UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Mark One
/X/ QUARTERLY REPORT PURSANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended September 30, 2000
// TRANSITION REPORT PURSANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT
For the transition period from _______ to _______
Commission File Number: 33-81890
Community Bankshares, Inc.
----------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1415887
-------------------------------- --------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
448 North Main Street,
Cornelia, Georgia 30531
---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(706) 778-2265
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant has (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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 2000: 2,178,830
<PAGE>
COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet -
September 30, 2000 and December 31, 1999 2
Consolidated Statements of Operations
and Comprehensive Income for Three
Months Ended September 30, 2000 and 1999
and Nine Months Ended September 30, 2000
and 1999 3
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8 - K 7
Signatures 8
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(Dollars in thousands)
(Unaudited)
2000 1999
--------- ---------
Assets
------
<S> <C> <C>
Cash and due from banks $ 26,323 $ 31,834
Interest-bearing deposits in banks 375 161
Federal funds sold 14,070 2,940
Securities available-for-sale 61,548 49,143
Securities held-to-maturity (fair value
$32,058 and $31,349) 31,916 31,939
Loans held for sale 230 1,275
Loans 402,037 375,593
Less allowance for loan losses 6,135 5,682
--------- ---------
Loans, net 395,902 369,911
--------- ---------
Premises and equipment 13,894 13,444
Other assets 17,209 15,502
--------- ---------
Total assets $ 561,467 $ 516,149
========= =========
Liabilities and Shareholders' Equity
-------------------------------------
Deposits
Non-interest-bearing demand $ 69,989 $ 65,815
Interest-bearing demand 97,915 99,185
Savings 22,937 20,863
Time, $100,000 and over 93,568 79,925
Other time 199,870 178,268
--------- ---------
Total deposits 484,279 444,056
Federal Home Loan Bank advances 10,000 15,000
Other borrowings 939 1,054
Other liabilities 16,160 11,237
--------- ---------
Total liabilities 511,378 471,347
--------- ---------
Commitments and contingent liabilities
Redeemable common stock held by ESOP, 382,580
and 380,780 shares outstanding at September 30, 2000 and December 31, 1999 14,048 13,982
--------- ---------
Shareholders' equity
Common stock, par value $1; 5,000,000
Shares authorized; 2,178,830 at December 31, 2000
Shares issued and outstanding 2,179 2,179
Capital surplus 6,115 6,115
Retained earnings 28,578 23,853
Accumulated other comprehensive loss,
Net of tax (831) (1,327)
--------- ---------
Total shareholders' equity 36,041 30,820
--------- ---------
Total liabilities and shareholders' equity $ 561,467 $ 516,149
========= =========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHESIVE INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------- ------- ------- --------
<S> <C> <C> <C> <C>
Interest income
Loans $10,479 $ 8,895 $30,134 $ 25,674
Taxable securities 745 591 2,137 1,747
Nontaxable securities 557 500 1,598 1,478
Deposits in banks 4 3 11 14
Federal funds sold 199 244 646 681
------- ------- ------- --------
Total interest income 11,984 10,233 34,526 29,594
------- ------- ------- --------
Interest expense on deposits
Deposits 5,514 4,341 15,509 12,654
Other borrowings 232 158 691 319
------- ------- ------- --------
Total interest expense 5,746 4,499 16,200 12,973
------- ------- ------- --------
Net interest income 6,238 5,734 18,326 16,621
Provision for loan losses 382 370 1,076 1,027
------- ------- ------- --------
Net interest income after
provision for
loan losses 5,856 5,364 17,250 15,594
------- ------- ------- --------
Other income
Service charges on
Deposit accounts 958 744 2,571 2,105
