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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File Number 000-18887
COLONIAL TRUST COMPANY
----------------------
(Exact name of registrant as specified in its charter)
Arizona 75-2294862
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(State of Incorporation) (IRS Employer Identification Number)
5336 N. 19th Avenue
Phoenix, Arizona 85015
----------------------
(Address of principal executive offices)
602-242-5507
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(Registrant's telephone number)
NONE
(Former name, address and 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 Exchange Act during the past 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 __________
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15 (d) of the Exchange Act after the
distribution of securities under a plan confirmed by court.
Yes __________ No __________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date: 721,872
Transitional Small Business Disclosure Format (check one):
Yes _________ No ___X______
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COLONIAL TRUST COMPANY
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
Part I. Financial Information:
Item 1: Financial Statements 3
Condensed Balance Sheets 3
Condensed Statements of Earnings 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6
Item 2: Management's Discussion and Analysis or
Plan of Operation 9
Part II. Other Information
Item 1: Legal Proceedings 12
Item 2: Changes in Securities 12
Item 3: Default Upon Senior Securities 12
Item 4: Other Information 12
Item 5: Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
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COLONIAL TRUST COMPANY
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Condensed Balance Sheets
(Unaudited)
ASSETS September 30, 2000 March 31, 2000
------------------ --------------
<S> <C> <C>
Cash and cash equivalents $ 80,248 $ 9,260
Receivables 700,127 802,122
Note receivable 464,130 378,387
Property, furniture and equipment, net 807,613 843,095
Excess of cost over fair value acquired, net 122,996 129,081
Other assets 152,730 100,421
Restricted cash 517,584 502,556
---------- ----------
$2,845,428 $2,764,922
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 231,375 $ 197,132
Income tax payable -- 46,301
Deferred income taxes 7,249 7,249
---------- ----------
Total Liabilities 238,624 250,682
Stockholders' equity:
Common stock, no par value;
25,000,000 shares authorized, 713,911 issued
and outstanding, at September 30, 2000 and 755,234
issued and outstanding at March 31, 2000 555,177 555,177
Additional paid-in capital 505,347 505,347
Retained earnings 1,546,280 1,453,716
---------- ----------
Total stockholders' equity 2,606,804 2,514,240
---------- ----------
$2,845,428 $2,764,922
========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
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COLONIAL TRUST COMPANY
Condensed Statements of Earnings (Unaudited)
<TABLE>
<CAPTION>
Three-month periods Six-month periods
Ended September 30 Ended September 30
------------------ ------------------
Revenues: 2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Bond servicing income $ 592,337 $ 719,613 $1,309,334 $1,264,601
IRA servicing fees-corporate 112,683 118,261 299,142 290,269
IRA servicing fees-personal trust 61,071 39,413 149,574 90,337
Trust fee income 256,082 135,165 395,051 247,135
Interest income 18,096 10,989 35,318 27,887
---------- ---------- ---------- ----------
Total revenue 1,040,269 1,023,441 2,188,419 1,920,229
General and administrative expenses 918,828 769,404 1,781,669 1,468,219
---------- ---------- ---------- ----------
Earnings before income taxes 121,441 254,037 406,750 452,010
Income taxes 49,802 104,238 172,129 185,209
---------- ---------- ---------- ----------
Net earnings $ 71,639 $ 149,799 $ 234,621 $ 266,801
========== ========== ========== ==========
Basic net earnings per common share $ .10 $ .20 $ .32 $ .35
========== ========== ========== ==========
Diluted net earnings per common share $ .10 $ .19 $ .31 $ .34
========== ========== ========== ==========
Weighted average shares outstanding
-basic 715,520 758,731 725,608 759,509
========== ========== ========== ==========
Weighted average shares outstanding
-diluted 737,464 781,343 747,551 782,120
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed financial statements.
