SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999 File number: 000-22054
COMMUNITY BANKSHARES, INC.
(Exact Name of Small Business Issuer in its Charter)
South Carolina 57-0966962
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
791 Broughton St., Orangeburg, South Carolina 29115
(Address of Principal Executive Office, Zip Code)
(803) 535-1060
(Issuer's telephone number)
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X. No _.
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 3,037,288 shares of common
stock outstanding as of August 5, 1999.
<PAGE>
10-Q 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 .......................... 9
Item 3 Quantitative and Qualitative Disclosures about Market Risk ... 18
Part II - Other Information
- -------------------------------------------------------------------------------
Item 4 Submission of Matters to a Vote of Securities Holders ........ 18
Item 6 Exhibits and Reports on Form 8-K ............................. 19
2
<PAGE>
COMMUNITY BANKSHARES, INC. - CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
($ amounts in thousands) UNAUDITED
June 30, December 31,
ASSETS 1999 1998
---- ----
Cash and due from other financial institutions:
<S> <C> <C>
Non-interest bearing ............................................................ $ 5,474 $ 7,746
Federal funds sold .............................................................. 13,670 15,550
--------- ---------
Total cash and cash equivalents ............................................. 19,144 23,296
Interest bearing deposits in other banks ............................................. 1,206 1,577
Investment securities:
Securities held to maturity, at amortized cost .................................. 13,968 15,286
Securities available for sale, at fair value .................................... 28,719 18,862
Loans held for resale ................................................................ 207 722
Loans ................................................................................ 139,525 117,795
Less, allowance for loan losses ................................................. (1,695) (1,459)
--------- ---------
Net loans ................................................................... 137,830 116,336
Premises and equipment ............................................................... 4,608 3,892
Accrued interest receivable ......................................................... 1,499 1,242
Deferred income taxes ................................................................ 473 453
Other assets ......................................................................... 522 615
--------- ---------
Total assets ................................................................ $ 208,176 $ 182,281
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing ............................................................ $ 26,818 $ 23,883
Interest bearing ................................................................ 145,560 123,747
--------- ---------
Total deposits .............................................................. 172,378 147,630
Federal funds purchased and securities
sold under agreements to repurchase ............................................. 3,882 4,464
Federal Home Loan Bank advances ...................................................... 11,490 9,490
Other liabilities .................................................................... 966 1,038
--------- ---------
Total liabilities ........................................................... 188,716 162,622
--------- ---------
Shareholders' equity:
Common stock
No par, authorized shares 12,000,000, issued and ............................ 14,189 14,648
outstanding 3,037,288 in 1999 and 3,047,686 in 1998
Retained earnings ............................................................... 5,674 4,975
Accumulated other comprehensive income (loss) ................................... (403) 36
--------- ---------
Total shareholders' equity .................................................. 19,460 19,659
--------- ---------
Total liabilities and shareholders' equity .................................. $ 208,176 $ 182,281
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
3
<PAGE>
COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
for the six months ended June 30, 1999 and 1998 (Unaudited)
<TABLE>
<CAPTION>
Common Common Retained Accumulated Total
Shares Stock Earnings Other Stockholders'
Comprehensive Equity
Income (Loss)
(dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Balances at Dec. 31, 1997 ..................... 2,634,676 $ 9,156 $ 3,861 $ 20 $ 13,037
Comprehensive income:
Net income ............................... 847 847
Other comprehensive income
(loss) net of tax:
Unrealized gain (loss) on ............ 1 1
securities
Issuance of common stock ...................... 300,240 4,462 4,462
Dividends paid ................................ 0 0 (215) 0 (215)
---------- ---------- ---------- ---------- ----------
Balances at June 30, 1998 ..................... 2,934,916 $ 13,618 $ 4,493 $ 21 $ 18,132
========== ========== ========== ========== ==========
Balances at Dec. 31, 1998 ..................... 3,047,686 $ 14,648 $ 4,975 $ 36 $ 19,659
Comprehensive income:
Net income ............................... 972 972
Other comprehensive income
(loss) net of tax:
Unrealized gain (loss) on ............ (439) (439)
securities
Issuance of common stock ...................... 36,702 171 171
Redemption of common stock .................... (47,100) (630) (630)
Dividends paid ................................ 0 0 (273) 0 (273)
---------- ---------- ---------- ---------- ----------
Balances at June 30, 1999 ..................... 3,037,288 $ 14,189 $ 5,674 $ (403) $ 19,460
========== ========== ========== ========== ==========
</TABLE>
4
<PAGE>
COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
1999 1998 1999 1998
($ amounts in thousands) Unaudited Unaudited Unaudited Unaudited
Interest and dividend income:
<S> <C> <C> <C> <C>
Interest and fees on loans ....................................... $ 5,632 $ 4,539 $ 2,940 $ 2,336
Deposits with other financial institutions ....................... 79 68 43 30
Investment securities:
Interest - U. S. Treasury and
U. S. Government Agencies .................................... 1,081 927 581 477
Dividends ...................................................... 56 30 23 15
---------- ---------- ---------- ----------
Total investment securities ................................. 1,137 957 604 492
Federal funds sold and securities
purchased under agreements to resell ........................... 297 144 143 86
---------- ---------- ---------- ----------
Total interest and dividend income .......................... 7,145 5,708 3,730 2,944
---------- ---------- ---------- ----------
Interest expense:
Deposits:
Certificates of deposit of $100,000 or more .................... 663 608 350 321
Other .......................................................... 2,168 1,763 1,128 874
---------- ---------- ---------- ----------
Total deposits .............................................. 2,831 2,371 1,478 1,195
Federal funds purchased and securities
sold under agreements to repurchase ............................ 75 49 37 24
Federal Home Loan Bank advances .................................. 283 128 155 76
---------- ---------- ---------- ----------
Total interest expense ...................................... 3,189 2,548 1,670 1,295
---------- ---------- ---------- ----------
Net interest income .................................................. 3,956 3,160 2,060 1,649
Provision for loan losses ............................................ 273 188 139 97
---------- ---------- ---------- ----------
Net interest income after provision for loan losses .................. 3,683 2,972 1,921 1,552
---------- ---------- ---------- ----------
Non-interest income:
Service charges on deposit accounts .............................. 455 376 238 199
Other ............................................................ 195 115 107 62
---------- ---------- ---------- ----------
Total non-interest income ................................... 650 491 345 261
---------- ---------- ---------- ----------
Non-interest expense:
Salaries and employee benefits ................................... 1,683 1,311 851 677
Premises and equipment ........................................... 437 276 222 137
Other ............................................................ 777 615 387 329
---------- ---------- ---------- ----------
Total non-interest expense .................................. 2,897 2,202 1,460 1,143
---------- ---------- ---------- ----------
Net income before taxes .............................................. 1,436 1,261 806 670
Provision for income taxes ........................................... 464 414 263 222
---------- ---------- ---------- ----------
Net income after taxes ............................................... $ 972 $ 847 $ 543 $ 448
========== ========== ========== ==========
Basic earnings per common share:
Weighted average shares outstanding .............................. 3,037,417 2,763,076 3,038,005 2,721,895
Net income per common share ...................................... $ 0.32 $ 0.31 $ 0.18 $ 0.16
Diluted earnings per common share:
Weighted average shares outstanding .............................. 3,063,042 2,862,856 3,064,022 2,800,525
Net income per common share ...................................... $ 0.32 $ 0.30 $ 0.18 $ 0.16
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
5
<PAGE>
COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Six months ended June 30,
1999 1998
---- ----
(dollar amounts in thousands)
Cash flows from operating activities:
<S> <C> <C>
Net income ............................................................................. $ 972 $ 847
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation .................................................................... 209 156
Provision for loan losses ....................................................... 273 188
Accretion of discounts and
amortization of premiums -
investment securities - net ................................................... (11) (26)
Proceeds from sale of real estate loans held for sale ........................... (6,226) (5,244)
Origination of real estate loans held for sale .................................. 6,741 5,417
Changes in assets and liabilities:
(Increase) in interest receivable ............................................... (257) (122)
Decrease in other assets ........................................................ 73 96
(Decrease) in other liabilities ................................................. (72) (77)
-------- --------
Net cash provided by operating activities .............................................. 1,702 1,235
-------- --------
Cash flows from investing activities:
Proceeds from maturities and sales of
investment securities - held to maturity ...................................... 5,419 11,990
Purchases of investment securities - held to maturity ........................... (4,101) (7,766)
Proceeds from maturities and sales of
investment securities - available for sale .................................... 5,363 7,202
Purchases of investment securities - available for sale ......................... (15,648) (11,484)
Net (increase) decrease in interest bearing deposits ............................ 371 (1,078)
Net increase in loans to customers .............................................. (21,767) (10,581)
Purchase of premises and equipment .............................................. (925) (873)
-------- --------
Net cash (used) in investing activities ....................................... (31,288) (12,590)
-------- --------
Cash flows from financing activities:
Net increase in demand, savings, & time deposits ................................ 24,748 9,167
Net (decrease) in federal funds purchased and
securities sold under agreements to repurchase ................................ (582) (92)
Sale of common stock ............................................................ 171 4,462
Common stock redemption ......................................................... (630) -
Proceeds of FHLB advances ....................................................... 2,000 8,500
Dividends ....................................................................... (273) (215)
-------- --------
Net cash provided by financing activities ..................................... 25,434 21,822
-------- --------
Net increase (decrease) in cash and due from other
financial institutions .......................................................... (4,152) 10,467
Cash and due from other financial institutions - beginning ............................. 23,296 5,122
-------- --------
Cash and due from other financial institutions - end of period ......................... $ 19,144 $ 15,589
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
6
<PAGE>
COMMUNITY BANKSHARES, INC. - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Significant Accounting Principles
A summary of significant accounting policies is included in the 1998
Annual Report of Community Bankshares, Inc. to the Shareholders, which also
contains the Company's audited financial statements for 1998.
Principles of Consolidation
The consolidated financial statements include the accounts of Community
Bankshares, Inc. (CBI), the parent company, and Orangeburg National Bank, Sumter
National Bank and Florence National Bank, its wholly owned subsidiaries. All
significant intercompany items have been eliminated in the consolidated
statements.