Other service charges and fees 231 202 632 466
Gains on sale of loans 88 83 263 239
Nonbank subsidiary
non-interest income 1,742 1,584 5,747 4,583
Other operating income 184 214 541 661
------- ------- ------- --------
Total other income 3,203 2,827 9,754 8,054
------- ------- ------- --------
Other expenses
Salaries and employee benefits 3,523 2,978 10,551 9,177
Occupancy expense 415 364 1,158 1,033
Equipment expense 684 697 1,958 1,958
Other operating expenses 1,892 1,780 5,963 5,336
------- ------- ------- --------
Total other expenses 6,514 5,819 19,630 17,504
------- ------- ------- --------
Income before income taxes 2,545 2,372 7,374 6,144
Income tax expense 766 765 2,299 1,809
------- ------- ------- --------
Net income $ 1,779 $ 1,607 $ 5,075 $ 4,335
------- ------- ------- --------
Other comprehensive income (loss):
Unrealized gains (losses) on
Securities available-for-sale
arising during the period 403 99 496 (782)
------- ------- ------- --------
Total other comprehensive
Income (loss) 403 99 496 (782)
------- ------- ------- --------
Comprehensive income $ 2,182 $ 1,706 $ 5,571 $ 3,553
======= ======= ======= ========
Basic earnings per common share $ 0.82 $ 0.74 $ 2.33 $ 2.00
======= ======= ======= ========
Diluted earnings per common share 0.81 0.73 2.31 1.97
======= ======= ======= ========
Cash dividends per share of common stock $ .0435 $ .039 $ .1305 $ 0.118
======= ======= ======= ========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Dollars in thousands)
(Unaudited)
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,075 $ 4,335
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,012 1,758
Provision for loan losses 1,076 1,027
Provision for other real estate 5 --
Deferred income taxes (201) (259)
Decrease in loans held for sale 1,045 72
Net (gains) losses on sale of other real estate (35) (56)
Increase in interest receivable (1,094) 298
Decrease in interest payable 1,760 (545)
Increase in taxes payable 211 345
Increase (decrease) in accounts
Receivable of nonbank subsidiary 184 (181)
Increase (decrease) in work in
process of nonbank subsidiary (1,045) 219
Increase (decrease) in accruals and
Payables of nonbank subsidiary 3,922 (1,253)
Other operating activities (1,265) (666)
-------- --------
Net cash provided by Operating activities 11,650 5,094
-------- --------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (13,826) (17,771)
Proceeds from maturities of securities
available-for-sale 2,248 10,731
Purchases of securities held-to-maturity (1,737) (448)
Proceeds from maturities of securities
held-to-maturity 1,760 596
Net (increase) decrease in Federal funds sold (11,130) 10,535
Net (increase) decrease in interest-bearing
deposits in banks (214) 54
Net increase in loans (28,168) (49,703)
Purchase of premises and equipment (2,160) (1,729)
Proceeds from sales of other real estate 1,242 607
-------- --------
Net cash used in Investing activities (51,985) (47,128)
-------- --------
FINANCING ACTIVITIES
Net increase in deposits 40,223 36,725
Increase (decrease) in FHLB advances (5,000) 10,000
Increase in other borrowings -- 400
Repayment of other borrowings (115) (114)
Proceeds from issuance of Common
Stock -- 30
Dividends paid (284) (258)
-------- --------
Net cash provided by financing activities 34,824 46,783
Net increase (decrease) in cash and due from banks $ (5,511) $ 4,749
Cash and due from banks at beginning of the Period 31,834 26,796
-------- --------
Cash and due from banks at end of the Period $ 26,323 $ 31,545
======== ========
SUPPLEMENTAL DISCLOSURES Cash paid for:
Interest $ 17,960 $ 13,518
Income taxes $ 2,289 $ 1,729
NONCASH TRANSACTIONS
Unrealized (gains) losses on
securities available-for sale $ (827) $ 1,302
Principal balances on loans and premises
And equipment transferred to other
real estate $ 1,101 $ 743
See Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in opinion of management, necessary for a
fair statement of results for the interim periods.