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COLONIAL TRUST COMPANY
Condensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Six-month period
Ended September 30,
-------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 234,621 $ 266,801
Adjustments to reconcile net earnings to
Net cash provided by Operating activities:
Depreciation and amortization 75,367 62,381
Decrease (increase) in receivables 101,995 (128,019)
Increase in other assets (52,309) (18,944)
Increase (decrease) in accounts payable and accrued liabilities 34,243 (101,594)
Decrease in income tax payable (46,301) (52,531)
--------- ---------
Net cash provided by operating activities 347,616 28,094
--------- ---------
Cash flows from investing activities:
Purchase of property, furniture and equipment (33,800) (83,074)
Additions to note receivable (410,743) --
Payments received on note receivable 325,000 249,536
Increase in restricted cash (15,028) (168,674)
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Net cash used in investing activities (134,571) (2,212)
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Cash flows from financing activities:
Purchase and retirement of common stock (142,057) (8,645)
--------- ---------
Net cash used in financing activities (142,057) (8,645)
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Increase in cash and cash equivalents 70,988 17,237
Cash and cash equivalents at beginning of period 9,260 175,256
--------- ---------
Cash and cash equivalents at end of period $ 80,248 $ 192,493
========= =========
</TABLE>
See accompanying notes to condensed financial statements.
5
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COLONIAL TRUST COMPANY
Notes to Condensed Financial Statements
1. Significant Accounting Policies
In the opinion of Colonial Trust Company (the "Company" or "Colonial"),
the accompanying unaudited condensed financial statements contain all
adjustments necessary to present fairly the financial position, the
results of operations and cash flows for the periods presented. The
accompanying condensed financial statements do not include all
disclosures considered necessary for a fair presentation in conformity
with generally accepted accounting principles. Therefore, it is
recommended that these accompanying statements be read in conjunction
with the financial statements appearing in the Company's Annual Report
on Form 10-KSB for the year ended March 31, 2000.
(a) Nature of Business
The Company was incorporated on August 15, 1989, in the State
of Arizona for the purpose of engaging in the business of
acting as a fiduciary. The Company's Common Stock is
registered under the Securities Exchange Act of 1934.
The Company serves as trustee under various bond indentures
for issuers of bonds in 39 states. The issuers are primarily
churches and other non-profit organizations. As trustee, the
Company receives, holds, invests and disburses the bond
proceeds as directed by the applicable trust indenture and
receives weekly or monthly sinking fund payments from the
issuer of bonds, and, as paying agent, pays the semi-annual
principal and interest payments to the bondholder.
The Company also serves as trustee of self-directed individual
retirement accounts for certain bondholders or employees of
religious organizations.
The Personal Trust segment provides investment management,
administration and custodial services for customers with
various securities held in trust or in investment agency
accounts.
(b) Revenue Recognition
Under the trust indentures with organizations issuing bonds,
Colonial, for its services, principally earns revenues based
on three fee structures. The first fee structure allows
Colonial to invest trust funds held for disbursement and
retain the gains and earnings therefrom. The second fee
structure requires the issuing institution to pay a percentage
of the bond proceeds to Colonial for set-up and printing costs
during the first year. The third fee structure entitles
Colonial to interest earnings up to 2.5% of daily trust funds
held in bond program fund accounts in lieu of a set-up fee.
Annual maintenance fees and bond printing costs are charged as
a percentage of the related bond issuance. Colonial also
receives fees for services provided as custodian for
self-directed individual retirement accounts.
In connection with providing investment management,
administration and custodial services, Colonial earns revenue
based on two fee structures. The first fee structure is
established as a percentage of the fiduciary assets that
Colonial holds as trustee or agent. Fees are assessed on a
monthly basis to individual accounts according to the prior
month end fair market value of each account. The second fee
structure relates to an annual minimum fee that is set up to
cover the maintenance of fiduciary assets which Colonial holds
in both trust and self-directed IRA accounts. Minimum fees are
assessed monthly, based on 1/12th of the published annual
minimum.
(c ) Computation of Basic and Diluted Net Earnings Per Common Share
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Basic EPS is computed based on weighted average shares
outstanding and excludes any potential dilution from stock
options, warrants and other common stock equivalents. Diluted
EPS reflects potential dilution from the exercise or
conversion of securities into common stock or from other
contracts to issue common stock.
2. Note receivable
On December 1, 1990, the Company entered into a Master Note and Letter
Agreement with Church Loans and Investment Trust, Inc., its former
parent corporation. The Master Note, in the maximum amount of
$1,000,000, is due on demand, bears interest payable monthly at 1% less
than the prime rate and is unsecured. Amounts advanced from time to
time may be prepaid and re-borrowed.