Management Opinion
The interim 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 1998 Annual Report.
Changes in Comprehensive Income Components
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income,"
effective for fiscal years beginning after December 15, 1997. This Statement
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. Disclosure as
required by the Statement is as follows:
<TABLE>
<CAPTION>
Before-Tax Tax Net-of-Tax
Amount (Expense) or Amount
Benefit
Unrealized gains (losses) on securities:
<S> <C> <C> <C>
Unrealized holding gains (losses) arising during ........................ $ 1,000 $ 0 $ 1,000
period
Less: reclassification adjustment for gains (losses) .................... 0 0 0
--------- --------- ---------
realized in net income
Net unrealized gains (losses) ........................................... $ 1,000 $ 0 $ 1,000
--------- --------- ---------
Other comprehensive income, June 30, 1998 ............................... $ 1,000 $ 0 $ 1,000
========= ========= =========
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during ........................ $(611,000) $ 208,000 $(403,000)
period
Less: reclassification adjustment for gains (losses) .................... 0 0 0
--------- --------- ---------
realized in net income
Net unrealized gains (losses) ........................................... (611,000) 208,000 (403,000)
--------- --------- ---------
Other comprehensive income, June 30, 1999 ............................... $(611,000) $ 208,000 $(403,000)
========= ========= =========
</TABLE>
7
<PAGE>
COMMUNITY BANKSHARES, INC. - AVERAGE BALANCE SHEETS, YIELDS AND RATES
<TABLE>
<CAPTION>
Six months ended June 30, 1999 1998
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 $ 3,039 $ 79 5.20% $ 2,396 $ 68 5.68%
Investment securities taxable 36,886 1,124 6.09% 29,849 951 6.37%
Investment securities--tax exempt (1) 663 13 5.94% 314 6 5.79%
Federal funds sold 12,416 297 4.78% 5,294 144 5.44%
Loans receivable 128,183 5,632 8.79% 96,812 4,539 9.38%
-------- ------ ----- -------- ------ -----
Total interest earning assets 181,187 7,145 7.89% 134,665 5,708 8.48%
Cash and due from banks 8,051 5,868
Allowance for loan losses (1,571) (1,201)
Premises and equipment 4,416 3,151
Other assets 2,082 1,619
-------- --------
Total assets $194,165 $144,102
======== ========
Liabilities and Shareholders' Equity
Interest bearing deposits
Savings $ 28,242 $ 455 3.22% $ 18,964 $ 327 3.45%
Interest bearing transaction accounts 16,476 127 1.54% 13,491 128 1.90%
Time deposits 88,765 2,249 5.07% 70,300 1,916 5.45%
-------- ------ ----- -------- ------ -----
Total interest bearing deposits 133,483 2,831 4.24% 102,755 2,371 4.61%
Short term borrowing 4,906 75 3.06% 2,447 49 4.00%
FHLB advances 10,501 283 5.39% 4,302 128 5.95%
-------- ------ ----- -------- ------ -----
Total interest bearing liabilities 148,890 3,189 4.28% 109,504 2,548 4.65%
Noninterest bearing demand deposits 24,765 18,126
Other liabilities 1,083 899
Shareholders' equity 19,427 15,573
-------- --------
Total liabilities and shareholders' equity $194,165 $144,102
======== ========
Interest rate spread 3.60% 3.82%
Net interest income and net yield on earning assets $3,956 4.37% $3,160 4.69%
====== ===== ====== =====
</TABLE>
(1) Yield is shown on a fully taxable equivalent basis.
8
<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. Community Bankshares, Inc. ("CBI") cautions
readers that forward looking statements, including without limitation, those
relating to CBI's future business prospects, revenues, working capital,
liquidity, capital needs, interest costs, income and Year 2000 readiness of CBI
and its customers, 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 CBI's
reports filed with the Securities and Exchange Commission.
Year 2000 Readiness Disclosure
The change in the year from 1999 to 2000 may create serious problems
for many computer systems around the world. This so-called millennium bug or Y2K
problem may affect certain of CBI's systems. CBI is investigating the extent to
which its systems are affected and communicating with all of its computer
vendors concerning timely completion of remedies for those systems that require
modification. CBI is also communicating with third parties on which it relies to
assess their progress in evaluating their systems and implementing any
corrective measures and has formed a committee to coordinate its Year 2000
activities. CBI has been taking and will continue to pursue reasonably necessary
steps to protect its operations and assets.
Management estimates that the costs of Year 2000 compliance will
approximate $250,000 and will be funded with internally generated resources. The
majority of these costs have already been expended and the remaining items
relate primarily to CBI's testing plans. Most of CBI's local and wide area
network computer and communications equipment is relatively new. For this
reason, the overall internal financial impact of the Year 2000 problem is
expected to be relatively limited.