The results of operations for the three and nine month periods ending
September 30, 2000 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The effective
date of this statement has been deferred by SFAS No. 137 until fiscal years
beginning after June 15, 2000. However, the statement permits early adoption
as of the beginning of any fiscal quarter after its issuance. The Company
expects to adopt this statement effective January 1, 2001. SFAS No. 133
requires the Company to recognize all derivatives as either assets or
liabilities in the balance sheet at fair value. For derivatives that are not
designated as hedges, the gain or loss must be recognized in earnings in the
period of change. For derivatives that are designated as hedges, changes in
the fair value of the hedged assets, liabilities, or firm commitments must be
recognized in earnings or recognized in other comprehensive income until the
hedged item is recognized in earnings, depending on the nature of the hedge.
The ineffective portion of a derivative's change in fair value must be
recognized in earnings immediately. Management has not yet determined what
effect the adoption of SFAS No. 133 will have on the Company's earnings or
financial position.
<PAGE>
NOTE 3. EARNINGS PER COMMON SHARE
The following is a reconciliation of net income (the numerator) and
weighted-average shares outstanding (the denominator) used in determining
basic and diluted earnings per common share (EPS).
<TABLE>
<CAPTION>
Three Months Ended September 30, 2000
(Dollars in Thousands, except per share amounts)
Net Weighted-Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Basic EPS $ 1,779 2,179 $ 0.82
Effect of Dilutive Securities
Stock options 0 20
-------- -------- --------
Diluted EPS $ 1,779 2,199 $ 0.81
======== ======== ========
Three Months Ended September 30, 1999
(Dollars in Thousands, except per share amounts)
Net Weighted-Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Basic EPS $ 1,607 2,172 $ 0.74
Effect of Dilutive Securities 0 27
Stock options -------- -------- --------
Diluted EPS $ 1,607 2,199 $ 0.73
======== ======== ========
Nine Months Ended September 30, 2000
( Dollars in Thousands, except per share amounts)
Net Weighted-Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Basic EPS $ 5,075 2,179 $ 2.33
Effect of Dilutive Securities
Stock options 0 20
-------- -------- --------
Diluted EPS $ 5,075 2,199 $ 2.31
======== ======== ========
Nine Months Ended September 30, 1999
(Dollars in Thousands, except per share amounts)
Net Weighted-Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
Basic EPS $ 4,335 2,172 $ 2.00
Effect of Dilutive Securities
Stock options 0 27
-------- -------- --------
Diluted EPS $ 4,335 2,199 $ 1.97
======== ======== ========
</TABLE>
NOTE 4 SEGMENT INFORMATION
Selected segment information by industry segment for the three and nine month
periods ended September 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
Reportable Segments
(Dollars in thousands)
-------------------------------------------------------------------
Financial All
For the three month period ended September 30, Banking Supermarkets Other Total
2000
------------------------------------------------ --------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenue from external customers $ 13,482 1,736 66 $ 15,284
Intersegment revenues (expenses) (211) 309 581 679
Segment profit (loss) 1,426 581 (191) 1,816
Segment assets $ 563,034 23,703 3,045 $ 589,782
</TABLE>
<TABLE>
<CAPTION>
Reportable Segments
(Dollars in thousands)
-------------------------------------------------------------------
Financial All
For the three month period ended September 30, Banking Supermarkets Other Total
1999
------------------------------------------------ --------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenue from external customers $ 11,563 1,646 57 $ 13,266
Intersegment revenues (expenses) (125) 162 395 432
Segment profit (loss) 1,418 589 (347) 1,660
</TABLE>
<TABLE>
<CAPTION>
Reportable Segments
(Dollars in thousands)
-------------------------------------------------------------------
Financial All
For the nine month period ended September 30, Banking Supermarkets Other Total
2000
------------------------------------------------ --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenue from external customers $ 38,731 5,902 194 $ 44,827
Intersegment revenues (578) 857 1,744 2,023
Segment profit $ 4,042 1,959 (657) $ 5,344
</TABLE>
<TABLE>
<CAPTION>
Reportable Segments
(Dollars in thousands)
-------------------------------------------------------------------
Financial All
For the nine month period ended September 30, Banking Supermarkets Other Total
1999
------------------------------------------------ --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenue from external customers $ 33,392 4,708 142 $ 38,242
Intersegment revenues (368) 469 1,185 1,286
Segment profit $ 3,906 1,406 (878) $ 4,434
</TABLE>
<TABLE>
<CAPTION>
For the three months For the nine months
Ended September, 30 Ended September, 30
-------------------------------- -------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income
Total profit for reportable segments $ 2,007 $ 2,007 $ 6,001 $ 5,312
Non-reportable segment loss (191) (347) (657) (878)
Elimination of intersegment (gains) losses (37) (53) (269) (99)
-------- -------- -------- --------
Total consolidated other income $ 1,779 $ 1,607 $ 5,075 $ 4,335
======= ======= ====== =======
</TABLE>
<PAGE>
COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
----------------------------------------------
The following appears in accordance with the Securities Litigation Reform Act.
