SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997 File number: 000-22054
COMMUNITY BANKSHARES, INC.
(Exact Name of Small Business Issuer in its Charter)
South Carolina 57-0966962
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification Number)
791 Broughton St., Orangeburg, South Carolina 29115
(Address of Principal Executive Office, Zip Code)
(803) 535-1060
(Issuer's telephone number)
Check whether the issuer (1) has filed all the reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 _.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 2,626,476 shares of common
stock outstanding as of July 31, 1997.
<PAGE>
10-QSB TABLE OF CONTENTS
Part I-Financial Statements Page
- --------------------------------------------------------------------------------
Item 1 Financial Statements .................................... 3
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 10
Part II-Other Information
- --------------------------------------------------------------------------------
Item 4 Submission of Matters to a Vote of Securities Holders ... 23
Item 6 Exhibits and Reports on Form 8-K ........................ 24
2
<PAGE>
COMMUNITY BANKSHARES, INC. - BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1997 December 31,
ASSETS UNAUDITED 1996
--------- ----
Cash and due from other financial institutions:
<S> <C> <C>
Non-interest bearing ....................................................... $ 5,831,000 $ 5,349,000
Federal funds sold ......................................................... 6,360,000 1,300,000
------------- -------------
Total cash and cash equivalents ........................................ 12,191,000 6,649,000
Interest bearing deposits in other banks ....................................... 1,607,000 431,000
Investment securities:
Securities held to maturity ................................................ 16,217,000 15,027,000
Securities available for sale .............................................. 13,354,000 10,761,000
Loans held for resale .......................................................... 48,000 295,000
Loans .......................................................................... 81,005,000 68,829,000
Less, allowance for loan losses ............................................ (1,014,000) (876,000)
------------- -------------
Net loans .............................................................. 79,991,000 67,953,000
------------- -------------
Premises and equipment ......................................................... 2,827,000 2,837,000
Accrued interest receivable ................................................... 1,044,000 855,000
Deferred income taxes .......................................................... 322,000 283,000
Other assets ................................................................... 266,000 370,000
------------- -------------
Total assets ........................................................... $ 127,867,000 $ 105,461,000
============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Deposits:
Non-interest bearing ....................................................... $ 14,999,000 $ 13,337,000
Interest bearing ........................................................... 92,583,000 76,514,000
------------- -------------
Total deposits ......................................................... 107,582,000 89,851,000
Federal funds purchased and securities
sold under agreements to repurchase ........................................ 6,138,000 1,744,000
Federal Home Loan Bank advances ................................................ 1,130,000 1,130,000
Other liabilities .............................................................. 612,000 632,000
------------- -------------
Total liabilities ...................................................... 115,462,000 93,357,000
------------- -------------
Shareholders' equity:
Common stock
No par, authorized shares 12,000,000, issued
and outstanding 2,626,476 in 1997 and 1996 ............................. 9,055,000 9,064,000
Retained earnings .......................................................... 3,390,000 3,040,000
Unrealized (loss) on securities available for sale ......................... (40,000) -
------------- -------------
Total shareholders' equity ............................................. 12,405,000 12,104,000
------------- -------------
Total liabilities and shareholders' equity ............................. $ 127,867,000 $ 105,461,000
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
3
<PAGE>
COMMUNITY BANKSHARES, INC. - STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
UNAUDITED UNAUDITED
--------- ---------
Interest and dividend income:
<S> <C> <C>
Interest and fees on loans ................................................. $ 3,546,000 $ 2,503,000
Deposits with other financial institutions ................................. 34,000 38,000
Investment securities:
Interest - U. S. Treasury and
U. S. Government Agencies .............................................. 791,000 762,000
Dividends ................................................................ 22,000 13,000
------------- -------------
Total investment securities ........................................... 813,000 775,000
------------- -------------
Federal funds sold and securities
purchased under agreements to resell ..................................... 94,000 48,000
------------- -------------
Total interest and dividend income .................................... 4,487,000 3,364,000
------------- -------------
Interest expense:
Deposits:
Certificates of deposit of $100,000 or more .............................. 373,000 392,000
Other .................................................................... 1,480,000 1,074,000
------------- -------------
Total deposits ........................................................ 1,853,000 1,466,000
Federal funds purchased and securities
sold under agreements to repurchase ...................................... 61,000 43,000
Federal Home Loan Bank advances ............................................ 37,000 38,000
------------- -------------
Total interest expense ................................................ 1,951,000 1,547,000
------------- -------------
Net interest income ............................................................ 2,536,000 1,817,000
Provision for loan losses ...................................................... 177,000 63,000
------------- -------------
Net interest income after provision for loan losses ............................ 2,359,000 1,754,000
------------- -------------
Non-interest income:
Service charges on deposit accounts ........................................ 253,000 172,000
Other ...................................................................... 110,000 63,000
------------- -------------
Total non-interest income ............................................. 363,000 235,000
------------- -------------
Non-interest expense:
Salaries and employee benefits ............................................. 1,133,000 806,000
Premises and equipment ..................................................... 249,000 155,000
Other ...................................................................... 543,000 350,000
------------- -------------
Total non-interest expense ............................................ 1,925,000 1,311,000
------------- -------------
Net income before taxes ........................................................ 797,000 678,000
Provision for income taxes ..................................................... 250,000 284,000
------------- -------------
Net income after taxes ......................................................... $ 547,000 $ 394,000
============= =============
Per common share:
Weighted average shares outstanding ........................................ 2,626,476 2,278,718
============= =============
Net income per common share ................................................ $ 0.21 $ 0.17
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
4
<PAGE>
COMMUNITY BANKSHARES, INC. - STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Quarter ended June 30,
1997 1996
UNAUDITED UNAUDITED
--------- ---------
Interest and dividend income:
<S> <C> <C>
Interest and fees on loans ................................................. $ 1,883,000 $ 1,277,000
Deposits with other financial institutions ................................. 23,000 10,000
Investment securities:
Interest - U. S. Treasury and
U. S. Government Agencies .............................................. 414,000 399,000
Dividends ................................................................ 10,000 7,000
------------- -------------
Total investment securities ........................................... 424,000 406,000
------------- -------------
Federal funds sold and securities
purchased under agreements to resell ..................................... 59,000 26,000
------------- -------------
Total interest and dividend income .................................... 2,389,000 1,719,000
------------- -------------
Interest expense:
Deposits:
Certificates of deposit of $100,000 or more .............................. 195,000 215,000
Other .................................................................... 781,000 515,000
------------- -------------
