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 September 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 1,446,984 shares issued and
outstanding as of November 12, 1998.
Transitional Small Business Disclosure Format (Check one):
Yes No X
(Page 1 of 14)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Consolidated Balance Sheets
ASSETS:
September 30, December 31,
1998 1997
(Unaudited) (Unaudited)
Cash and due from banks $ 4,823,130 $ 2,534,421
Federal funds sold - - 1,500,000
Total cash and cash equivalents $ 4,823,130 $ 4,034,421
Securities:
Available-for-sale,
at estimated market values 20,597,548 13,592,071
Held-to-maturity (Estimated market
values of $3,039,094 (09-30-98)
and $3,644,394 (12-31-97)) 2,995,123 3,627,805
Loans, net 70,764,202 69,194,004
Property and equipment 1,851,095 1,806,059
Goodwill 21,649 26,645
Other assets 1,001,191 794,652
Total Assets $102,053,938 $93,075,657
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 6,503,867 $ 5,910,213
Interest bearing deposits 81,297,248 75,869,351
Total deposits $ 87,801,115 $81,779,564
Other liabilities 2,523,993 1,191,085
Total Liabilities $ 90,325,108 $82,970,649
Commitments & Contingencies
Shareholders' Equity:
Common stock - $3.00 par value,
10 million shares authorized;
1,446,984 and 1,297,156
shares issued and outstanding
at September 30, 1998 and
December 31, 1997, respectively $ 4,340,952 $ 3,891,468
Paid-in-capital 5,769,693 5,380,223
Retained earnings 1,496,555 791,381
Unrealized gain on
securities available-for-sale 121,630 41,936
Total Shareholders' Equity $ 11,728,830 $10,105,008
Total Liabilities
and Shareholders' Equity $102,053,938 $93,075,657
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Income Statements
(Unaudited)
For the nine months
ended September 30,
1998 1997
Interest income $6,580,409 $5,476,573
Interest expense 3,217,495 2,660,710
Net interest income $3,362,914 $2,815,863
Provision for possible loan losses 190,000 400,000
Net interest income after
provision for possible loan losses $3,172,914 $2,415,863
Other income:
Service fees and other charges $ 176,586 $ 126,973
Gain on sale of assets 34,954 - -
Gain/(loss) on sale of securities 1,360 (4,618)
Total other income $ 212,900 $ 122,355
Operating expenses:
Salaries and benefits $1,046,988 $ 876,758
Legal and professional 254,390 113,621
Depreciation 65,041 42,557
Amortization 4,996 7,002
Courier and postage 72,218 51,313
Rent and land lease expense 72,136 73,148
Data processing 144,146 98,595
Regulatory assessments 47,454 33,866
Other operating expenses 451,371 394,714
Total Expenses $2,158,740 $1,691,574
Income before taxes $1,227,074 $ 846,644
Income tax 521,900 422,869
Net income $ 705,174 $ 423,775
Basic income per share $ .51 $ .35
Diluted income per share $ .49 $ .33
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Income Statements
(Unaudited)
For the three months
ended September 30,
1998 1997
Interest income $2,226,678 $2,059,677
Interest expense 1,061,290 966,976
Net interest income $1,165,388 $1,092,701
Provision for possible loan losses 60,000 125,000
Net interest income after
provision for possible loan losses $1,105,388 $ 967,701
Other income:
Service fees and other charges $ 57,510 $ 54,788
Total other income $ 57,510 $ 54,788
Operating expenses:
Salaries and benefits $ 342,387 $ 384,752
Legal and professional 86,245 59,772
Depreciation 23,938 17,076
Amortization 1,665 1,195
Courier and postage 25,294 22,522
Rent and land lease expense 25,539 25,193
Data processing 49,825 34,538
Regulatory assessments 15,750 8,519
Other operating expenses 153,427 219,496
Total Expenses $ 724,070 $ 773,063
Income before taxes $ 438,828 $ 249,426
Income tax 185,000 139,249
Net income $ 253,828 $ 110,177
Basic income per share $ .18 $ .09
Diluted income per share $ .17 $ .08
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Statements of Cash Flows
(Unaudited)
Nine months ended
September 30,
1998 1997
Cash flows from operating activities: $ 1,127,592 $ 80,394
Cash flows from investing activities:
Purchase of equipment (110,077) (787,564)
(Increase) in loans, net (1,760,198) (12,891,583)
Securities, available-for-sale
Sale of securities 504,687 2,051,632
Purchase of securities (11,484,896) (3,939,653)
Maturities and pay-downs 3,818,414 1,105,760
Securities, held-to-maturity
Purchase of securities (538,462) (298,799)
Maturities and pay-downs 1,171,144 1,489,269
Net cash used in investing activities $ (8,399,388) $(13,270,938)
Cash flows from financing activities:
Increase in borrowings $ 1,200,000 $ - -
Increase in deposits 6,021,551 12,437,421
Proceeds from sale of stock 838,954 104,255
Net cash provided from financing activities $ 8,060,505 $ 12,541,676
Net increase (decrease) in
cash and cash equivalents $ 788,709 $ (648,868)
Cash and cash equivalents
at beginning of period 4,034,421 4,213,882
Cash and cash equivalents at end of period $ 4,823,130 $ 3,565,014
Refer to notes to the consolidated financial statements.