CBI has been devoting significant time and energy to management of the
Year 2000 problem. It formed a Year 2000 steering committee comprised of senior
officers from each of the three banks and the holding company to oversee the
process. The boards of directors of CBI and its subsidiaries receive regular
detailed progress reports on the Year 2000 project. The national bank
regulators, which supervise the three banking subsidiaries, have also devoted a
substantial amount of their time and supervisory attention to the Year 2000
problems and related issues, as well as monitoring the banks' progress toward
Year 2000 compliance.
CBI has concentrated its internal efforts toward making its own mission
critical systems fully Year 2000 compliant as quickly as practical. Management
expects its efforts to be successful and, consequently, has no plans to
implement any major changes in the information technology systems prior to
January 2000.
CBI has completed testing its core information system. Test results
have been successful. Management is substantially complete with testing of other
mission critical systems. In early March 1999 management simulated conducting
banking business during January 2000 and was successful in its testing. In April
1999 management engaged its independent accounting firm to evaluate the
reasonableness and validity of its testing program.
Nevertheless, CBI's ability to avoid experiencing difficulty as a
result of the Year 2000 problem could be adversely affected by the availability
of skilled personnel, the success of vendors, customers and providers of
services in dealing with their own Year 2000 problems and by the difficulty of
identifying all the possible causes of the Year 2000 problem and
interrelationships between various mission critical systems. CBI is refining its
contingency planning to anticipate potential problems from external as well as
internal Year 2000 problems, including, but not limited to, telecommunications
and power suppliers.
9
<PAGE>
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Net Income
For the six months ended June 30, 1999, CBI earned a consolidated
profit of $972,000, compared to $847,000 for the comparable period of 1998, an
increase of 14.7% or $125,000. Basic earnings per share were $.32 in the 1999
period, compared to $.31 for the 1998 period, an increase of 3.2%.
Orangeburg National Bank reported net income of $1,002,000 for the six
months ended June 30, 1999. This compares to $805,000 for the same period in
1998, an increase of $197,000 or 24%. At June 30, 1999 the Orangeburg bank had
$84 million in loans, $133 million in assets, and $107 million in deposits.
Sumter National Bank reported net income of $213,000 for the six months
ended June 30, 1999. This compares to $53,000 for the same period in 1998, an
increase of $160,000 or 302%. At June 30, 1999 the Sumter bank had $45 million
in loans, $56 million in assets, and $51 million in deposits. The Sumter bank
began operation in June 1996.
Florence National Bank reported a net after tax loss of $211,000 for
the period ended June 30, 1999. The Florence bank began operation in July 1998.
At June 30, 1999 the Florence bank had $11 million in loans, $19 million in
assets, and $15 million in deposits.
As noted above, consolidated net income for the six months ended June
30, 1999, increased from the prior year by 14.7% or $125,000. The major
components of this increase are discussed below. Net interest income before
provision for loan losses for the six months ended June 30, 1999, increased to
$3,956,000, compared to $3,160,000 for the same period in 1998, an increase of
25.1% or $796,000. For the 1999 period, the provision for loan losses was
$273,000, compared to $188,000 for the 1998 period, an increase of 45.2% or
$85,000. Non-interest income for the 1999 period increased to $650,000 from
$491,000 for the 1998 period, a 32.3% or $159,000 increase. Non-interest expense
increased to $2,897,000 from $2,202,000, a 31.5% or $695,000 increase.
Throughout this discussion many of the dollar and percentage changes
between periods are substantial. The Orangeburg and Sumter banks are continuing
to grow assets and earnings. The 1999 periods include the operations of the
Florence bank, which were not included in the prior year since it began business
in July 1998.
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, 1999 and 1998, the following table is presented.
Six months ended June 30,
1999 1998
---- ----
(dollars in thousands)
Average assets $194,165 $144,102
ROA 1.00% 1.18%
Average equity $19,427 $15,573
ROE 10.01% 10.88%
Net income $972 $847
10
<PAGE>
Average assets and average equity were substantially greater in 1999
than they were in 1998 primarily as the result of operating three banks instead
of two and because of the sale of stock to capitalize the new bank in Florence.
Return on assets and return on equity diminished in 1999 primarily because of
operating losses incurred by Florence National Bank.
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 1999, net interest income after provision for loan losses
increased to $3,683,000 from $2,972,000, a 23.9% or $711,000 increase over the
comparable period of 1998. This improvement was the result of an increase in the
volume of earning assets at all three banks.
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 six month period ended June 30, 1999 and 1998. A
discussion of that table follows.
Total interest income for the six months ended June 30, 1999, was
$7,145,000 compared with $5,708,000 for the same period in 1998, a 25.1% or
$1,437,000 increase. The yield on earning assets for the 1999 period was 7.89%,
down from 8.48.% for the 1998 period. Total average interest earning assets for
the six months ended June 30, 1999, were $181,187,000, up from $134,665,000 for
the same period in 1998, an increase of 34.5% or $46,522,000.
The loan portfolio earned $5,632,000 for the six months ended June 30,
1999, up from $4,539,000 for the same period of 1998, a 24% or $1,093,000
increase. The 1999 yield decreased to 8.79% from 9.38% for the 1998 period, a 59
basis point decline. The prime lending rate fell from 8.50% to 7.75% during the
fourth quarter of 1998. The average size of the loan portfolio was $128,183,000
for the 1999 period, up from $96,812,000 for the same period of 1998, an
increase of 32.4% or $31,371,000.