Total deposits ........................................................ 976,000 730,000
Federal funds purchased and securities
sold under agreements to repurchase ...................................... 42,000 22,000
Federal Home Loan Bank advances ............................................ 19,000 20,000
------------- -------------
Total interest expense ................................................ 1,037,000 772,000
------------- -------------
Net interest income ............................................................ 1,352,000 947,000
Provision for loan losses ...................................................... 93,000 33,000
------------- -------------
Net interest income after provision for loan losses ............................ 1,259,000 914,000
------------- -------------
Non-interest income:
Service charges on deposit accounts ........................................ 130,000 91,000
Other ...................................................................... 60,000 37,000
------------- -------------
Total non-interest income ............................................. 190,000 128,000
------------- -------------
Non-interest expense:
Salaries and employee benefits ............................................. 576,000 428,000
Premises and equipment ..................................................... 127,000 86,000
Other ...................................................................... 302,000 186,000
------------- -------------
Total non-interest expense ............................................ 1,005,000 700,000
------------- -------------
Net income before taxes ........................................................ 444,000 342,000
Provision for income taxes ..................................................... 130,000 166,000
------------- -------------
Net income after taxes ......................................................... $ 314,000 $ 176,000
============= =============
Per common share:
Weighted average shares outstanding ........................................ 2,626,476 2,278,718
============= =============
Net income per common share ................................................ $ 0.12 $ 0.08
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
5
<PAGE>
COMMUNITY BANKSHARES, INC. - STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Six months ended June 30,
UNAUDITED
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income ..................................................................... $ 547,000 $ 394,000
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation ........................................................... 151,000 76,000
Provision for loan losses .............................................. 177,000 63,000
Accretion of discounts and amortization of premiums -
investment securities - net .......................................... (51,000) (12,000)
Changes in assets and liabilities:
(Increase) in interest receivable ...................................... (189,000) (130,000)
(Increase) decrease in other assets .................................... 29,000 (300,000)
Decrease in other liabilities .......................................... (20,000) (21,000)
------------- -------------
Net cash provided by operating activities ...................................... 644,000 70,000
------------- -------------
Cash flows from investing activities:
Proceeds from maturities and sales of
investment securities - held to maturity ............................. 3,267,000 4,814,000
Purchases of investment securities - held to maturity .................. (4,446,000) (5,724,000)
Proceeds from maturities and sales of
investment securities - available for sale ........................... 2,165,000 1,922,000
Purchases of investment securities - available for sale ................ (4,758,000) (3,180,000)
Net increase in interest bearing deposits .............................. (1,176,000) (9,000)
Net increase in loans to customers ..................................... (11,968,000) (3,553,000)
Purchase of premises and equipment ..................................... (105,000) (894,000)
Net (increase) in other real estate .................................... - (11,000)
------------- -------------
Net cash (used) in investing activities .............................. (17,021,000) (6,635,000)
------------- -------------
Cash flows from financing activities:
Net increase in demand, savings, & time deposits ....................... 17,731,000 6,673,000
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase .................. 4,394,000 (663,000)
Sale of common stock ................................................... - 4,402,000
Cost of stock sale & dividend reinvestment program ..................... (9,000) (44,000)
Proceeds of FHLB advances .............................................. - 500,000
Dividends paid............................................................ (197,000) (121,000)
Notes payable .......................................................... - (240,000)
------------- -------------
Net cash provided by financing activities ............................ 21,919,000 10,507,000
------------- -------------
Net increase in cash and due from other
financial institutions ................................................. 5,542,000 3,942,000
Cash and due from other financial institutions -
beginning of period .................................................... 6,649,000 4,535,000
------------- -------------
Cash and due from other financial institutions -
end of period .......................................................... $ 12,191,000 $ 8,477,000
============= =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
6
<PAGE>
Summary of Significant Accounting Principles
A summary of significant accounting policies is included in the 1996 Annual
Report of Community Bankshares, Inc. to the Shareholders, which also contains
the Company's audited financial statements for 1996.
Principles of Consolidation
The consolidated financial statements include the accounts of Community
Bankshares, Inc. (CBI), the parent company, and Orangeburg National Bank and
Sumter National Bank, its wholly owned subsidiaries. All significant
intercompany items have been eliminated in the consolidated statements.
Management Opinion
The financial statements in this report are unaudited. In the opinion of
management, all the adjustments necessary to present a fair statement of the
results for the interim period have been made. Such adjustments are of a normal
and recurring nature.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for an entire year. These interim
financial statements should be read in conjunction with the annual financial
statements and notes thereto contained in the 1996 Annual Report.
7
<PAGE>
COMMUNITY BANKSHARES, INC. - AVERAGE BALANCE SHEETS, YIELDS AND RATES
<TABLE>
<CAPTION>
........................................... .........................................
Six months ended June 30, 1997 1996
........................................... .........................................
Interest Interest
Average Income/ Yields/ Average Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates
------- ------- ----- ------- ------- -----
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest bearing deposits ............ $ 1,171 $ 34 5.81% $ 1,510 $ 38 5.03%
Investment securities taxable ........ 25,989 804 6.19% 26,227 766 5.84%
Investment securities--tax exempt .... 412 9 6.62% 417 9 6.54%
Federal funds sold ................... 3,578 94 5.25% 1,915 48 5.01%
Loans, net of unearned income ........ 75,329 3,546 9.41% 53,629 2,503 9.33%
-------- ------ ---- ------- ------ ----
Total interest earning assets ........ 106,479 4,487 8.43% 83,698 3,364 8.04%
Cash and due from banks .............. 4,810 3,321
Allowance for loan losses ............ (942) (721)
Premises and equipment ............... 2,837 1,943
Other assets ......................... 1,447 1,170
-------- -------
Total assets ............................. $114,631 $89,411
======== =======
Liabilities and Shareholders' Equity
Interest bearing deposits
Savings .............................. $ 18,651 $ 313 3.36% $13,353 $ 168 2.52%
Interest bearing transaction accounts 11,244 105 1.87% 7,976 80 2.01%
Time deposits ........................ 53,675 1,435 5.35% 44,657 1,200 5.37%
-------- ------ ---- ------- ------ ----
Total interest bearing deposits ...... 83,570 1,853 4.43% 65,986 1,448 4.39%
Short term borrowing ................. 3,142 61 3.88% 2,103 43 4.09%
FHLB advances ........................ 1,123 37 6.59% 1,152 38 6.60%
-------- ------ ----- ------- ------ ----
Total interest bearing liabilities ... 87,835 1,951 4.44% 69,241 1,529 4.42%
Noninterest bearing demand deposits .. 13,913 9,629
Other liabilities .................... 757 553
Shareholders' equity ................. 12,126 9,988
-------- -------
Total liabilities and shareholders' equity $114,631 $89,411
======== =======
Interest rate spread ................. 3.99% 3.62%
Net interest income and net
yield on earning assets ........... $2,536 4.76% $1,835 4.38%
====== ==== ====== ====
</TABLE>
8
<PAGE>
COMMUNITY BANKSHARES, INC. - AVERAGE BALANCE SHEETS, YIELDS AND RATES
<TABLE>
<CAPTION>
.......................................... ..........................................
