%
CD's 62,096,560 1,842,098 5.93%
Other borrowings 281,215 9,049 6.44%
Total $80,555,242 $2,156,205 5.35%
Net interest income $2,197,526
Net yield on earning assets 4.69%
c. Total non-interest income has increased from $67,567 for the six-month
period ended June 30, 1997 to $155,390 for the six-month period ended
June 30, 1998. If one excludes a $34,954 gain on sale of assets, non-
interest income for the six-month period ended June 30, 1998 would have
been $120,436 or 78.2% higher than non-interest income during the six-
month period ended June 30, 1997. The increase is attributable
primarily to higher volumes and fees with respect to transactional
accounts.
d. For the six-month period ended June 30, 1998, operating expenses
amounted to $1,434,670 representing an annualized 3.0% of average
assets. By comparison, for the six-month period ended June 30, 1997,
operating expenses amounted to $918,511, representing an annualized 2.4%
of average assets. The increase in operating expenses during 1998 is
attributed mainly to salaries and benefits, as well as professional fees
related to the shareholder litigation.
During the six-month period ended June 30, 1998, the allowance for loan losses
has grown from $1,033,393 to $1,066,992. The allowance for loan losses as a
percentage of gross loans increased from 1.47% at December 31, 1997 to 1.49%
at June 30, 1998. Management considers the allowance for loan losses to be
adequate and sufficient to absorb possible future losses; however, there can
be no assurance that charge-offs in future periods will not exceed the
allowance for loan losses or that additional provisions to the allowance will
not be required.
The Company is not aware of any current recommendation by the regulatory
authorities which, if they were to be implemented, would have a material
effect on the Company's liquidity, capital resources, or results of
operations.
Year 2000
A critical issue affecting companies that rely extensively on electronic data
processing systems, such as the Company, is the Year 2000 issue. The Year
2000 issue has arisen due to the widespread use of computer programs that rely
on two-digit date codes to perform computations or decision making functions.
Many of these programs may fail as a result of their inability to properly
interpret date codes beginning January 1, 2000. For example, such programs
may misinterpret "00" as the year 1900 rather than the year 2000. In
addition, some equipment being controlled by microprocessor chips may not
deal appropriately with the year "00". This could result in a system failure
or miscalculations causing disruptions of operations, including among other
things, a temporary inability to process transactions or engage in similar,
normal business activities.
The Bank primarily uses a third-party vendor for processing its primary
banking applications. During 1997, the Bank formed an internal task force,
chaired by its Operations Executive, to address the Year 2000 issue, conduct a
comprehensive review of the Bank's systems and ensure that the Bank takes any
necessary measures. The Company is currently involved in testing its systems
to ensure that they are Year 2000 compliant. Management does not believe that
significant expenditures will be required to ensure compliance. As of June
30, 1998, the Company had spent approximately $6,000 to upgrade its software
and hardware systems to help ensure that they would be Year 2000 compliant.
Further, all third-party vendors have been contacted to provide assurances
that their data processing programs and systems are Year 2000 compliant now or
will be well in advance of the year 2000. The Company believes that its
systems and those of its data processing vendors are currently Year 2000
compliant and does not believe that material expenditures will be necessary to
implement any further modifications. However, there can be no assurances that
unforseen difficulties or costs will not arise. In addition, there can be no
assurance that systems of other companies on which the Company's systems rely,
such as the Bank's data processing vendor, will be modified on a timely basis,
or that the failure by another company to properly modify its systems will not
negatively impact the Company's systems or operations.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Several individuals exercised their warrants to purchase an aggregate
147,228 shares of the Company's common stock. The number of warrants and the
dates they were exercised were as follows: (i) 400 warrants on February 18,
1998; (ii) 5,000 warrants on April 10, 1998; (iii) 800 warrants on May 1,
1998; (iv) 122,718 warrants on May 5, 1998; and (v) 18,310 warrants on May 6,
1998. These warrants were exercised at a price of $5.50 per share and were
originally issued in connection with the Company's initial public offering to
its organizers and a group of the Company's initial shareholders.
