<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
Or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
, 19 . -------------
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Commission file number : 33-95562
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BEACH FIRST NATIONAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
South Carolina
57-1030117 (State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1601 North Oak Street, Suite 305, Myrtle Beach, South Carolina 29577
(Address of principal executive offices)
(803) 626-2265
(Registrant's telephone number including area code)
4702 Oleander Drive, Myrtle Beach, South Carolina 29577
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 13, 1996
Common Stock, $1.00 par value 636,642
(No. of Shares)
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BEACH FIRST NATIONAL BANCSHARES
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 1996 and
December 31, 1995 3
Unaudited Statement of Income for the
Six Months ended June 30, 1996 and 1995 4
Unaudited Statement of Income for the
Three Months ended June 30, 1996 and 1995 5
Statements of Cash Flows for the Six
Months ended June 30, 1996 and 1995 6
Notes to Unaudited Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 15
</TABLE>
EXHIBIT INDEX
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
ASSETS (Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash $3,886,493 $ 4,639
Interest receivable 43,668 - -
Investment, available-for-sale 2,002,917 - -
Land, property and equipment 256,363 241,125
Organizational costs 85,133 81,672
Deferred registration costs 130,905 138,652
Other assets 47,414 40,341
---------- ----------
Total Assets $6,452,893 $ 506,429
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable $ 18,893 $ 131,563
Advances from organizers 65,000 65,000
Notes payable 217,000 411,000
---------- ----------
Total Liabilities $ 300,893 $ 607,563
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value,
10,000,000 shares authorized,
626,252 and 10 shares issued
& outstanding as of June 30, 1996
and December 31, 1995, respectively $ 626,252 $ 10
Paid-in-capital 5,636,268 90
(Deficit) accumulated during
development stage (110,520) (101,234)
--------- -----------
Total Shareholders' Equity $6,152,000 $ (101,134)
Total Liabilities and ---------- -----------
Shareholders' Equity $6,452,893 $ 506,429
========= ==========
</TABLE>
Refer to notes to the financial statements.
3
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BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Unaudited Statement of Income
<TABLE>
<CAPTION>
For the quarter
ended June 30,
---------------------
1996 1995
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<S> <C> <C>
Revenues:
Interest income $ 67,583
--------
Total Revenues $ 67,583
--------
Expenses:
Salary expense $ 30,092 Company
Interest expense 8,701
Rent expense 900 was
Insurance 4,001
Legal & professional 5,764
Utilities & telephone 1,258 not
Depreciation expense 1,517
Supplies expense 694 Operational
Miscellaneous other expenses 12,559
--------
Total Expenses $ 65,486
--------
Net Income $ 2,097
========
</TABLE>
Refer to notes to the financial statements.
4
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BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Unaudited Statement of Income
<TABLE>
<CAPTION>
For the six months
ended June 30,
--------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Interest income $102,763
--------
Total Revenues $102,763
--------
Expenses:
Salary expense $ 50,336 Company
Interest expense 20,520
Rent expense 1,500 was
Insurance 6,984
Legal & professional 6,180
Utilities & telephone 1,824 not
Depreciation expense 2,489
Supplies expense 1,684 Operational
Miscellaneous other expenses 20,533
--------
Total Expenses $112,050
--------
Net (Loss) $ (9,287)
========
</TABLE>
Refer to notes to the financial statements.
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BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
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1996 1995
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<S> <C> <C>
Net cash used by pre-operating
activities of the development stage $ (165,922) Company
-----------
Cash flows from Investing Activities:
Purchase of AFS security (2,002,917) was
Purchase of fixed assets (17,727)
-----------
Net cash used by Investing Activities $(2,020,644) not
-----------
Cash flows from Financing Activities:
Increase in common stock $ 6,262,420 Operational
Reduction in notes payable (194,000)
-----------
Net cash provided by
Financing Activities $ 6,068,420
-----------
Net increase in cash $ 3,881,854
Cash at beginning of period 4,639
-----------
Cash at end of period $ 3,886,493
===========
</TABLE>
Refer to notes to the financial statements.
6
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BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Notes to Financial Statements (Unaudited)
June 30, 1996
Note 1 - Summary of Organization
Beach First National Bancshares, Inc., (a development stage
enterprise) Myrtle Beach, South Carolina (the "Company"), was incorporated on
July 28, 1995 under the laws of the State of South Carolina for the purpose of
operating as a bank holding company with respect to a proposed de novo national
bank (the "Bank") to be located in Myrtle Beach, South Carolina. The Company
obtained preliminary approval to establish a national bank. Its Registration
Statement to sell stock was declared effective by the Securities and Exchange
Commission on September 29, 1995.
A minimum of 525,000 and a maximum of 1,000,000 shares of common stock
were offered to the public at $10 per share. As of June 30, 1996, 626,242
shares of stock have been purchased and paid for. The Company has extended its
offering of its common stock until the earlier of the sale of 1,000,000 shares
or October 31, 1996, unless the offering is extended, at the discretion of the
Company, for additional periods ending no later than December 31, 1996.