Quarter ended June 30, 1997 1996
.......................................... ..........................................
Interest Interest
Average Income/ Yields/ Average Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates
------- ------- ----- ------- ------- -----
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest bearing deposits .............. $ 1,594 $ 23 5.77% $ 765 $ 10 5.23%
Investment securities taxable .......... 27,024 420 6.22% 27,130 401 5.91%
Investment securities--tax exempt ...... 411 4 5.90% 420 5 7.22%
Federal funds sold ..................... 4,368 59 5.40% 2,023 26 5.14%
Loans, net of unearned income .......... 78,443 1,883 9.60% 54,878 1,277 9.31%
-------- ------ ---- ------- ----- ----
Total interest earning assets .......... 111,840 2,389 8.54% 85,216 1,719 8.07%
Cash and due from banks ................ 5,141 3,432
Allowance for loan losses .............. (980) (730)
Premises and equipment ................. 2,831 2,201
Other assets ........................... 1,589 1,269
-------- -------
Total assets ............................... $120,421 $91,388
======== =======
Liabilities and Shareholders' Equity
Interest bearing deposits
Savings ................................ $ 19,886 $ 172 3.46% $13,783 $ 86 2.50%
Interest bearing transaction accounts .. 11,765 55 1.87% 8,336 41 1.97%
Time deposits .......................... 55,532 748 5.39% 44,321 603 5.44%
-------- ------ ---- ------- ---- ----
Total interest bearing deposits ........ 87,183 975 4.47% 66,440 730 4.39%
Short term borrowing ................... 4,256 43 4.04% 2,268 22 3.88%
FHLB advances .......................... 1,130 19 6.73% 1,200 20 6.67%
-------- ------ ---- ------- ---- ----
Total interest bearing liabilities ..... 92,569 1,037 4.48% 69,908 772 4.42%
Noninterest bearing demand deposits .... 14,887 9,712
Other liabilities ...................... 743 570
Shareholders' equity ................... 12,222 11,198
-------- -------
Total liabilities and shareholders' equity . $120,421 $91,388
======== =======
Interest rate spread ................... 4.06% 3.65%
Net interest income and net yield
on earning assets .................... $1,352 4.84% $947 4.45%
====== ==== ==== ====
</TABLE>
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby identified as `forward looking statements'
for purposes of the safe harbor provided by Section 21E of the Securities
Exchange Act of 1934, as amended. The Corporation cautions readers that forward
looking statements, including without limitation, those relating to the
Corporation's future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income, are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward looking statements, due to several important factors
herein identified, among others, and other risks and factors identified from
time to time in the Corporation's reports filed with the Securities and Exchange
Commission.
Stock Split
The Corporation effected a two-for-one stock split of its common
shares at July 21, 1997. This increased the number of shares outstanding from
1,313,238 to 2,626,476. All information contained within Management's Discussion
and Analysis has been retroactively adjusted to reflect the split.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Net Income
For the six months ended June 30, 1997, CBI earned a consolidated
profit of $547,000, compared to $394,000 for the comparable period of 1996, an
increase of 38.8% or $153,000. Earnings per share were $.21 in the 1997 period,
compared to $.17 for the 1996 period, an increase of 23.5%.
For the six months ended June 30, 1997, Orangeburg National Bank
reported a profit of $673,000, compared to $530,000 for the comparable period of
1996, an increase of 27% or $143,000.
For the six months ended June 30, 1997, Sumter National Bank reported
an after tax loss of $144,000, compared to $54,000 for the comparable period of
1996, an increase of 167% or $90,000. However, the 1997 amount represents six
full months of operation, whereas the 1996 amount represents only twenty days of
operation.
As noted above, consolidated net income for the six months ended June
30, 1997, increased from the prior year by 38.8% or $153,000. The major
components of this increase are discussed below. Net interest income before
provision for loan losses for the six months ended June 30, 1997, increased to
$2,536,000, compared to $1,817,000 for the same period in 1996, an increase of
39.6% or $719,000. For the 1997 period, the provision for loan losses was
$177,000, compared to $63,000 for the 1996 period, an increase of 180.9% or
$114,000. Non-interest income for the 1997 period increased to $363,000 from
$235,000 for the 1996 period, a 54.5% or $128,000 increase. Non-interest expense
increased to $1,925,000 from $1,311,000, a 46.8% or $614,000 increase. Results
for the first six months of 1997 include results of operations for Sumter
National Bank, which was in operation for only twenty days during the first six
months of 1996. Accordingly, many of the dollar and percentage comparisons and
changes between periods discussed in this report are unusually large.
10
<PAGE>
Profitability
One of the best ways to review earnings is through the ROA (return on
average assets) and the ROE (return on average equity). Return on assets is the
income for the period divided by the average assets for the period, annualized.
Return on equity is the income for the period divided by the average equity for
the period, annualized. Based on operating results for the six months ended June
30, 1997 and 1996, the following table is presented.
Six months ended June 30,
1997 1996
---- ----
(dollars in thousands)
Average assets ....................... $114,631 $89,411
ROA .................................. 0.95% 0.88%
Average equity ....................... $ 12,126 $ 9,988
ROE .................................. 9.02% 7.89%
Net income ........................... $ 547 $ 394
Average equity and average assets were substantially greater in 1997
than they were in 1996 primarily as the result of the sale of stock to
capitalize the Sumter bank and the deposit taking activities of the Sumter bank,
respectively.
Net interest income
Net interest income, the major component of CBI's income, is the
amount by which interest and fees on interest earning assets exceed the interest
paid on interest bearing deposits and other interest bearing funds. During the
first six months of 1997, net interest income after provision for loan losses
increased to $2,536,000 from $1,817,000, a 39.6% or $719,000 increase over the
comparable period of 1996. This improvement was the result of an increase in the
volume of earning assets at both banks, but was mostly associated with the
operation of the new bank in Sumter, which had net interest income for the first
six months of 1997 of $425,000 or 59% of the total increase.