These financial statements and financial review include forward looking
statements that involve inherent risks and uncertainties. A number of
important factors could cause actual results to differ materially from those
in the forward looking statements. Those factors include fluctuations in
interest rates, inflation, government regulations, economic conditions, Year
2000 issues and competition in the geographic business areas in which the
Company conducts its operations.
Management Discussion and Analysis
----------------------------------------------
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.
Financial Condition
As of September 30, 2000, the Company continues to experience growth in total
assets, total loans and total deposits as compared to December 31, 1999. Total
assets, loans, and deposits increased by 8.78%, 6.74% and 9.06% respectively.
The growth in all areas is slightly less than the same period last year but
consistent with management's expectations. The growth in assets is
attributable to growth in deposits and retention of earnings. Management
expects the growth to continue in the future.
Liquidity
As of September 30, 2000, the Liquidity Ratio was 22.48% which is consistent
with the Company's target range of 20 - 25%. Liquidity is measured by the
ratio of net cash, short term and marketable securities to net deposits and
short term liabilities.
Interest Rate Risk
The Company uses a simulation model to monitor changes in net interest income
due to changes in market rates. The model of rising, falling and stable
interest rate scenarios allows management to monitor and adjust interest rate
sensitivity to minimize the impact of market rate swings. The analysis of
impact on net interest margins as well as market value of equity over a twelve
month period is subjected to a 200 basis point increase and decrease in rate.
The Company's overall interest rate risk was less than 4% of net interest
income subjected to rising and falling rates of 200 basis points. The
Company's policy is to allow no more than +- 8% change in net interest income
for these scenarios. Therefore, the Company is within its policy guidelines
and is protected from any significant impact due to market rate changes.
<PAGE>
Capital
Banking regulation requires the Company to maintain capital levels in relation
to Company assets. At September 30, 2000, the Company's and Bank's capital
ratios were considered satisfactory based on regulatory minimum capital
requirements. The minimum capital requirements and the actual capital ratios
for the Company at September 30, 2000 were as follows:
<TABLE>
Actual Regulatory Minimum
------ ------------------
<S> <C> <C>
Leverage 8.67% 3.00%
Risked Based Capital ratios:
Core Capital 11.22% 4.00%
Total Capital 12.47% 8.00%
</TABLE>
Results of Operation
Net interest income for the nine month period ended September 30, 2000 is up
10.26% over the same period for 1999, from $16,621,000 to $18,326,000, and is
up 8.79% for the three month period ending September 30, 2000 from $5,734,000
to $6,238,000 for 2000. Interest income was up by 16.67% for the nine month
period ending September 30, 2000 from $29,594,000 to $34,526,000 and up 17.11%
for the three month period ending September 30, 2000 from $10,233,000 to
$11,984,000. Interest expense was up 24.87% or $3,227,000 for the nine month
period ended September 30, 2000, over the same period in 1999 and up 27.72% or
$1,247,000 for the three month period ending September 30, 2000, as compared
to 1999. The increase in interest income is due to an increase of 40.74% or
$147,675,000 in earning assets from September 30, 1999 to September 30, 2000.