The Company authorized the issuance of 10 million shares of common
stock, $1 par value per share. No holder of common stock: (i) has preemptive
rights with respect to the issuance of shares of that or any other class of
common stock or (ii) is entitled to cumulative voting rights with respect to
the election of directors. The Company also authorized the issuance of up to
10 million shares of preferred stock, issuable in series, the relative rights
and preferences of which shall be designated by the Board of Directors.
The Company is a development stage enterprise as defined by FASB
Statement No. 7, "Accounting and Reporting by Development Stage Enterprises,"
as it devotes substantially all of its efforts to establishing a new business,
its planned principal operations have not commenced and there has been no
significant revenue from the planned principal operations.
Note 2 - Summary of Significant Accounting Policies
Basis of Accounting. The accounting and reporting policies of the
Company conform to generally accepted accounting principles and to general
practices in the banking industry. The Company uses the accrual basis of
accounting by recognizing revenues when they are earned and expenses in the
period incurred, without regard to the time of receipt or payment of cash.
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BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Notes to Financial Statements
(Unaudited)
June 30, 1996
Organizational Costs. Organizational costs are costs that have been
incurred in the expectation that they will generate future revenues or otherwise
benefit periods after the Company reaches the operating stage. Organizational
costs generally include incorporation, legal and accounting fees incurred in
connection with establishing the Company. Salary and travel expenses, overhead
and similar operating costs are not considered to be organizational costs and
are thus expensed in the period incurred. Organizational costs are capitalized
when incurred, and are amortized over a sixty-month period beginning immediately
after the Company commences its principal operations.
Deferred Registration Costs. Deferred registration costs are deferred
and incremental costs incurred by the Company in connection with the issuance of
its own stock. Deferred registration costs do not include any allocation of
salaries, overhead or similar costs. In a successful offering, deferred
registration costs are deducted from the Company's paid-in-capital account. As
of June 30, 1996, deferred registration costs amounted to $130,905.
Income Taxes. The Company will be subject to taxation whenever taxable
income is generated. As of June 30, 1996, no income taxes had been accrued
since no taxable income had been generated.
Net Income/(Loss) Per Share. Information concerning net income/(loss)
per share was omitted from the face of the Statement of Operations since that
information is not indicative of the capital structure of the ongoing entity.
Statement of Cash Flows. The statement of cash flows was prepared
using the indirect method. Under this method, net income/(loss) is reconciled
to net cash flows from pre-operating activities by adjusting for the effects of
current assets and short term liabilities.
Note 3 - Note Payable
On April 24, 1995, the organizers of the Company executed and, as a
group, guaranteed a $350,000 line of credit on behalf of the Company from an
unrelated financial institution. Proceeds from the above line of credit were
used to fund organizational costs,
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BEACH FIRST NATIONAL BANCSHARES, INC.
Myrtle Beach, South Carolina
(A Development Stage Enterprise)
Notes to Financial Statements
(Unaudited)
June 30, 1996
registration costs and pre-opening expenses. As of June 30, 1996, the above
line of credit, with all accrued interest, was paid off.
Note 4 - Related Party Transactions
The thirteen organizers advanced to the Company $5,000 each,
or $65,000 in the aggregate. The advances are interest-Free and the maturity
dates are set to coincide with the date the escrow will be released upon the
successful completion of the offering. While the advances are interest free,
the imputed interest expense on the advances based on a 9.0% interest rate and
for the six-month period ended June 30, 1996, amounted to $2,925.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements, and
the Company's operating performance each quarter is subject to various risks
and uncertainties that are discussed in detail in the Company's filings with
the Securities and Exchange Commission, including the "Risk Factors" section in
the Company's Registration Statement, dated September 29, 1995.
The Company was incorporated in South Carolina on July 28, 1995 to
become a bank holding company and to own and control all of the capital stock
of Beach First National Bank (in organization) (the "Bank"). Organizing
activities for the Company were begun in January, 1995, and have consisted
primarily of preparation and filing of a registration statement for sale of the
Company's stock, preparation and filing of the Bank's charter application and
hiring of staff. The Company received preliminary approval of its application
to charter the Bank from the Office of the Comptroller of the Currency on
February 12, 1996. On February 7, 1996, the Federal Deposit Insurance
Corporation approved the Company's application for deposit insurance for the
Bank. On April 17, 1996 the Board of Governors of the Federal Reserve System
approved the Company's application to become a bank holding company, and the
South Carolina State Board of Financial Institutions approved the Company's
application to become a bank holding company on May 2, 1996. The Company
currently expects to open the Bank and commence banking operations late in the
third quarter or early in the fourth quarter of 1996.
RESULTS OF OPERATIONS
Since the Company was not operating for the period ended June 30,
1995, no comparisons are provided. This discussion will concentrate on the
results for the six month and three month periods ended June 30, 1996.
For the six month period ended June 30, 1996, losses amounted to
$(9,287), on revenues of $102,763. All revenues were from interest income on
the proceeds received from the sale of the Common Stock. The majority of
expenses were represented by salary ($50,336) and interest ($20,520). Other
operating expenses, such as rent, insurance, utilities, etc., amounted to
($41,194).