Interest Income
Elsewhere in this report is a table comparing the average balances,
yields, and rates for the interest rate sensitive segments of the company's
balance sheet for the period ended June 30, 1997 and 1996. A discussion of that
table follows.
Total interest income for the six months ended June 30, 1997, was
$4,487,000 compared with $3,364,000 for the same period in 1996, a 33.4% or
$1,123,000 increase. The yield on earning assets for the 1997 period was 8.43%,
up from 8.04% for the 1996 period. Total average interest earning assets for the
six months ended June 30, 1997, were $106,479,000, up from $83,698,000 for the
same period in 1996, an increase of 27.2% or $22,781,000. The Sumter bank had
average earning assets of $15,937,000, which represents 70% of the increase in
assets over the prior year.
The loan portfolio earned $3,546,000 for the six months ended June 30,
1997, up from $2,503,000 for the same period of 1996, a 41.7% or $1,043,000
increase. The 1997 yield increased to 9.41% from 9.33% for the 1996 period. The
increase in yield is partly due to an increase in the prime lending rate in late
March 1997, to 8.50% from 8.25%. The average size of the loan portfolio was
$75,329,000 for the 1997 period, up from $53,629,000 for the same period of
1996, an increase of 40.4% or $21,700,000. Of that increase, $13,495,000 or 62%
was in the Sumter National Bank loan portfolio.
The taxable investment portfolio earned $804,000 for the six months
ended June 30, 1997, up from $766,000 for the 1996 period, a 4.9% or $38,000
increase. The yield increased to 6.19% in the 1997 period from 5.84% in the 1996
period. The average size of the portfolio declined to $25,989,000 in the 1997
period from $26,227,000 in the 1996 period, a decrease of 1.9% or $238,000. The
investment portfolio for Sumter National Bank averaged $1,455,000, 5.6% of the
consolidated total.
11
<PAGE>
The tax exempt investment portfolio continues to be a relatively small
part of the portfolio, it earned $9,000 for the six months ended June 30, 1997,
unchanged from the prior year. The yield on the portfolio was 6.62% (on a fully
taxable equivalent basis), slightly up from the prior year's 6.54%. The average
size of the portfolio decreased to $412,000 for the 1997 period from $417,000 in
the 1996 period, a decrease of 1.2% or $5,000. The entire tax exempt portfolio
is owned by Orangeburg National Bank.
Interest bearing deposits in other banks contributed $34,000 for the
six months ended June 30, 1997, compared to $38,000 during the prior year, a
decrease of 10.5% or $4,000. The yield on these deposits increased to 5.81% for
the 1997 period from 5.03% in the 1996 period. CBI averaged $1,171,000 in
interest bearing balances in the 1997 period compared to $1,510,000 in the 1996
period, a decrease of 22.4% or $339,000.
Federal funds sold earned $94,000 for the six months ended June 30,
1997, compared to $48,000 the prior year, an increase of 95.8% or $46,000.
Yields increased to 5.25% for the period ended June 30, 1997, from 5.01% for the
1996 period. For the 1997 period, CBI increased its average volume in federal
funds sold to $3,578,000 from $1,915,000 for the 1996 period, a 86.8% or
$1,663,000 increase. Sumter National Bank averaged $987,000 in federal funds
sold during 1997 period.
Interest expense
Interest expense increased for the six months ended June 30, 1997, to
$1,951,000 from the prior year's $1,529,000, a 27.6% or $422,000 increase. The
volume of interest bearing liabilities increased to $87,835,000 for the period
ended June 30, 1997, from $69,241,000 for the 1996 period, a 26.9% or
$18,594,000 increase. Sumter National Bank averaged $12,310,000 in interest
bearing liabilities during the 1997 period, which represented 66% of the total
increase. The average rate CBI paid for interest bearing liabilities during the
1997 period was 4.44%, slightly up from 4.42% for the 1996 period.
The cost of savings accounts increased to $313,000 for the six months
ended June 30, 1997 from $168,000 in the 1996 period, an 86.3% or $145,000
increase. Average savings deposit balances increased to $18,651,000 for the
period ended June 30, 1997, from $13,353,000 for the 1996 period, an increase of
39.7% or $5,298,000. Sumter National Bank averaged $3,501,000 in such balances
during the 1997 period, which represented 66% of the total increase. The average
rate paid on these funds increased to 3.36% from 2.52%.
Interest bearing transaction accounts cost $105,000 for the six months
ended June 30, 1997, up from the prior year's $80,000, an increase of 31.2% or
$25,000. The volume of these deposits increased to $11,244,000 for the period
ended June 30, 1997, from $7,976,000 for the 1996 period, a 40.9% or $3,268,000
increase. Sumter National Bank averaged $2,183,000 in such balances during the
1997 period, which represented 66.7% of the total increase. The average rate
paid on these funds for the period ended June 30, 1997, decreased to 1.87% from
2.01% for the 1996 period.
Time deposits cost $1,435,000 for the six months ended June 30, 1997,
up from $1,200,000 in the 1996 period, an increase of 19.6% or $235,000. The
volume increased to $53,675,000 for the period ended June 30, 1997, from
$44,657,000 for the 1996 period, a 20.2% or $9,018,000 increase. Sumter National
Bank averaged $6,586,000 in such balances during the 1997 period, which
represented 73% of the total increase. The average rate paid on these funds
decreased slightly to 5.35% for the period ended June 30, 1997, from 5.37% for
the 1996 period.
Short term borrowing consists of federal funds purchased and
securities sold under agreements to repurchase. This is a relatively small and
volatile part of the balance sheet. It cost $61,000 for the six months ended
June 30, 1997, up from $43,000 for the 1996 period, a 41.9% or $18,000 increase.
The volume of these funds increased to $3,142,000 in the 1997 period from
$2,103,000 in the 1996 period, an increase of 49.4% or $1,039,000. Virtually all
these balances were attributable to Orangeburg National Bank. The average rate
paid on these funds decreased to 3.88% from 4.09%.
Borrowings from the Federal Home Loan Bank cost $37,000 for the six
months ended June 30, 1997, compared to $38,000 for the 1996 period, a 2.7% or
$1,000 decline. The advances averaged $1,123,000 during the 1997 period,
compared to $1,152,000 for the prior year period, a 2.5% or $29,000 decrease.
All these balances were attributable to Orangeburg National Bank. The average
rate paid on these funds decreased to 6.59% from 6.60%.
12
<PAGE>
Non-Interest Income
Non-interest income for the six months ended June 30, 1997 grew to
$363,000 from $235,000 in the 1996 period, a 54.4% or $128,0000 increase. This
increase was mostly the result of the operation of the new Sumter bank which
reported $85,000 or 66% of the total increase in non-interest income for the
1997 period. Most of the remainder of the increase was attributable to increased
credit life and accident and health insurance sales in the Orangeburg bank.