The taxable investment portfolio earned $1,124,000 for the six months
ended June 30, 1999, up from $951,000 for the 1998 period, an 18.1% or $173,000
increase. The yield decreased to 6.09% in the 1999 period from 6.37% in the 1998
period. The average size of the portfolio increased to $36,886,000 in the 1999
period from $29,849,000 in the 1998 period, an increase of 23.5% or $7,037,000.
The tax exempt investment portfolio continues to be a relatively small
part of the portfolio. It earned $13,000 for the six months ended June 30, 1999,
compared to $6,000 for the 1998 period, an increase of 117% or $7,000. The yield
on the portfolio was 5.94% (on a fully taxable equivalent basis), increased from
the prior year's 5.79%. The average size of the portfolio increased to $663,000
for the 1999 period from $314,000 in the 1998 period, an increase of 111% or
$349,000.
Interest bearing deposits in other banks contributed $79,000 for the
six months ended June 30, 1999, compared to $68,000 during the prior year, an
increase of 16.1% or $11,000. The yield on these deposits decreased to 5.20% for
the 1999 period from 5.68% in the 1998 period. CBI averaged $3,039,000 in
interest bearing balances in the 1999 period compared to $2,396,000 in the 1998
period, an increase of 26.8% or $643,000.
Federal funds sold earned $297,000 for the six months ended June 30,
1999, compared to $144,000 the prior year, an increase of 106% or $153,000.
Yields decreased to 4.78% for the period ended June 30, 1999, from 5.44% for the
1998 period. For the 1999 period, CBI increased its average volume in federal
funds sold to $12,416,000 from $5,294,000 for the 1998 period, a 135% or
$7,122,000 increase. This substantial increase was mostly related to the opening
of the new bank in Florence.
11
<PAGE>
Interest expense
Interest expense increased for the six months ended June 30, 1999, to
$3,189,000 from the prior year's $2,548,000, a 25.1% or $641,000 increase. The
volume of interest bearing liabilities increased to $148,890,000 for the period
ended June 30, 1999, from $109,504,000 for the 1998 period, a 35.9% or
$39,386,000 increase. The average rate CBI paid for interest bearing liabilities
during the 1999 period was 4.28%, down from 4.65% for the 1998 period.
The cost of savings accounts increased to $455,000 for the six months
ended June 30, 1999 from $327,000 in the 1998 period, a 39.1% or $128,000
increase. Average savings deposit balances increased to $28,242,000 for the
period ended June 30, 1999, from $18,964,000 for the 1998 period, an increase of
48.9% or $9,278,000. The average rate paid on these funds decreased to 3.22%
from 3.45%.
Interest bearing transaction accounts cost $127,000 for the six months
ended June 30, 1999, almost unchanged from the prior year's $128,000. The volume
of these deposits increased to $16,476,000 for the period ended June 30, 1999,
from $13,491,000 for the 1998 period, a 22.1% or $2,985,000 increase. The
average rate paid on these funds for the period ended June 30, 1999, decreased
to 1.54% from 1.90% for the 1998 period.
Time deposits cost $2,249,000 for the six months ended June 30, 1999,
up from $1,916,000 in the 1998 period, an increase of 17.3% or $333,000. The
volume increased to $88,765,000 for the period ended June 30, 1999, from
$70,300,000 for the 1998 period, a 26.2% or $18,465,000 increase. The average
rate paid on these funds decreased to 5.07% for the period ended June 30, 1999,
from 5.45% for the 1998 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 $75,000 for the six months ended June 30,
1999, increased from $49,000 for the 1998 period, a 53% or $26,000 increase. The
volume of these funds increased to $4,906,000 in the 1999 period from $2,447,000
in the 1998 period, an increase of 100% or $2,459,000. The average rate paid on
these funds decreased to 3.06% from 4%.
Borrowings from the Federal Home Loan Bank cost $283,000 for the six
months ended June 30, 1999, compared to $128,000 for the 1998 period, a 121% or
$155,000 increase. The advances averaged $10,501,000 during the 1999 period,
compared to $4,302,000 for the prior year period, a 144% or $6,199,000 increase.
The increasing volume in these funds is due to the Orangeburg bank's
asset-liability management strategy. The average rate paid on these funds
decreased to 5.39% from 5.95%.
Non-Interest Income
Non-interest income for the six months ended June 30, 1998 grew to
$650,000 from $491,000 in the 1998 period, a 32.3% or $159,0000 increase. This
increase was generated by substantial increases in service charge fee income at
the Sumter bank and the early operation of the Florence bank.
Non-Interest Expense
For the six months ended June 30, 1999 non-interest expenses increased
to $2,897,000 from $2,202,000 for the 1998 period, a 31.6% or $695,000 increase.
Of this increase, approximately $487,000 or 70% is related to operation of the
new bank in Florence.
Personnel costs were $1,683,000 for the 1999 period compared to
$1,311,000 for the 1998 period, a 28.3% or $372,000 increase.