3. Earnings Per Share
A reconciliation from basic earnings per share to diluted earnings per
share for the three-month and six-month periods ended September 30,
2000, and September 30, 1999 follows:
<TABLE>
<CAPTION>
Three-month periods Six-month periods
Ended September 30, Ended September 30,
------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net earnings $ 71,639 $149,799 $234,621 $266,801
-------- -------- -------- --------
Basic EPS
-weighted average
shares outstanding 715,520 758,731 725,608 759,509
======== ======== ======== ========
Basic EPS $ .10 $ .20 $ .32 $ .35
======== ======== ======== ========
Basic EPS
-weighted average
shares outstanding 715,520 758,731 725,608 759,509
Effect of dilutive securities:
Stock options 21,944 22,612 21,943 22,611
-------- -------- -------- --------
Diluted EPS
-weighted average
shares outstanding 737,464 781,343 747,551 782,120
======== ======== ======== ========
Diluted EPS $ .10 $ .19 $ .31 $ .34
======== ======== ======== ========
</TABLE>
4. Business Segments
Operating results and other financial data are presented for the
principal business segments of the Company for the three-month and
six-month periods ended September 30, 2000 and September 30, 1999.
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The Company has two distinct business segments consisting of Corporate
Trust services and Personal Trust services.
In computing operating profit by business segment, portions of
administrative expenses and other items not considered direct operating expenses
were considered to be in the Other category.
<TABLE>
<CAPTION>
Corporate Personal
Trust Trust Other Total
----- ----- ----- -----
<S> <C> <C> <C> <C>
Three-month periods:
September 30, 2000
Bond Servicing Income $ 592,337 -- -- $ 592,337
IRA Servicing Fees 112,683 $ 61,071 -- 173,754
Trust Fee Income -- 256,082 -- 256,082
Interest Income -- -- $ 18,096 18,096
---------- ---------- ---------- ----------
$ 705,020 $ 317,153 $ 18,096 $1,040,269
---------- ---------- ---------- ----------
General & Administrative
Expenses $ 351,355 $ 215,947 $ 351,526 $ 918,828
---------- ---------- ---------- ----------
September 30, 1999
Bond Servicing Income $ 719,613 -- -- $ 719,613
IRA Servicing Fees 118,261 $ 39,413 -- 157,674
Trust Fee Income -- 135,165 -- 135,165
Interest Income -- -- $ 10,989 10,989
---------- ---------- ---------- ----------
$ 837,874 $ 174,578 $ 10,989 $1,023,441
---------- ---------- ---------- ----------
General & Administrative
Expenses $ 380,603 $ 137,109 $ 251,692 $ 769,404
---------- ---------- ---------- ----------
Six-month periods:
September 30, 2000
Bond Servicing Income $1,309,334 -- -- $1,309,334
IRA Servicing Fees 299,142 $ 149,574 -- 448,716
Trust Fee Income -- 395,051 -- 395,051
Interest Income -- -- $ 35,318 35,318
---------- ---------- ---------- ----------
$1,608,476 $ 544,625 $ 35,318 $2,188,419
---------- ---------- ---------- ----------
General & Administrative
Expenses $ 740,905 $ 390,359 $ 650,405 $1,781,669
---------- ---------- ---------- ----------
September 30, 1999
Bond Servicing Income $1,264,601 -- -- $1,264,601
IRA Servicing Fees 290,269 $ 90,337 -- 380,606
Trust Fee Income -- 247,135 -- 247,135
Interest Income -- -- $ 27,887 27,887
---------- ---------- ---------- ----------
$1,554,870 $ 337,472 $ 27,887 $1,920,229
---------- ---------- ---------- ----------
General & Administrative
Expenses $ 720,107 $ 282,558 $ 465,554 $1,468,219
---------- ---------- ---------- ----------
</TABLE>
8
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Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations Three-Month Periods Ended September 30, 2000 and
September 30, 1999
The Company had net earnings of $71,639, or $.10 per diluted share, for
the period ended September 30, 2000, compared to net earnings of
$149,799, or $.19 diluted earnings per share, for the period ended
September 30, 1999, a decrease in net earnings of 52%. The Company had
total revenue of $1,040,269 for the period ended September 30, 2000,
compared to total revenue of $1,023,441 for the prior year, an increase
of 2%.
The Corporate Trust segment's income decreased $132,854 to $705,020 for
the period ended September 30, 2000, compared to $837,874 for the
period ended September 30, 1999, a decrease of 16%. The Personal Trust
segment's income increased $142,575 to $317,153 for the period ended
September 30, 2000, compared to $174,578 for the period ended September
30, 1999, an increase of 82%.