Results for the six months ended June 30, 1997 include results of
operations for Sumter National Bank for the entire period, however, the Sumter
bank was in operation for only twenty days during the same period of 1996.
Accordingly, many of the dollar and percentage comparisons and changes between
periods discussed in the non-interest income and non -interest expense sections
are unusually large.
Non-Interest Expense
For the six months ended June 30, 1997 non-interest expenses increased
to $1,925,000 from $1,311,000 for the 1996 period, a 46.8% or $614,000 increase.
Approximately $502,000 (81.7%) of this increase is related to the operation of
Sumter National Bank.
For the six months ended June 30, 1997 personnel costs were $1,133,000
compared to $806,000 for the 1996 period, a 40.6% or $327,000 increase.
Approximately $309,000 (94%) of this increase is related to the operation of
Sumter National Bank. The new bank has 16 full time equivalent employees.
Premises and equipment expense for the 1997 period were $249,000
compared to $155,000 for the 1996 period, an increase of 60.6% or $94,000.
Approximately $72,000 (76.6%) of this increase is related to the operation of
Sumter National Bank.
Other costs for the 1997 period were $543,000 compared to $350,000 for
the 1996 period, an increase of 55.1% or $193,000. Approximately $121,000
(62.6%) of this increase is related to the operation of Sumter National Bank.
Income Taxes
CBI provided $250,000 for federal and state income taxes during the
six months ended June 30, 1997, compared to $284,000 for the same period in
1996, a 11.9% or $34,000 decrease.
13
<PAGE>
RESULTS OF OPERATIONS FOR THE QUARTERS ENDED JUNE 30, 1997 AND 1996
Net Income
For the quarter ended June 30, 1997, CBI earned a consolidated profit
of $314,000, compared to $176,000 for the comparable period of 1996, an increase
of 78.4% or $138,000. Earnings per share were $.12 in the 1997 period, compared
to $.08 for the 1996 period, an increase of 50%.
As noted above, consolidated net income for the quarter ended June 30,
1997, increased from the prior year by 78.4% or $138,000. The major components
of this increase are discussed below. Net interest income before provision for
loan losses for the quarter ended June 30, 1997, increased to $1,352,000,
compared to $947,000 for the same period in 1996, an increase of 42.7% or
$405,000. For the same period, the provision for loan losses was $93,000,
compared to $33,000 for the 1996 period, an increase of 181.8% or $60,000.
Non-interest income for the 1997 period increased to $190,000 from $128,000 for
the 1996 period, a 48.4% or $62,000 increase. Non-interest expense increased to
$1,005,000 from $700,000, a 43.6% or $305,000 increase. Results for the second
quarter of 1997 include results of operation for Sumter National Bank for the
entire quarter, however, the Sumter bank was in operation for only twenty days
during the second quarter of 1996. Accordingly, many of the dollar and
percentage comparisons and changes between quarters discussed in this report are
unusually large.
Profitability
The ROA and ROE for the quarters ended June 30, 1997 and 1996 are set
forth below:
Quarter ended June 30,
1997 1996
---- ----
(dollars in thousands)
Average assets ........................... $120,421 $91,388
ROA ...................................... 1.04% 0.77%
Average equity ........................... $ 12,222 $11,198
ROE ...................................... 10.28% 6.29%
Net income ............................... $ 314 $ 176
Average equity and average assets were substantially greater in the
1997 quarter than they were in the 1996 quarter as the result of the sale of
stock to capitalize the Sumter bank and the deposit taking activities of the
Sumter bank, respectively.
Net interest income
Net interest income, the major component of CBI's income, is the
amount by which interest and fees on interest earning assets exceeds the
interest paid on interest bearing deposits and other interest bearing funds.
During the quarter ended June 30, 1997, net interest income after provision for
loan losses increased to $1,259,000 from $914,000, a 37.7% or $345,000 increase
over the comparable period of 1996. This improvement was the result of an
increase in the volume of earning assets at both banks, but mostly associated
with the operation of the new bank in Sumter, which had net interest income for
the second quarter of 1997 of $253,000 or 73.3% of the total increase.
14
<PAGE>
Interest Income
Elsewhere in this report is a table comparing the average balances,
yields, and rates for the interest rate sensitive segments of the company's
balance sheet for the quarters ended June 30, 1997 and 1996. A discussion of
that table follows.
Total interest income for the second quarter 1997 was $2,389,000
compared with $1,719,000 for the same period in 1996, a 39% or $670,000
increase. The yield on earning assets for the 1997 period was 8.54%, up from
8.07% for the 1996 period. Total average interest earning assets for the quarter
ended June 30, 1997, were $111,840,000, up from $85,216,000 for the quarter
ended June 30, 1996, an increase of 31.2% or $26,624,000. The Sumter bank had
average earnings assets of $18,300,000, which represents 68.7% of the increase
in assets over the prior year.
The loan portfolio earned $1,883,000 for the second quarter in 1997,
up from $1,277,000 for the same period of 1996, a 47.5% or $606,000 increase.
The second quarter 1997 yield increased to 9.60% from 9.31% for the second
quarter in 1996. This increase in yield was partly related to the prime lending
rate increase in late March 1997, to 8.50% from 8.25%. The average size of the
loan portfolio was $78,443,000 for the 1997 quarter, up from $54,878,000 for the
same period of 1996, an increase of 42.9% or $23,565,000.
The investment portfolio earned $420,000 for the second quarter in
1997, up from $401,000 for the 1996 period, a 4.7% or $19,000 increase. The
yield increased to 6.22% in the 1997 quarter from 5.91% in the 1996 quarter. The
average size of the portfolio declined to $27,024,000 in the 1997 quarter from
$27,130,000 in the 1996 quarter, a decrease of .4% or $6,000. The investment
portfolio for Sumter National Bank averaged $1,240,000, about 6% of the
consolidated total.
The tax exempt investment portfolio earned $4,000 for the second
quarter in 1997, slightly down from the 1996 period. The yield on the portfolio
was 5.90% (fully taxable equivalent basis), a decrease from 7.22% the prior
year. The average size of the portfolio decreased to $411,000 for the 1997
period from $420,000 in the 1996 period, a decrease of 2.1% or $19,000. The
entire tax exempt portfolio is owned by Orangeburg National Bank.