Premises and equipment expense for the 1999 period were $437,000
compared to $276,000 for the 1998 period, an increase of 58.3% or $161,000.
Other costs were $777,000 for the 1999 period compared to $615,000 for
the 1998 period, an increase of 26.3% or $162,000.
Income Taxes
CBI provided $464,000 for federal and state income taxes during the six
months ended June 30, 1999, compared to $414,000 for the same period in 1998, a
12% or $50,000 increase.
12
<PAGE>
RESULTS OF OPERATIONS FOR THE QUARTERS ENDED JUNE 30, 1999 AND 1998
Net Income
For the quarter ended June 30, 1999, CBI earned a consolidated profit
of $543,000, compared to $448,000 for the comparable period of 1998, an increase
of 21.2% or $95,000. Basic earnings per share were $.18 in the 1999 period,
compared to $.16 for the 1998 period, an increase of 12.5%. The changes in the
items comprising net interest income which are discussed below resulted from
essentially the same factors discussed above regarding the results of operations
for the six months ended June 30, 1999.
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. Net interest
income before provision for loan losses for the quarter ended June 30, 1999,
increased to $2,060,000, compared to $1,649,000 for the same period in 1998, an
increase of 24.9% or $411,000. For the same period, the provision for loan
losses was $139,000, compared to $97,000 for the 1998 period, an increase of
43.2% or $42,000.
Interest Income
Total interest income for the second quarter 1999 was $3,730,000
compared with $2,944,000 for the same period in 1998, a 26.6% or $786,000
increase.
The loan portfolio earned $2,940,000 for the second quarter in 1999, up
from $2,336,000 for the same period of 1998, a 25.8% or $604,000 increase.
The investment portfolio earned $604,000 for the second quarter in
1999, up from $492,000 for the 1998 period, a 22.7% or $112,000 increase.
Interest bearing deposits in other banks contributed $43,000 for the
second quarter 1999, compared to $30,000 during the prior year, an increase of
43.3% or $13,000.
Federal funds sold earned $143,000 the second quarter of 1999 compared
to $86,000 the prior year, an increase of 66.2% or $57,000.
Interest expense
Interest expense increased for the second quarter of 1999 to $1,670,000
from the prior year's $1,295,000, a 28.9% or $375,000 increase.
Non-interest income and expense
Non-interest income for the 1999 period increased to $345,000 from
$261,000 for the 1998 period, a 32.1% or $84,000 increase. Non-interest expense
increased to $1,460,000 from $1,143,000, a 27.7% or $317,000 increase.
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 three banks usually purchase short term
issues of U. S Treasury and U. S. Government agency securities for investment
purposes. At June 30, 1999, the held-to-maturity portfolio totaled $13,968,000
compared to $15,286,000 at December 31, 1998, a decrease of 9.4% or $1,318,000.
At June 30, 1999, the available-for-sale portfolio totaled $28,719,000 compared
to $18,862,000 at December 31, 1998, an increase of 52.3% or $9,857,000. The
following chart summarizes the investment portfolios at June 30, 1999, and
December 31, 1998.
13
<PAGE>
<TABLE>
<CAPTION>
June 30, 1999
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 .................... $ 13,868 $ 13,526 $ 27,152 $ 26,565
Tax exempt securities .................................... 100 101 831 822
Other equity securities .................................. - - 1,332 1,332
-------- -------- -------- --------
Total .................................................... $ 13,968 $ 13,627 $ 29,315 $ 28,719
======== ======== ======== ========
Unrealized (loss) ........................................ $ (341) $ (596)
======== ========
<CAPTION>
December 31, 1998
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 ...................... $15,035 $15,076 $16,921 $16,975
Tax exempt securities ...................................... 251 253 225 227
Other equity securities .................................... - - 1,660 1,660
------- ------- ------- -------
Total ...................................................... $15,286 $15,329 $18,806 $18,862
======= ======= ======= =======
Unrealized gain ............................................ $ 43 $ 56
======= =======
</TABLE>
Loan portfolio
The loan portfolio is primarily consumer and small business oriented.
At June 30, 1999, the loan portfolio was $139,525,000, compared to $117,795,000
at December 31, 1998, an 18.4% or $21,730,000 increase. The following chart
summarizes the loan portfolio at June 30, 1999, and December 31, 1998.
Jun. 30, 1999 Dec. 31, 1998
------------- -------------
(dollars in thousands)
Real estate $80,425 $68,527
Commercial 35,989 29,943
Loans to individuals 23,111 19,325
------ ------
Total $139,525 $117,795
======== ========
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, 1999, and December 31, 1998.
June 30, 1999 Dec. 31, 1998
------------- -------------
(dollars in thousands)
Accruing loans past due 90 days + $ - $187
Non-accrual loans $15 $ 31
Impaired loans (included in non-accrual) $15 $ 31
Other real estate owned $31 $266
Management considers the past due and non-accrual amounts at June 30,
1999 to be reasonable and manageable in the normal course of business.
CBI had no restructured loans during any of the above listed periods.
14
<PAGE>
CBI's activity with its allowance for loan losses reserve is summarized
below.