COMMUNITY BANCSHARES, INC.
Wilkesboro, North Carolina
Notes to Consolidated Financial Statements (Unaudited)
September 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 nine-month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1998. These statements should be read in conjunction with the
consolidated 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 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.
As of September 30, 1998 and December 31, 1997, there were 1,446,984 and
1,297,156 shares of common stock outstanding, respectively.
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 September 30, 1998 and December 31, 1997, there
were 235,036 and 382,664 warrants outstanding, respectively. The Company also
has a stock option plan with 166,296 and 168,496 options outstanding at
September 30, 1998 and December 31, 1997, respectively.
Note 3 - Recent Accounting Pronouncements
Beginning January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which is effective for annual and COMMUNITY BANCSHARES,
INC.interim periods beginning after December 15, 1997. SFAS 130 establishes
new rules for the reporting and display of comprehensive income and its
components; however, the adoption of this Statement had no impact on the
Company's net income or shareholders' equity. SFAS 130 requires unrealized
gains and losses on the Company's available-for-sale securities which, prior
to adoption were reported separately in shareholders' equity, to be included
in other comprehensive income. During the third quarter and for the nine-
month period ended September 30, 1998, total comprehensive income amounted to
$342,551 and $784,868, respectively, and totaled $140,587 and $449,878
respectively, for the comparable periods in 1997.
Beginning January 1, 1998, the Company adopted the provisions of SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which is effective for annual and interim periods beginning
after December 15, 1997. This Statement establishes standards for the method
that public entities are to use when reporting information about operating
segments in annual financial statements and requires that those enterprise
reports be issued to shareholders, beginning with annual financial statements
in 1998 and for interim and annual financial statements thereafter. SFAS 131
also established standards for related disclosures about products and
services, geographic areas and major customers.
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 $9.0 million to $102.1 million during the
nine-month period ended sept 30, 1998. The increase was generated primarily
through a $6.0 million increase in deposits, a $1.3 million increase in other
liabilities, a $.7 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 $6.4 million, loans by
$1.6 million, cash and cash equivalents by $.8 million and other assets by $.2
million. During the nine-month period ended September 30, 1998, loans grew at
a rate proportionally lower than that of the asset growth rate. Management
believes that this is due to a weaker loan demand triggered by uncertain
economic conditions, as well as to rate competition undertaken by other banks.
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
September 30, 1998 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $4.8 million,
representing 4.7% of total assets. Investment securities, which amounted to
$23.4 million or 23.1% 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
September 30, 1998 by regulator
Leverage ratio 8.2% 4.0%
Risk weighted ratio 12.7% 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 nine months of 1998, 147,628 warrants and 2,200 options
were exercised, resulting in an $838,954 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 September 30, 1998 and 1997, net
income amounted to $253,828 and $110,177, respectively. On a per share basis,
basic and diluted income for the three-month period ended September 30, 1998
amounted to $.18 and $.17, respectively. For the three-month period ended
September 30, 1997, basic and diluted income per share amounted to $.09 and
$.08, respectively. The improvement in net income for the three-month period
ended September 30, 1998 as compared to the three-month period ended September
30, 1997, is primarily due to the following:
(i) Net interest income, which represents the difference between interest
received on interest earning assets and interest paid on interest
bearing liabilities, increased by approximately $73,000, due to a
higher level of earning assets.
(ii) Provision for loan losses (an expense item) was $65,000 lower in 1998.
Management believes that the reserve for loan losses, at 1.52% of
gross loans, is adequate.
(iii) Other operating expenses declined by approximately $49,000 because of
lower personnel and other miscellaneous expenses. These operating
expenses were generally lower in the third calendar quarter of
1998 as compared to the third calendar quarter of 1997 because of
a significantly lower asset growth rate.