The Corporate Trust segment's bond servicing income decreased $127,276
to $592,337 for the period ended September 30, 2000, compared to
$719,613 for the period ended September 30, 1999, a decrease of 18%.
The decrease in bond servicing income was primarily attributable to the
following factors. First, late fees decreased to approximately $50,000
for the three months ended September 30, 2000, compared to
approximately $150,000 in the comparable prior period, reflecting a
return of late fees as a percentage of total bond issuances to a level
more closely approximating the historical norm. Second, the Company's
income attributable to set-up fees on non-profit bond issuances
decreased by approximately $34,000 in the current quarter compared to
the comparable prior period, due primarily to a decrease in new
non-profit bond issuances for which the Company was serving as trustee
and paying agent in the current quarter compared to new non-profit bond
issuances originated in the comparable prior period. Printing fees in
the current quarter also decreased slightly compared to the prior
period due to the same decrease in the number of new non-profit bond
issuances originated in the current quarter compared to the comparable
prior period. The Company anticipates that revenues from the Corporate
Trust segment's non-profit bond servicing activities will continue to
be negatively impacted for at least the next fiscal quarter by overall
weakness in the market for non-profit bonds and by an anticipated
decrease in new non-profit issuances originated by broker/dealers with
whom the Company has a relationship compared to issuances in the
comparable prior period. The foregoing was offset in part by the
Company's receipt in the three months ended September 30, 2000 of
approximately $33,000 in municipal bond servicing fees, compared to no
revenues from such activities in the comparable prior quarter,
reflecting the expansion of the Company's Corporate Trust segment to
include the servicing of bonds issued by municipal as well as
non-profit issuers. The Company is presently unable to determine the
level of fees, if any, that it will be able to generate from servicing
of municipal bonds in the future. At September 30, 2000, the Company
was serving as trustee and paying agent on 456 non-profit bond
offerings totaling approximately $446,700,000 in original principal
amount; at September 30, 1999, the Company was serving as trustee and
paying agent on 448 non-profit bond offerings totaling approximately
$415,000,000 in original principal amount.
Revenue from the Corporate Trust segment's IRA Account servicing
activities decreased $5,578 to $112,683 for the period ended September
30, 2000, compared to $118,261 for the period ended September 30, 1999,
a decrease of 5%. This decrease was primarily attributable to a delay
in the timing of collection of certain annual maintenance fees in the
current quarter. Revenue from the Personal Trust segment's IRA Account
servicing activities increased $21,658 to $61,071 for the period ended
September 30, 2000, compared to $39,413 for the period ended September
30, 1999, an increase of 55%. The increase in Personal Trust IRA
revenue was primarily due to the increase in the aggregate value of IRA
Accounts serviced by the Company and an increase in the fee structure
effective July 1, 2000. At September 30, 2000, the Corporate Trust
segment was servicing 9,502 IRA Accounts with an aggregate value of
approximately $164,300,000 and the Personal Trust segment was servicing
214 IRA Accounts with an aggregate value of approximately $47,276,000.
At September 30, 1999, the Corporate Trust segment was servicing 8,361
IRA Accounts with an aggregate value of approximately $142,000,000, and
the Personal Trust segment was servicing 227 Accounts with an aggregate
value of approximately $40,000,000.
The Personal Trust segment's trust income increased $120,917 to
$256,082 for the period ended September 30, 2000, compared to $135,165
for the period ended September 30, 1999, an increase of 89%. The
increase in trust income was primarily due to the increase in the
number of trust investment accounts or other accounts serviced by the
Company. At September 30, 2000, the Personal Trust segment was serving
as trustee or agent for 430 trust, investment accounts,
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or other accounts with a fair market value of approximately
$92,415,000. At September 30, 1999, the Personal Trust segment was
serving as Trustee or agent for 278 trust, investment accounts, or
other accounts with a fair market value of approximately $68,000,000.
Interest income was $18,096 for the period ended September 30, 2000,
compared to $10,989 for the period ended September 30, 1999. This
increase was primarily attributable to monies held in the master trust
note, against which additional available working capital was advanced.