<TABLE>
<CAPTION>
June 30, 1999 Dec. 31, 1998 June 30, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Allowance at beginning of period .................................... $ 1,459 $ 1,140 $ 1,140
Provision expense ................................................... 273 484 188
Net charge offs ..................................................... (37) (165) (58)
------- ------- -------
Allowance at end of period .......................................... $ 1,695 $ 1,459 $ 1,270
======= ======= =======
Allowance as a percent of outstanding loans ......................... 1.21% 1.24% 1.24%
</TABLE>
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, 1999.
Premises and equipment
Premises and equipment were $4,608,000 at June 30, 1999, compared to
$3,892,000 at December 31, 1998, an increase of 18% or $716,000. Most of this
increase was due to the opening of a new branch bank building on Broughton
Street in Orangeburg. This office replaced an existing branch building, which is
now being rented to Community Bankshares.
Deposits
Deposits were $172,378,000 at June 30, 1999, compared to $147,630,000
at December 31, 1998, an increase of 16.7% or $24,748,000.
Time deposits greater than $100,000 were $32,474,000 at June 30, 1999,
compared to $24,504,000 at December 31, 1998, an increase of 32.5% or
$7,970,000.
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, Sumter National Bank, and Florence 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.
15
<PAGE>
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 $172 million in 1999. This 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 March 31, 1999, CBI had
approximately $21.8 million in certificates of deposit and other interest
bearing liabilities maturing in one to five years. CBI had no such liabilities
maturing in over 5 years. CBI's assets maturing or repricing in the same periods
were $75.5 million and $48 million, respectively. CBI expects to be able to
manage its current balance sheet structure without experiencing any material
liquidity problems.
In the opinion of management, CBI's current and projected liquidity
position is adequate.
Capital resources
As summarized in the table below, CBI maintains a strong capital
position.
June 30, 1999 Dec. 31, 1998
------------- -------------
Tier 1 capital to average total assets ..... 9.79% 10.90%
Tier 1 capital to risk weighted assets ..... 13.92% 15.90%
Total capital to risk weighted assets ...... 15.11% 17.00%
Banks are required to maintain a minimum risk weighted capital ratio of
at least 8%.
16
<PAGE>
In the opinion of management, the Company's current and projected
capital positions are adequate.
Common Stock
At June 30, 1999 the common stock account totaled $14,189,000, compared
to $14,648,000 at December 31, 1998. This $459,000 decrease was the result of
the redemption of $630,000 in CBI common stock and the issuance of stock for
$171,000 resulting from the exercise of employee stock options.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable pursuant to Instruction 1 to 17 C.F.R. 229.304(c).
Part II--Other Information
Item 4. Submission of Matters to a Vote of Security Holders.
CBI had an Annual Meeting of Shareholders on April 27, 1999.
The following persons were elected to the Board:
Three year term: Martha Rose C. Carson, J. M. Guthrie, Phil P. Leventis, Wm.
Reynolds Williams, Michael A. Wolfe.
Two year term: Richard L. Havekost.
One year term: Jesse A. Nance.
An amendment to the 1997 Employee Stock Option Plan was approved which increases
from 106,000 to 272,000 the number of shares reserved for issuance upon exercise
of the options.
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,
1999.
The vote tally was as follows:
<TABLE>
<CAPTION>
Total number Voting for Voting Voting to Present at
of shares against or to abstain meeting and
eligible to withhold not voting
vote authority
Election of directors
<S> <C> <C> <C> <C> <C>
Martha Rose C. Carson .................... 3,036,946 1,957,053 1,500 0 0
J. M. Guthrie ............................ 3,036,946 1,950,862 7,691 0 0
Phil P. Leventis ......................... 3,036,946 1,952,758 5,795 0 0
Wm. Reynolds Williams .................... 3,036,946 1,957,053 1,500 0 0
Michael A. Wolfe ......................... 3,036,946 1,957,053 1,500 0 0
Richard L. Havekost ...................... 3,036,946 1,954,858 3,695 0 0
Jesse A. Nance ........................... 3,036,946 1,954,858 3,695 0 0
Approval of Stock Option Plan .............. 3,036,946 1,862,938 79,300 16,315 0
Amendment
Ratification of J. W. Hunt .................... 3,036,946 1,933,143 1,838 23,572 0
</TABLE>
17
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on page 20.
b) None.
18
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: August 10, 1999
COMMUNITY BANKSHARES, INC.
By: s/ E. J. Ayers, Jr.,
E. J. Ayers, Jr.,
Chief Executive Officer
By: s/ William W. Traynham
William W. Traynham
President and Chief Financial Officer
(Principal Accounting Officer)
19
<PAGE>
EXHIBIT INDEX
Exhibit No. (from item Description
601 of S-B)
(10) Form of Change in Control Agreement between the
Registrant and each of William W. Traynham, Michael
A. Wolfe, William H. Nock and Jesse A. Nance.
(27) Financial Data Schedule
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
CHANGE OF CONTROL AGREEMENT
This Agreement is entered into as of this ___ day of ___________, 1999
by and between Community Bankshares, Inc. (the "Company") and
_________________________________ (the "Employee").
The principal purpose of this agreement is to protect Employee against
a Change in Control of the Company as defined in Item 1 below. Employee is,
however, an employee at will, and this agreement is not an employment agreement
and shall not create for Employee any right to continued employment.