Net income for the nine-month period ended September 30, 1998 amounted
to $705,174, or $.49 per diluted share. For the nine-month period ended
September 30, 1997, net income amounted to $423,775, or $.33 per diluted
share. The following four items are of significance when one compares the
September 30, 1998 results to those of September 30, 1997.
a. Net interest income has increased from $2,815,863 for the nine-month
period ended September 30, 1997 to $3,362,914 for the same period one
year later, representing an increase of $547,051, or 19.4%. This
increase was attained primarily because of a $15.9 million increase in
average earning assets, from $78.2 million for the nine-month period
ended September 30, 1997 to $94.1 million for the nine-month period
ended September 30, 1998.
b. The net interest yield, defined as net interest income divided by
average interest earning assets, has declined slightly from 4.80% for
the nine-month period ended September 30, 1997 to 4.76% for the nine-
month period ended September 30, 1998. Below is pertinent information
concerning the yield on earning assets and the cost of funds for the
nine-month period ended September 30, 1998.
Avg. Assets/ Interest Yield/
Description Liabilities Income/Expense Cost
Federal funds $ 1,690,290 $ 69,513 5.48%
Securities 21,347,515 981,165 6.13%
Loans 71,078,802 5,529,731 10.37%
Total $94,116,607 $6,580,409 9.32%
Transactional
accounts $15,859,672 $ 389,194 3.27%
Savings 3,327,610 74,444 2.98%
CD's 61,867,389 2,744,514 5.91%
Other borrowings 298,718 9,343 4.17%
Total $81,353,389 $3,217,495 5.27%
Net interest income $3,362,914
Net yield on earning assets 4.76%
c. Total non-interest income has increased from $122,355 for the nine-month
period ended September 30, 1997 to $212,900 for the nine-month period
ended September 30, 1998. If one excludes a $34,954 gain on sale of
assets, non-interest income for the nine-month period ended September
30, 1998 would have been $177,946 or 45.4% higher than non-interest
income during the nine-month period ended September 30, 1997. The
increase is attributable primarily to higher volumes and fees with
respect to transactional accounts.
d. For the nine-month period ended September 30, 1998, operating expenses
amounted to $2,158,740 representing an annualized 2.86% of average
assets. By comparison, for the nine-month period ended September 30,
1997, operating expenses amounted to $1,691,574, representing an
annualized 2.80% of average assets. The increase in operating expenses
during 1998 is attributed mainly to salaries and benefits, data
processing costs, as well as professional fees related to the
shareholder litigation.
During the nine-month period ended September 30, 1998, the allowance for
loan losses has grown from $1,033,393 to $1,097,837. The allowance for loan
losses as a percentage of gross loans increased from 1.47% at December 31,
1997 to 1.52% at September 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 estimates that the
Bank will incur approximately $50,000 in expenditures relating to Year 2000
compliance. As of September 30, 1998, the Company had spent approximately
$8,000 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 1. Legal Proceedings.
On September 24, 1998, the North Carolina Superior Court dismissed the
shareholder derivative action brought against the Company and eight of its
directors by Edward F. Greene and Joe Severt. The lawsuit, styled Edward F.
Greene and Joe Severt, Individually and Derivatively on behalf of Community
Bancshares, Inc. v. Ronald S. Shoemaker, Dwight Pardue, Rebecca Ann Sebastian,
Colin Shoemaker, Gilbert Miller, Robert Ricketts, Brent Eller, Ray Ferguson
and Community Bancshares, Inc.; In the North Carolina General Court of
Justice, Superior Court Division; File No.: 97-CvS-2118, was dismissed for
failure to make a demand for relief before filing a shareholder derivative
action as required by North Carolina law and for failure to state a claim upon
which relief may be granted.
Both sides in this litigation have filed motions to recover fees and
expenses. A hearing on these motions was held on November 10, 1998. A
decision is expected shortly.
The day after the lawsuit was dismissed, Mr. Greene presented the
Company with a formal demand in accordance with the derivative action
requirements of North Carolina law. The demand was accompanied by a proposed
third lawsuit against the Company and certain of its directors. In his demand
and in the draft lawsuit, Mr. Greene reiterates many of the claims he made in
his first two lawsuits against the Company and requests, among other things,
compensatory and punitive damages, along with reasonable attorneys fees and
other costs.