All issuances of securities described above were made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 as transactions by an issuer not involving a public offering. No
underwriter was involved in the transactions and no commissions were paid.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibit is filed with this report.
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended June 30, 1998.
SIGNATURES
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 BANCSHARES, INC.
(Registrant)
Date: August 13, 1998 BY: /s/ Ronald S. Shoemaker
Ronald S. Shoemaker
President and Chief Executive Officer
(Principal Executive, Financial and Accounting
Officer)
Financial Data Schedule Submitted Under Item 601(a)(27) of Regulation S-B
This schedule contains summary financial information extracted from Community
Bancshares, Inc. unaudited consolidated financial statements for the six-month
periods ended June 30, 1998 and 1997 and is qualified in its entirety by
reference to such financial statements.
Item Number Item Description Amount
June 30,
1998 1997
9-03(1) Cash and due from banks $ 3,823,091 $ 1,680,859
9-03(2) Interest bearing deposits 0 0
9-03(3) Federal funds sold - purchased
securities for sale 0 550,000
9-03(4) Trading account assets 0 0
9-03(6) Investment and mortgage backed
securities held for sale 18,451,704 12,150,540
9-03(6) Investment and mortgage backed
securities held to maturity -
carrying value 3,406,000 4,440,598
9-03(6) Investment and mortgage backed
securities held to maturity -
market value 3,415,000 4,435,098
9-03(7) Loans 71,548,915 63,109,649
9-03(7)(2) Allowance for losses 1,066,992 891,804
9-03(11) Total assets 98,960,169 82,939,683
9-03(12) Deposits 86,423,339 72,249,551
9-03(13) Short-term borrowings 0 0
9-03(15) Other liabilities 1,167,751 942,888
9-03(16) Long-term debt 0 0
9-03(19) Preferred stock -
mandatory redemption 0 0
9-03(20) Preferred stock -
no mandatory redemption 0 0
9-03(21) Common stock 4,336,752 3,889,068
9-03(22) Other stockholders' equity 7,032,327 5,858,176
9-03(23) Total liabilities and
stockholders' equity 98,960,169 82,939,683
9-04(1) Interest and fees on loans 3,654,202 2,867,852
9-04(2) Interest and dividends
on investments 699,529 549,044
9-04(4) Other interest income 0 0
9-04(5) Total interest income 4,353,731 3,416,896
9-04(6) Interest on deposits 2,147,156 1,685,348
9-04(9) Total interest expense 2,156,205 1,693,734
9-04(10) Net interest income 2,197,526 1,723,162
9-04(11) Provision for loan losses 130,000 275,000
9-04(13)(h) Investment securities gains/losses 1,360 (4,618)
9-04(14) Other expenses 1,434,670 918,511
9-04(15) Income/loss before income tax 788,246 597,218
9-04(17) Income/loss before
extraordinary items 788,246 597,218
9-04(18) Extraordinary items, less tax 0 0
9-04(19) Cumulative change in
accounting principles 0 0
9-04(20) Net income or loss 451,346 313,598
9-04(21) Basic earnings per share .33 .21
9-04(21) Diluted earnings per share .30 .19
I.B.5. Net yield - interest earning
assets - actual 4.69% 4.52%
III.C.1(a) Loans on non-accrual 0 83,000
III.C.1(b) Accruing loans past due
90 days or more 0 16,222
III.C.1(c) Troubled debt restructuring 0 0
III.C.2. Potential problem loans 2,114,739 83,000
IV.A.1 Allowance for loan losses -
beginning of period 1,033,393 619,133
IV.A.2 Total chargeoffs 104,301 6,991
IV.A.3 Total recoveries 7,900 4,662
IV.A.4 Allowance for loan losses -
end of period 1,066,992 891,804
IV.B.1 Loan loss allowance allocated to
domestic loans 1,050,000 880,000
IV.B.2 Loan loss allowance allocated to
foreign loans 0 0
IV.B.3 Loan loss allowance - unallocated 16,992 11,804