In consideration of services previously provided to the Company by the
Employee, and Employee's willingness to continue employment with the Company,
the parties hereby agree as follows:
1. In the event that, within five years after the date of this Agreement, any
Change of Control (as defined below) of the Company is effected, then Employee
shall be entitled to the following benefits:
(a) If Employee terminates his employment with the Company or is
terminated by the Company at any time within the six months following
the effective date of an event listed in 1(i), (ii), (iii) or (iv)
above, upon such termination Employee shall be entitled to a lump sum
payment equal to twice the Employee's annual salary in effect at the
date of termination.
(b) If, however, the amount of any lump-sum payment in (a) above, plus
any other amount treated as a parachute payment under Section 280G of
the Internal Revenue Code equals or exceeds three times the base amount
described in Section 280G of the Internal Revenue Code, then the amount
due hereunder shall be adjusted to have a value for purposes of Section
280G of three times the base amount less $100.
(c) Any amount paid pursuant to this Agreement will be deemed severance
pay. Employee shall not be under any duty to mitigate damages and no
income received by Employee thereafter shall reduce the amount due
Employee hereunder.
A "Change of Control" of the Company shall be deemed to have been
effected for purposes of this agreement if either (i) voting control of the
Company is acquired, directly or indirectly, by any person or group acting in
concert, (ii) the Company is merged with or into any other entity and the
Company is not the surviving entity of the merger, (iii) voting control of any
subsidiary of the Company by which subsidiary Employee is principally employed
is acquired, directly or indirectly, by any person or group acting in concert,
or (iv) any subsidiary of the Company by which employee is principally employed
is merged with or into another entity which is not also a subsidiary of the
Company and such subsidiary is not the surviving entity of the merger.
2. Commencing on the first anniversary after the date of this Agreement, and on
each annual anniversary thereafter, the term of this agreement shall
automatically be extended for an additional year, unless 30 days prior to the
anniversary the Company gives notice to the Employee that the term will not be
extended.
3. Nothing herein shall deprive Employee of any vested benefits that Employee
has in any Company retirement or other employee benefit plan. The payment
provided for in Section 1 is in addition to any other amount due to Employee.
<PAGE>
4. This agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Employee should die after the occurrence
of a Change of Control and while any amount would still be payable to Employee
hereunder if Employee had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or designee or, if there be no such designee, to
Employee's estate.
5. No provision of this Agreement may be modified, waived or discharged unless
such modification, waiver or discharge is agreed to in a writing signed by
Employee and the Chairman of the Board of the Company. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina.
6. The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
7. Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in Orangeburg, South Carolina, by
three arbitrators in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrators' award in
any court having jurisdiction. The Company shall bear all costs and expenses,
including Employee's reasonable attorneys' fees, arising in connection with any
arbitration proceeding pursuant to this Section.
8. Should the Company merge or consolidate with another corporation and the
Company is not the surviving corporation in such a merger or consolidation, the
Company will obtain as a condition of merger or consolidation assent to and
assumption of this Agreement by the corporation which will be the surviving
corporate entity in such merger or consolidation. Upon consummation of the
consolidation or merger, the term "Company" shall mean the corporate entity
which is the survivor of the merger or consolidation.
In witness whereof, the parties hereto have executed this Agreement as
of the date first above written.
EMPLOYEE: EMPLOYER:
Community Bankshares, Inc.
By:
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at June 30, 1999, (unaudited) and the Consolidated
Statement of Income for the six months ended June 30, 1999 (unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,474
<INT-BEARING-DEPOSITS> 1,206
<FED-FUNDS-SOLD> 13,670
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,719
<INVESTMENTS-CARRYING> 13,968
<INVESTMENTS-MARKET> 13,627
<LOANS> 139,525
<ALLOWANCE> 1,695
<TOTAL-ASSETS> 208,176
<DEPOSITS> 172,378
<SHORT-TERM> 3,882
<LIABILITIES-OTHER> 966
<LONG-TERM> 11,490
0
0
<COMMON> 14,189
<OTHER-SE> 5,271
<TOTAL-LIABILITIES-AND-EQUITY> 208,176
<INTEREST-LOAN> 5,632
<INTEREST-INVEST> 1,137
<INTEREST-OTHER> 376
<INTEREST-TOTAL> 7,145
<INTEREST-DEPOSIT> 2,831
<INTEREST-EXPENSE> 3,189
<INTEREST-INCOME-NET> 3,956
<LOAN-LOSSES> 273
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,897
<INCOME-PRETAX> 1,436
<INCOME-PRE-EXTRAORDINARY> 1,436
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 972
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.32
<YIELD-ACTUAL> 4.37
<LOANS-NON> 15
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 15
<ALLOWANCE-OPEN> 1,459
<CHARGE-OFFS> 50
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 1,695
<ALLOWANCE-DOMESTIC> 1,695
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