Interest bearing deposits in other banks contributed $23,000 for the
second quarter 1997, compared to $10,000 during the prior year, an increase of
130% or $13,000. The yield on these deposits increased to 5.77% for the 1997
period from 5.23% in the 1996 period. CBI averaged $1,594,000 in interest
bearing balances in the second quarter 1997 compared to $765,000 the second
quarter of the prior year, an increase of 108% or $829,000.
All the interest bearing balances in 1997 were owned by Orangeburg National
Bank.
Federal funds sold earned $59,000 the second quarter of 1997 compared
to $26,000 the prior year, an increase of 127% or $33,000. Yields increased to
5.40% for the second quarter in 1997 from 5.14% for the second quarter in 1996.
For the second quarter of 1997, CBI increased its average volume in federal
funds sold to $4,368,000 from $2,023,000 for the second quarter of 1996, a 116%
or $2,345,000 increase. Sumter National Bank averaged $893,000 in federal funds
sold during the second quarter, about 38% of the increase. Most of the increase
was due to the Orangeburg bank obtaining the local municipally owned utility as
a customer, beginning in April 1997. The utility rotates its banking
relationship every six months as a matter of policy.
15
<PAGE>
Interest expense
Interest expense increased for the second quarter of 1997 to
$1,037,000 from the prior year's $772,000, a 34.3% or $265,000 increase. The
volume of interest bearing liabilities increased to $92,569,000 for the second
quarter in 1997 from $69,908,000 for the second quarter of 1996, a 32.4% or
$22,661,000 increase. Sumter National Bank averaged $14,248,000 in interest
bearing liabilities during the second quarter, which represented 62.8% of the
total increase. The average rate CBI paid for interest bearing liabilities
during the 1997 quarter was 4.48%, up from 4.42% for the 1996 period.
The cost of savings accounts increased to $172,000 in the second
quarter in 1997 from $86,000 in the second quarter of 1996, a 100% or $86,000
increase. Average savings deposit balances increased to $19,886,000 for the
second quarter in 1997 from $13,783,000 for the second quarter of 1996, an
increase of 44.3% or $6,103,000. Sumter National Bank averaged $4,044,000 in
such balances during the second quarter, which represented 66.3% of the total
increase. The average rate paid on these funds increased to 3.46% from 2.50%.
Interest bearing transaction accounts cost $55,000 for the second
quarter in 1997, up from the second quarter of the prior year's $41,000, an
increase of 34.1% or $14,000. The volume of these deposits increased to
$11,765,000 for the second quarter in 1997 from $8,336,000 for the second
quarter of 1996, a 41.1% or $3,429,000 increase. Sumter National Bank averaged
$2,620,000 in such balances during the second quarter, which represented 76% of
the total increase. The average rate paid on these funds for the second quarter
in 1997 decreased to 1.87% from 1.97% for the second quarter of 1996.
Time deposits cost $748,000 for the second quarter of 1997, up from
$603,000 in the second quarter of the prior year, an increase of 24% or
$145,000. The volume increased to $55,532,000 for the second quarter in 1997
from $44,321,000 for the second quarter of 1996, a 25.3% or $11,211,000
increase. Sumter National Bank averaged $7,504,000 in such balances during the
second quarter, which represented 66.9% of the total increase. The average rate
paid on these funds decreased to 5.39% for the second quarter in 1997 from 5.44%
for the second quarter in 1996.
Short term borrowing consists of federal funds purchased and
securities sold under agreements to repurchase. This is a relatively small and
volatile part of the balance sheet. It cost $43,000 for the second quarter in
1997 up from $22,000 for the second quarter of 1996, a 95.5% or $21,000
increase. The volume of these funds increased to $4,256,000 in the second
quarter in 1997 from $2,268,000 in the second quarter of 1996, an increase of
87.6% or $1,988,000. Virtually all these balances were attributable to
Orangeburg National Bank. The relatively large size of this increase is mostly
due to securities sold under agreements to repurchase involving the municipally
owned utility company discussed in the earlier federal funds sold paragraph. The
average rate paid on these funds increased to 4.04% from 3.88%.
Borrowings from the Federal Home Loan Bank cost $19,000 for the second
quarter in 1997, down from $20,000 for the 1996 period, a decrease of 5% or
$1,000. The advances averaged $1,130,000 during the 1997 quarter, compared to
$1,200,000 for the prior year period, a 5.8% or $70,000 decrease. All these
balances were attributable to Orangeburg National Bank. The average rate paid on
these funds increased to 6.73% from 6.67%.
Non-Interest Income
Non-interest income for the second quarter 1997 grew to $190,000 from
$128,000 in the second quarter of 1996, a 48.4% or $62,0000 increase. This
increase was mostly the result of the operation of the new Sumter bank. The
remainder of the total increase was attributable to increases in the credit life
and accident and health insurance volume in Orangeburg.
Results for the second quarter of 1997 include results of operation
for Sumter National Bank for the entire quarter, however, the Sumter bank was in
operation for only twenty days during the second of 1996. Accordingly, many of
the dollar and percentage comparisons and changes between quarters discussed in
the non-interest income and non-interest expense sections are unusually large.
16
<PAGE>
Non-Interest Expense
For the second quarter of 1997 non-interest expenses increased to
$1,005,000 from $700,000 for the second quarter of 1996, a 43.5% or $305,000
increase. Approximately $247,000 (80.9%) of this increase is related to the
operation of Sumter National Bank.
For the three months ended June 30, 1997, personnel costs were
$576,000 compared to $428,000 for the second quarter of 1996, a 34.5% or
$148,000 increase. Approximately 100% of this increase is related to the
operation of Sumter National Bank. The new bank has 16 full time equivalent
employees.
Premises and equipment expense for the 1997 period were $127,000
compared to $86,000 for the 1996 period, an increase of 47.6% or $41,000.
Approximately $38,000 (92.6%) of this increase is related to the operation of
Sumter National Bank.
Other costs for the second quarter 1997 were $302,000 compared to
$186,000 for the second quarter of 1996, an increase of 62.4% or $116,000.
Approximately $62,000 (53.4%) of this increase is related to the operation of
Sumter National Bank.
Income Taxes
CBI provided $130,000 for federal and state income taxes during the
second quarter of 1997, compared to $166,000 for the same period in 1996, a
21.7% or $36,000 decrease.
CHANGES IN FINANCIAL POSITION
Investment portfolio
The investment portfolio is comprised of a held to maturity and an
available for sale portion. CBI and its two banks usually purchase short term
issues of U. S Treasury and U. S. Government agency securities for investment
purposes. At June 30, 1997, the held to maturity portfolio totaled $16,217,000
compared to $15,027,000 at December 31, 1996, an increase of 7.9% or $1,190,000.