For the three month period ended June 30, 1996, net income amounted to
$2,097 on revenues of $67,583. All revenues were earned from interest while
expenses were represented by salary ($30,092), interest ($8,701) and other
($26,693).
LIQUIDITY AND SOURCES OF CAPITAL
The Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission offering for sale a minimum of 525,000 and a
maximum of 1,000,000 shares of its own $1 par value common stock: each share
will be sold for $10. The
10
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Registration Statement became effective on September 29, 1995. Having met all
of the conditions to breaking escrow, the Company broke escrow on May 3, 1996.
As of June 30, 1996, the Company had received proceeds of $6,262,420 from the
sale of 626,242 shares of Common Stock.
Presently, to fund its operations, the Company is using funds from the
sale of its Common Stock and a $65,000 loan from its group of organizers. The
Company will utilize approximately $5.25 million to capitalize the Bank. The
Company plans to retain any remaining proceeds.
11
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Company or the Bank is a party or of which any of their property is subject.
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable.
(b) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) Not applicable.
(b) Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders for a vote
during the six months ended June 30, 1996.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
1.1. Selling Agent Agreement, dated October 16, 1995, by
and between Capital Investment Group, Inc. and the
Company (incorporated by reference to Exhibit 1.1 to
the Company's Registration Statement No. 33-95562 on
Form S-1).
3.1. Articles of Incorporation (incorporated by reference
to Exhibit 3.1 to the Company's Registration
Statement No. 33-95562 on Form S-1).
3.2. Bylaws (incorporated by reference to Exhibit 3.2 to
the Company's Registration Statement No. 33-95562 on
Form S-1).
4.1. Provisions in the Company's Articles of Incorporation
and Bylaws defining the rights of holders of the
Common Stock (incorporated by
12
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reference to Exhibit 4.1 to the Company's Registration
Statement No. 33-95562 on Form S-1).
4.2. Form of Certificate of Common Stock (incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement No. 33-95562 on Form S-1).
10.1. Contract of Sale, dated April 27, 1995, by and between
Nadim Baroody, Mary Baroody, Jean P. Saad, and Miray
Saad, as sellers, and Orvis Bartlett Buie, as
purchaser (incorporated by reference to Exhibit 10.1
to the Company's Registration Statement No. 33-95562
on Form S-1).
10.2. Line of Credit Note, dated April 24, 1995, by Sea
Group, Ltd. to The Bankers Bank (incorporated by
reference to Exhibit 10.2 to the Company's
Registration Statement No. 33-95562 on Form S-1).
10.3. Employment Agreement, dated August 23, 1995, by and
between the Company and William Gary Horn
(incorporated by reference to Exhibit 10.3 to the
Company's Registration Statement No. 33-95562 on Form
S-1). *
10.4. Form of Amended and Restated Escrow Agreement, dated
November __, 1995, by and among The Bankers Bank,
Capital Investment Group, Inc., and the Company
(incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement No. 33-95562 on Form
S-1).
10.5. Amended and Restated Escrow Agreement, dated December
1, 1995, by and among The Bankers Bank, Capital
Investment Group, Inc., and the Company (incorporated
by reference to Exhibit 10.5 of the Company's Form
10-KSB for the fiscal year ended December 31, 1995).
10.6. Amendment to Employment Agreement, dated January 9,
1996, by and between the Company and William Gary
Horn (incorporated by reference to Exhibit 10.6 of
the Company's Form 10-KSB for the fiscal year ended
December 31, 1995).*
- -----------------------
* Denotes executive compensation contract or arrangement.
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21.1. Subsidiaries of the Company. (Incorporated by
reference to Exhibit 21.1 of the Company's Form
10-QSB for the quarter ended March 30, 1996).
27.1. Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K. The Company did not file any
reports on Form 8-K during the quarter ended June 30, 1996.
14
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SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, as amended, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BEACH FIRST NATIONAL BANCSHARES, INC.
Date: August 14, 1996 By: /s/ Raymond E. Cleary III
--------------------- ----------------------------------
Raymond E. Cleary III
President and Chief Executive
Officer (principal financial
and accounting officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF BEACH FIRST NATIONAL BANCSHARES, INC. FOR THE
PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,886,493
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,002,917
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 6,452,893
<DEPOSITS> 0
<SHORT-TERM> 282,000
<LIABILITIES-OTHER> 18,893
<LONG-TERM> 0
0
0
<COMMON> 626,252
<OTHER-SE> 5,525,748
<TOTAL-LIABILITIES-AND-EQUITY> 6,452,893
<INTEREST-LOAN> 0
<INTEREST-INVEST> 10,871
<INTEREST-OTHER> 91,892
<INTEREST-TOTAL> 102,763
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 20,520
<INTEREST-INCOME-NET> 82,243
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 91,530
<INCOME-PRETAX> (9,287)
<INCOME-PRE-EXTRAORDINARY> (9,287)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,287)
<EPS-PRIMARY> (929)
<EPS-DILUTED> (929)
<YIELD-ACTUAL> 6.25
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