The Corporate Trust segment's general and administrative expenses
decreased in the aggregate $29,248 to $351,355 for the period ended
September 30, 2000, compared to $380,603 for the period ended September
30, 1999, but increased to 50% of segment revenues for the period ended
September 30, 2000, from 45% of segment revenues for the period ended
September 30, 1999. The Personal Trust segment's general and
administrative expenses increased in the aggregate $78,838 to $215,947
for the period ending September 30, 2000, compared to $137,109 for the
period ended September 30, 1999, but decreased to 68% of segment
revenues for the period ended September 30, 2000 from 79% of segment
revenues for the period ended September 30, 1999. The percentage
increase in the Corporate Trust segment's general and administrative
expenses was due primarily to an increase in personnel staffing to
administer the Company's anticipated increase in bond servicing
business and also because the Corporate Trust segment bond servicing
income was down in the period ending September 30, 2000 as explained
above. The increase in the Personal Trust segment's general and
administrative expenses was due primarily to an increase in personnel
as well as additional expenses involved in administering the Company's
increased trust servicing business.
The Company's effective income tax rate remained constant at 41.0% for
the three-month periods ended September 30, 2000 and September 30,
1999.
Results of Operations Six-Month Periods Ended September 30, 2000 and
September 30, 1999
The Company had net earnings of $234,621, or $.31 diluted earnings per
share, for the period ended September 30, 2000, compared to net
earnings or $266,801, or $.34 diluted earnings per share, for the
period ended September 30, 1999, a decrease in net earnings of 12%. The
Company had total revenue of $2,188,419 for the period ended September
30, 2000, compared to total revenue of $1,920,229 for the prior year,
an increase of 14%.
The Corporate Trust segment's income increased $53,606 to $1,608,476
for the period ended September 30, 2000, compared to $1,554,870 for the
period ended September 30, 1999, an increase of 3%. The Personal Trust
segment's income increased to $544,625 in the period ended September
30, 2000, compared to $337,472 for the period ended September 30, 1999,
an increase of 61 %.
The Corporate Trust segment's bond servicing income increased $44,733
to $1,309,334 for the period ended September 30, 2000, compared to
$1,264,601 for the period ended September 30, 1999, an increase of 4%.
The increase in bond servicing income was primarily attributable to the
increase in the number of bond accounts serviced by the Company but the
rate of growth was negatively impacted by a decrease in new issuances
originated in the current year compared to the comparable prior period.
Revenue from the Corporate Trust segment's IRA Account servicing
activities increased $8,873 to $299,142 for the period ended September
30, 2000, compared to $290,269 for the period ended September 30, 1999,
an increase of 3%. Revenue from the Personal Trust segment's IRA
Account servicing activities increased $59,237 to $149,574 for the
period ended September 30, 2000, compared to $90,337 for the period
ended September 30, 1999, an increase of 66%. The increase in IRA
revenue was primarily due to the increase in the aggregate value of IRA
Accounts serviced by the Company and an increase in the fee structure
effective July 1, 2000.
The Personal Trust segment's trust income increased $147,916 to
$395,051 for the period ended September 30, 2000, compared to $247,135
for the period ended September 30, 1999, an increase of 60%. The
increase in trust income was primarily due to the increase in the
number of trust investment accounts or other accounts serviced by the
Company.
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Interest income increased $7,431 to $35,318 for the period ended
September 30, 2000, compared to $27,887 for the period ended September
30, 1999, an increase of 27%. The increase was primarily attributable
to monies held in the master trust note, against which additional
available working capital was advanced.
The Corporate Trust segment's general and administrative expenses
increased in the aggregate $20,798 to $740,905 for the period ended
September 30, 2000, compared to $720,107 for the prior period, and
remained constant at 46% of segment revenues for the periods ended
September 30, 2000, and September 30, 1999. The Personal Trust
segment's general and administrative expenses increased in the
aggregate $107,801 to $390,359 for the period ended September 30, 2000,
compared to $282,558 for the period ended September 30, 1999, but
decreased to 72% of segment revenues for the period ended September 30,
2000 from 84% for the period ended September 30, 1999. The decrease in
the Personal Trust segment's general and administrative expenses, as a
percentage of segment revenues, was due primarily to an increase in
personal trust accounts, and associated revenues, more than offsetting
the increase in personnel and additional expenses involved in
administering the Company's increased trust servicing business.
The Company's effective income tax rate was 42.3% for the six-month
period ended September 30, 2000, and 41.0% for the six-month period
ended September 30, 1999.
Year 2000
As of the date hereof, the Company has not experienced any Year 2000
problems with its systems nor does the Company anticipate any problems.