At June 30, 1997, the available for sale portfolio totaled $13,354,000 compared
to $10,761,000 at December 31, 1996, an increase of 24.6% or $2,593,000. The
following chart summarizes the investment portfolios at June 30, 1997, and
December 31, 1996.
<TABLE>
<CAPTION>
June 30, 1997
-------------------------------------------------------------------------------------
Held to maturity Available for sale
---------------------------------------- ------------------------------------------
Amortized cost Fair value Amortized cost Fair value
-------------- ---------- -------------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C>
U. S. Government and federal
agencies ................... $15,807 $15,731 $12,704 $12,642
Tax exempt securities ........... 410 411 - -
Other equity securities ......... - - 712 712
------- ------- ------- -------
Total ........................... $16,217 $16,142 $13,416 $13,354
======= ======= ======= =======
Unrealized gain or (loss) ....... $ (75) $ (62)
======= =======
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
December 31, 1996
----------------------------------------------------------------------------
Held to maturity Available for sale
-------------------------------- ----------------------------------
Amortized cost Fair value Amortized cost Fair value
-------------- ---------- -------------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C>
U. S. Government and federal
agencies ............................. $14,613 $14,612 $10,175 $10,175
Tax exempt securities ..................... 414 417 - -
Other equity securities ................... - - 586 586
------- ------- ------- -------
Total ..................................... $15,027 $15,029 $10,761 $10,761
======= ======= ======= =======
Unrealized gain or (loss) ................. $ 2 $ -
======= =======
</TABLE>
Orangeburg National Bank owns approximately 90% of the held to
maturity and the available for sale investment portfolios. The remainder is
owned by Sumter National Bank and CBI.
Loan portfolio
The loan portfolio is primarily consumer and small business oriented.
At June 30, 1997, the loan portfolio was $81,005,000, compared to $68,829,000 at
December 31, 1996, a 17.7% or $12,176,000 increase. The following chart
summarizes the loan portfolio at June 30, 1997, and December 31, 1996.
June 30, 1997 Dec. 31, 1996
------------- -------------
(dollars in thousands)
Real estate .............................. $48,253 $41,164
Commercial ............................... 18,872 16,644
Loans to individuals ..................... 13,880 11,021
======= =======
Total .................................... $81,005 $68,829
======= =======
At June 30, 1997, Orangeburg National Bank's loan portfolio totaled
$63,422,000 compared to $59,877,000 at December 31, 1996, an increase of
$3,545,000 or 5.9%.
At June 30, 1997, Sumter National Bank's loan portfolio totaled
$17,642,000, compared to $8,952,000 at December 31, 1996, an increase of
$8,690,000 or 97%.
18
<PAGE>
Past Due and Non-Performing Assets and the Allowance for Loan Losses
CBI closely monitors past due loans and loans that are in non-accrual
status and other real estate owned. Below is a summary of past due and
non-performing assets at June 30, 1997, December 31, 1996.
June 30, 1997 Dec. 31, 1996
------------- -------------
Past due 90 days + accruing loans .......... $221,000 $ 93,000
Non-accrual loans .......................... $207,000 $431,000
Impaired loans (included in nonaccrual) .... $ 12,000 $ 12,000
Other real estate owned .................... $ 0 $ 0
Management considers the past due and non-accrual amounts in June 1997
to be reasonable and manageable in the normal course of business. All loans
shown in the above table are attributable to Orangeburg National Bank.
CBI had no restructured loans during any of the above listed periods.
CBI's activity with its allowance for loan losses reserve is
summarized below.
June 30, 1997 Dec. 31, 1996
------------- -------------
Allowance at beginning of period .............. $ 876,000 $707,000
Provision expense ............................. 177,000 227,000
Net charge-offs ............................... (39,000) (58,000)
---------- --------
Allowance at end of period .................... $1,014,000 $876,000
========== ========
Allowance as a percent of outstanding loans ... 1.25% 1.27%
========== ========
At December 31, 1996, the Sumter National Bank allowance for loan
losses was $97,000. The bank increased the allowance with a provision expense of
$87,000. The allowance at June 30, 1997, was $184,000.
At December 31, 1996, the Orangeburg National Bank allowance for loan
losses was $779,000. The bank increased the allowance with a provision expense
of $90,000. Net chargeoffs during the quarter were $38,000. The allowance at
June 30, 1997, was $830,000.
In reviewing the adequacy of the allowance for loan losses at the end
of each period, management considers historical loan loss experience, current
economic condition, loans outstanding, trends in non-performing and delinquent
loans, and the quality of collateral securing problem loans. After charging off
all known losses, management considers the allowance adequate to provide for
estimated future losses inherent in the loan portfolio at June 30, 1997.
Deposits
Deposits were $107,582,000 at June 30, 1997, compared to $89,851,000
at December 31, 1996, an increase of 19.7% or $17,731,000. Deposits at Sumter
National Bank represent approximately 20% of total deposits.
Time deposits greater than $100,000 were $18,785,000 at June 30, 1997,
compared to $13,640,000 at December 31, 1996, an increase of 37.7% or
$5,140,000.
19
<PAGE>
Liquidity
Liquidity is the ability to meet current and future obligations
through liquidation or maturity of existing assets or the acquisition of
additional liabilities. Adequate liquidity is necessary to meet the requirements
of customers for loans and deposit withdrawals in a timely and economical
manner. The most manageable sources of liquidity are composed of liabilities,
with the primary focus of liquidity management being the ability to attract
deposits within the Orangeburg National Bank and Sumter National Bank service
areas. Core deposits (total deposits less certificates of deposit of $100,000 or
more) provide a relatively stable funding base. Certificates of deposit of
$100,000 or more are generally more sensitive to changes in rates, so they must
be monitored carefully. Asset liquidity is provided by several sources,
including amounts due from banks, federal funds sold, and investments available
for sale.
CBI and its banks maintain an available-for-sale investment and a held
to maturity investment portfolio. While all these investment securities are
purchased with the intent to be held to maturity, such securities are marketable
and occasional sales may occur prior to maturity as part of the process of
asset/liability and liquidity management. Such sales will generally be from the
available for sale portfolio. Management deliberately maintains a short-term
maturity schedule for its investments so that there is a continuing stream of
maturing investments. CBI intends to maintain a short-term investment portfolio
in order to continue to be able to supply liquidity to its loan portfolio and
for customer withdrawals.