Investment securities increased by $14,434,000 or 18.26% during the period.
Total loans increased during the last year by $39,766,000 or 10.97%. The
increase in interest income, interest expense, and net interest income were
consistent with the budget projections made by management and are on target to
be consistent with annual projections.
The provision for loan losses was $1,076,000 for the first nine months of
2000. This provision will fluctuate based on Small Business Administration
(SBA) loans closed, as we have a policy of reserving 5% of the un-guaranteed
portion of any SBA loans. The Company currently has reserves totaling
$1,050,337 for its un-guaranteed portion of SBA loans.
The following table furnishes information on the Loan Loss Reserve for the
current nine month reporting period and the same period for 1999.
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Beginning Balance $ 5,682 $ 4,863
Less Charge Offs:
Real Estate Loans 0 (23)
Commercial Loans (346) (279)
Consumer Loans (428) (427)
Credit Cards (7) (24)
------- -------
(781) (753)
------- -------
Plus Recoveries
Real Estate Loans 0 4
Commercial Loans 50 44
Consumer Loans 106 179
Credit Cards 2 2
------- -------
158 229
------- -------
Net Charge-offs (623) (524)
------- -------
Plus Provision 1,076 1,027
------- -------
Ending Balance $ 6,135 $ 5,366
======= =======
</TABLE>
The loan loss reserve for the company is evaluated monthly and adjusted to
reflect the risk in the portfolio in the following manner. We use four different
methods of measuring risk in the portfolio: (a) Risk in our watch list of loans
and past due ratios; (b) Historical charge offs; ( c) Peer group comparisons;
and (d) Percentage of classified loans. We then compare results to reserve
balances to assure any and all identified risk are covered.
The Provision for Loan Losses for the nine month period ended September 30, 2000
represented 138% of charge offs for the same period, while the provision for the
first nine months of 1999 represented 136% of the charge offs recorded in that
period. The reserve at the end of September 30, 2000 represented 462% of non
accrual loans while the reserve at September 30, 1999 represented 230% of non
accrual loans. Non accrual loans have decreased from $2,469,000 at September 30,
1999 to $1,327,000 as of September 30, 2000. Past due loans greater than 90 days
and accruing interest have increased from $1,464,000 in 1999 to $2,418,000 in
2000. The total of past due loans greater than 90 days and non accrual loans has
decreased from $3,933,000 in September 1999, which represents 1.04% of
outstanding loans to $3,745,000 as of September 30, 2000, which represents .93%
of outstanding loans. Of the $3,745,000 of non performing loans on September 30,
2000, $710,000 is guaranteed by the U. S. Government. Our reserve represents
202% of the remaining portion of non performing loans which is within our
guideline of maintaining a reserve of at least 200% of non performing assets.
The Loan Loss Reserve balance to total loan ratio at September 30, 2000 was
1.52% as compared to 1.51% at September 30, 1999. Management considers the Loan
Loss Reserve to be adequate to absorb any losses that may be incurred.
The following table is a summary of Non Accrual, Past due and Restructured Debt
<TABLE>
<CAPTION>
September 30, 2000
------------------
Past Due
Non-accrual 90 days Restructured
Loans Still accruing Debt
----------- -------------- -------------
<S> <C> <C> <C>
Real Estate Loans 0 0 0
Commercial Loans 855 1,848 758
Consumer Loans 472 570 0
----- ----- ---
Total 1,327 2,418 758
===== ===== ===
</TABLE>
September 30, 1999
------------------
<TABLE>
<CAPTION>
Past Due
Non-accrual 90 days Restructured
Loans Still accruing Debt
----------- -------------- -------------
<S> <C> <C> <C>
Real Estate Loans 0 0 0
Commercial Loans 1,770 917 747
Consumer Loans 699 547 0
----- ----- ---
Total 2,469 1,464 747
===== ===== ===
</TABLE>
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrows to comply with the loan payment terms.