However, there can be no guarantee that future system problems related
to Year 2000 will not have a material impact on the Company's
operations. The Company's third party vendors with which it has
relationships also did not experience any Year 2000 problems which
materially impacted the Company's operation. However, there can be no
guarantee that future problems with third party vendors' computer
systems related to Year 2000 will not have a material impact on the
Company's operations.
The Company's expenditures required to be Year 2000 compliant
(primarily a reallocation of current personnel's time from other
projects to the year 2000 remediation plan) were not material, and the
Company has expensed all costs associated with the Year 2000
remediation plan. However, there can be no assurance that the ultimate
cost to identify and implement solutions to future problems related to
Year 2000 will not be material to the Company. See the Company's Form
10-QSB for the period ended September 30, 1999 for a discussion of the
Company's Year 2000 remediation plan.
Liquidity and Capital Resources
Under legislation effective on July 20, 1996, the Company is required
to maintain net capital of at least $500,000; the Company's net capital
was $2,606,804 on September 30, 2000. The legislation also requires
that the Company's net capital meet certain liquidity requirements.
Specifically, $500,000 of such net capital must meet the Arizona
Banking Department's liquidity requirements. At September 30, 2000,
$517,584 of the Company's net capital met the Department's liquidity
requirements. The Company has satisfied these liquidity requirements
and believes that it will be able to maintain its compliance with these
liquidity requirements from cash on hand and other assets of the
Company. The Company also believes that it will be able to satisfy its
working capital and capital expenditure requirements for the
foreseeable future from existing cash balances, from anticipated cash
flow from operating activities, and from funds available under the
Company's Master Note with its former parent, Church Loans and
Investments Trust.
The Company's cash and cash equivalents increased from $9,260 on March
31, 2000, to $80,248 on September 30, 2000, while the note receivable
increased from $378,387 on March 31, 2000, to $464,130 on September 30,
2000. The increase in the cash and cash equivalents was primarily due
to improvement in the timing of collection of trust management fees.
The increase in the note receivable was primarily due to an additional
net advance of $75,000. The Company's net property and equipment
decreased from $843,095 on March 31, 2000, to $807,613 on September 30,
2000. The decrease was primarily due to depreciation of existing
property and equipment exceeding the purchase of additional furniture,
equipment and computer software for new employees. The Company believes
that capital expenditure requirements for the foreseeable future will
be covered by excess cash flow from operations.
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Market Risk
In the opinion of management, our market risk factors have not changed
materially from March 31, 2000.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995.
This Form 10-QSB contains one or more forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and is subject to the safe harbors created thereby.
These forward-looking statements involve risks and uncertainties,
including, but not limited to: the Company's continued employment of
key management; the success of the Company in its business development
efforts; the Company's success with the investment advisory agreement
with Hackett Investment Advisors ("HIA"), Feldman Securities Group LLP
(FSG) and Wright Investors' Services (WIS), pursuant to which HIA, FSG
and WIS provide investment advisory services for the majority of the
trust and investment agency accounts of the Company, and the success of
HIA, FSG and WIS in managing such accounts; increased competition for
the Company's services; competitive pressures on prices for the
Company's services; Year 2000 issues; increased staffing or office
needs not currently anticipated; new rules or regulations not currently
anticipated which adversely affect the Company; and an increase in
interest rates or other economic factors having an adverse impact on
the Company and other risks detailed from time to time in the Company's
Securities and Exchange Commission filings. The Company filed its
fiscal 2000 Form 10-KSB on June 28, 2000. Please refer to these
documents for a more detailed discussion of the risks and uncertainties
associated with the Company's future operations.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
None.
Item 2: Changes in Securities
None.
Item 3: Default Upon Senior Securities
None.
Item 4: Other Information
On August 21, 2000, Mr. Chris Olson, the Company's
former Chief Financial Officer, resigned from the
Company. On August 16, 2000, the Company hired Ian B.
Currie as its Controller and Treasurer. Mr. Currie
reports to Cecil Glover, who is the Company's current
Chief Operating Officer.
Item 5: Exhibits and Reports on Form 8-K:
(a) Exhibits: 27 Financial Data Schedule
(b) Reports on Form 8-K: None.
12
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
COLONIAL TRUST COMPANY
DATE: November 14, 2000 BY: /s/ John K. Johnson
----------------- -----------------------------
John K. Johnson
Its: President
DATE: November 14, 2000 BY: /s/ Ian B. Currie
----------------- --------------------
Ian B Currie
Its: Controller & Treasurer
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