CBI has substantially more liabilities (mostly deposits, which may be
withdrawn) which mature in the next 12 months than it has assets maturing in the
same period. However, based on its historical experience, and that of similar
financial institutions, CBI believes that it is unlikely that so many deposits
would be withdrawn, without being replaced by other deposits, that CBI would be
unable to meet its liquidity needs with the proceeds of maturing assets.
CBI through its banking subsidiaries also maintains federal funds
lines of credit with correspondent banks, and is able to borrow from the Federal
Home Loan Bank and from the Federal Reserve's discount window.
CBI through its banking subsidiaries has a demonstrated ability to
attract deposits from its markets. Deposits have grown from $30 million in 1989
to over $107 million in 1997. This stable, growing base of deposits is the major
source of operating liquidity.
CBI's long term liquidity needs are expected to be primarily affected
by the maturing of long term certificates of deposit. At June 30, 1997, CBI had
approximately $9.5 million and $0 in certificates of deposit maturing in one to
five years and over five years, respectively. CBI's assets maturing or repricing
in the same periods were $51.5 million and $11.5 million, respectively. CBI
expects to be able to manage its current balance sheet structure without
experiencing any unusual liquidity problems.
In the opinion of management, CBI's current and projected liquidity
position is adequate.
20
<PAGE>
Capital resources
As summarized in the table below, CBI maintained a strong capital
position.
June 30, 1997 Dec. 31, 1996
------------- -------------
Tier 1 capital to average total assets ...... 11.67% 11.50%
Tier 1 capital to risk weighted assets ...... 15.02% 17.50%
Total capital to risk weighted assets ....... 16.25% 18.70%
The moderate decline in the risk weighted capital ratios is the anticipated
effect of the asset growth resulting from the operation of the new bank in
Sumter, combined with asset growth of the Orangeburg bank.
In the opinion of management, the Company's current and projected
capital positions are adequate.
Shareholders' equity
At June 30, 1997 the common stock account totaled $9,055,000, compared
to $9,064,000 at December 31, 1996. This $9,000 reduction was for costs
associated with the establishment of a dividend reinvestment plan, although no
stock was sold by CBI during the period. Ongoing costs of the reinvestment plan
will be charged to expense.
Financial Information on Subsidiaries
ORANGEBURG NATIONAL BANK FINANCIAL HIGHLIGHTS
Six months ended Year ended
June 30, 1997 Dec. 31, 1996
------------- -------------
(Dollar amounts in thousands)
Financial Condition
Investment securities ........................ $ 26,698 $ 23,826
Net loans receivable ......................... 62,581 59,393
Total assets ................................. 101,591 90,772
Total deposits ............................... 85,794 79,792
Federal funds purchased and securities sold
under agreement to repurchase ........... 6,138 1,744
Other borrowed money (Federal Home Loan Bank
advances) ............................... 1,130 1,130
Stockholders' equity ......................... $ 7,969 $ 7,624
Earnings Summary
Interest income .............................. $ 3,772 $ 6,904
Interest expense ............................. 1,686 3,176
-------- --------
Net interest income .......................... 2,086 3,728
Provision for loan losses .................... 90 130
Non-interest income .......................... 279 469
Non-interest expense ......................... 1,259 2,238
-------- --------
Net income before taxes ...................... 1,016 1,829
Income taxes ................................. 343 667
-------- --------
Net income after tax ......................... $ 673 $ 1,162
======== ========
21
<PAGE>
SUMTER NATIONAL BANK FINANCIAL HIGHLIGHTS
Six months ended Year ended
June 30, 1997 Dec. 31, 1996*
------------- --------------
(Dollar amounts in thousands)
Financial Condition
Investment securities ........................ $ 1,734 $ 1,071
Net loans receivable ......................... 17,458 8,855
Total assets ................................. 25,019 13,322
Total deposits ............................... 21,915 10,112
Stockholders' equity ......................... $ 3,012 $ 3,159
Earnings Summary
Interest income .............................. $ 689 $ 338
Interest expense ............................. 264 142
-------- --------
Net interest income .......................... 425 196
Provision for loan losses .................... 87 97
Non-interest income .......................... 84 45
Non-interest expense ......................... 668 701
-------- --------
Net loss before taxes ........................ (246) (557)
Income tax (benefit) ......................... (103) (217)
-------- --------
Net (loss) after taxes ....................... $ (143) $ (340)
======== ========
*Note - Sumter National Bank began operations on June 10, 1996.
22
<PAGE>
Part II--Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
CBI had an Annual Meeting of Shareholders on April 29, 1997.
The following persons were elected to the Board:
Three year term: E. J. Ayers, Alvis J. Bynum, Hugo S. Sims, Jr., J. Otto Warren,
Jr. Two year term: Phil P. Leventis. One year term: William H. Nock and William
W. Traynham.
The shareholders also approved the 1997 stock option plan.
The other item approved was the ratification of J. W. Hunt and Co., Certified
Public Accountants, as outside auditors for CBI for the year ended December 31,
1997.
The vote tally was as follows:
<TABLE>
<CAPTION>
Total number Voting for Voting Abstaining Not voting
of shares against or to
eligible to withhold
vote authority
Election of directors
<S> <C> <C> <C> <C> <C>
E. J. Ayers 1,313,238 809,319 503,919
Alvis J. Bynum 1,313,238 807,119 2,200 503,919
Hugo S. Sims 1,313,238 809,319 503,919
J. Otto Warren, Jr. 1,313,238 806,287 3,032 503,919
Phil P. Leventis 1,313,238 809,310 1,009 502,919
William H. Nock 1,313,238 809,319 503,919
William W. Traynham 1,313,238 809,319 503,919
Ratification of J. W. Hunt 1,313,238 806,602 2,717 503,919
(accountants)
Approval of Stock 1,313,238 787,083 15,049 7,187 503,919
Option Plan
</TABLE>
The following persons continued their terms as directors: Anna O.
Dantzler, Samuel F. Reid, Jr., Martha Rose C. Carson, J. M. Guthrie, Michael A.
Wolfe, and Russell S. Wolfe, II.
23
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit No.(from Description
item 601 of S-B)
(27) Financial Data Schedule
b) Reports on Form 8-K. CBI filed a Form 8-K on June 16, 1997, to report that
the Board of Directors of CBI approved a two-for-one stock split, which was
effected July 21, 1997.
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.
DATED: August 11, 1997
COMMUNITY BANKSHARES, INC.
By: s/ Hugo S. Sims, Jr.,
Hugo S. Sims, Jr.,
Chief Executive Officer
By: s/ William W. Traynham
William W. Traynham
President and Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at June 30, 1997, (unaudited) and the Consolidated
Statement of Income for the six months ended June 30, 1997 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
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