The banks place loans on non-accrual at such a time it is apparent that the
collection of all principal and interest is questionable and the loan is either
past due 90 days or bankruptcy has been filed.
Other income increased by 21.11% or $1,700,000 during the nine month period
ended September 30, 2000 as compared to the same period for 1999 and the three
month period ending September 30, 2000 showed a 13.30% or $376,000 increase over
the same three month period of 1999. Service charges on deposit accounts
increased by $466,000 or 22.14% for the nine month period ended September 30,
2000, and $214,000 or 28.76% for the three month period ended September 30,
2000, as compared to the same periods in 1999. The major increase was the
increase in non-sufficient funds (NSF) charges of $415,000 and $185,000 for the
nine month period and the three month period ended September 30, 2000,
respectively, compared to the same period in 1999. NSF charges increased
primarily as a result of the Company's continued growth in accounts in the
totally free checking program. Other service charges and fees increased by
$166,000 or 35.62% for the nine month period ended September 30, 2000, and
$29,000 or 14.36% for the three month period ended September 30, 2000, as
compared to the same periods in 1999. The major increase was fees from check
cashing, Honor and Mastermoney of $140,000 and $66,000 for the nine month period
and the three month period ended September 30, 2000, respectively, compared to
the same period in 1999. During these same periods other items earned less such
as credit insurance earned less. The gains on sale of loans increased by $24,000
or 10.04% during the nine month period ended September 30, 2000 as compared to
the same period for 1999. Nonbank subsidiary non-interest income increased by
25.40% or $1,164,000 for the nine month period ended September 30, 2000 and
9.97% or $158,000 for the three month period ending September 30, 2000 as
compared to the same periods in 1999. The increase in income is due to the
increased sale of in-store units associated with Financial Supermarket's
Consulting Agreement with the Canadian Imperial Bank of Commerce. Management
anticipates the income resulting from this relationship will continue to
increase for the next six to twelve months.
Other operating expenses increased by 12.15% or $2,126,000 for the nine month
period ended September 30, 2000, and 11.94% or $695,000 for the three month
period ending September 30, 2000 as compared to the same periods in 1999.
Salaries and benefits increased by $1,374,000 or 14.97% during the nine month
period ended September 30, 2000 compared to the same period in 1999. Full time
equivalent employees increased from 309 at the end of September 1999 to 345 at
the end of September 2000. Equipment and occupancy expenses were up by 4.18% or
$125,000 for the nine month period ended September 30, 2000, and 3.58% or
$38,000 for the three month period ending September 30, 2000, as compared to the
same period in 1999. The increase in full time equivalent employees as well as
equipment and occupancy expenses was influenced by the addition of three new
supermarket banking centers and two expansions of existing supermarket banking
centers during the past twelve months as well as the overall growth of the
Company's banking operations.
The Company incurred income tax expenses of $766,000 which represents an
effective rate of 30% for the three month period ended September 30, 2000 as
compared to $765,000 which represents an effective tax rate of 32% for the same
period in 1999. In addition, the Company incurred income tax expenses of
$2,299,000 which represents an effective rate of 31% for the nine month period
ended September 30, 2000 as compared to $1,809,000 which represents an effective
tax rate of 29% for the same period in 1999. The increase in the effective tax
rate is related to the increased income of Financial Supermarkets, which does
not include non-taxable income as do the Community Banking Subsidiaries.
Net income for the nine month period ended September 30, 2000, was $5,075,000 or
an increase of 17.07% and for the three month period ended September 30, 2000,
was $1,779,000 or an increase of 10.70% over the same periods for 1999. The
company is not aware of any other known trends, events or uncertainties, other
than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. The Company is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6.Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
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.
COMMUNITY BANKSHARES, INC.
DATE: November 13, 2000 BY: /s/ Harry L. Stephens
Harry L. Stephens,
Executive Vice President and
Chief Financial Officer