In response to Mr. Greene's demand, the Company on October 6, 1998 filed
a motion asking the court to appoint one or more independent persons to
determine whether the proposed derivative proceeding is in the best interests
of the Company. On November 10, 1998, the Court appointed a two-man panel to
determine whether the proposed derivative proceeding is in the best interest
of the Company.
The Company believes that the claims of Mr. Greene in his demand and
draft lawsuit are unfounded and completely without merit. The Company denies
any liability with respect to these claims and intends vigorously to defend
them. This action is at an early procedural stage, however, and it is not
possible at this time to determine the outcome of the lawsuit or the effect of
its resolution on the Company's financial position or operating results.
Management of the Company and the directors who are proposed defendants in
this action believe that their defenses have merit; however, there can be no
assurance that any such litigation will not have a material adverse effect on
the Company's results of operations for some period or on the Company's
financial position.
Reference is made to "Item 3 -- Legal Proceedings" in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997 for
additional information relating to this litigation.
Item 2. Changes in Securities and Use of Proceeds.
During the third calendar quarter of 1998, one individual exercised his
warrants to purchase 400 shares of the Company's common stock. These warrants
were exercised on August 3, 1998 at a price of $5.50 per share. The warrants
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 September 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: November 12, 1998 BY: /s/ Ronald S. Shoemaker
Ronald S. Shoemaker
President and Chief Executive Officer
(Principal Executive, Financial and Accounting
Officer
Exhibit 27.1
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 nine-month
periods
ended September 30, 1998 and 1997 and is qualified in its entirety by reference
to such
financial statements.
Item Number Item Description Amount
September 30,
1998 1997
9-03(1) Cash and due from banks $ 4,823,130 $ 2,765,014
9-03(2) Interest bearing deposits 0 0
9-03(3) Federal funds sold - purchased
securities for sale 0 800,000
9-03(4) Trading account assets 0
9-03(6) Investment and mortgage backed
securities held for sale 20,597,548 12,101,317
9-03(6) Investment and mortgage backed
securities held to maturity -
carrying value 2,995,123 4,224,366
9-03(6) Investment and mortgage backed
securities held to maturity -
market value 3,039,094 4,238,596
9-03(7) Loans 71,862,039 66,278,221
9-03(7)(2) Allowance for losses 1,097,837 999,940
9-03(11) Total assets 102,053,938 87,811,011
9-03(12) Deposits 87,801,115 76,892,598
9-03(13) Short-term borrowings 1,200,000 0
9-03(15) Other liabilities 1,323,993 1,028,382
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 4,340,952 3,890,268
9-03(22) Other stockholders' equity 7,387,878 5,999,763
9-03(23) Total liabilities and
stockholders' equity 102,053,938 87,811,011
9-04(1) Interest and fees on loans 5,529,731 4,647,529
9-04(2) Interest and dividends
on investments 1,050,678 829,044
9-04(4) Other interest income 0 0
9-04(5) Total interest income 6,580,409 5,476,573
9-04(6) Interest on deposits 3,211,733 2,646,124
9-04(9) Total interest expense 3,217,495 2,660,710
9-04(10) Net interest income 3,362,914 2,815,863
9-04(11) Provision for loan losses 190,000 400,000
9-04(13)(h) Investment securities gains/losses 1,360 (4,618)
9-04(14) Other expenses 2,158,740 1,691,574
9-04(15) Income/loss before income tax 1,227,074 846,644
Item Number Item Description Amount
September 30,
1998 1997
9-04(17) Income/loss before
extraordinary items $ 1,227,074 846,644
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 705,174 423,775
9-04(21) Earnings per share - primary .51 .35
9-04(21) Earnings per share - fully diluted .49 .33
I.B.5. Net yield - interest earning
assets - actual 4.76% 4.80%
III.C.1(a) Loans on non-accrual 48,363 83,000
III.C.1(b) Accruing loans past due
90 days or more 0 0
III.C.1(c) Troubled debt restructuring 0 0
III.C.2. Potential problem loans 2,131,986 1,639,644
IV.A.1 Allowance for loan losses -
beginning of period 1,033,393 619,133
IV.A.2 Total chargeoffs 133,770 24,887
IV.A.3 Total recoveries 8,214 5,694
IV.A.4 Allowance for loan losses -
end of period 1,097,837 999,940
IV.B.1 Loan loss allowance allocated to
domestic loans 1,025,941 988,000
IV.B.2 Loan loss allowance allocated to
foreign loans 0 0
IV.B.3 Loan loss allowance - unallocated 71,896 11,940
