<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996.
OR
- - --- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File No. 33-19735-A
BEACH FIRST NATIONAL BANCSHARES, INC.
- - -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
South Carolina 57-1030117
- - ------------------------- ----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
4702 Oleander Drive Myrtle Beach South Carolina 29577
- - -------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(803) 626-2265
- - -------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
- - -------------------------------------------------------------------------------
(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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.
Common stock, $1.00 par value per share 595,279 shares issued and
outstanding as of May 3, 1996.
(Page 1 of 14)
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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>
March 31, December 31,
1996 1995
ASSETS (Unaudited) (Unaudited)
- - ------ ----------- -----------
<S> <C> <C>
Cash $ 2,371 $ 4,639
Interest receivable 58,060 - -
Land, property and equipment 240,152 241,125
Organizational costs 83,772 81,672
Deferred registration costs 118,112 138,652
Other assets 14,142 40,341
---------- ----------
Total Assets $ 516,609 $ 506,429
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Liabilities:
Accounts payable $ 37,126 $ 131,563
Advances from organizers 65,000 65,000
Notes payable 527,000 411,000
Total Liabilities $ 629,126 $ 607,563
---------- ----------
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value,
10,000,000 shares authorized,
10 shares issued & outstanding $ 10 $ 10
Paid-in-capital 90 90
(Deficit) accumulated during
development stage (112,617) (101,234)
Total Shareholders' Equity $ (112,517) $ (101,134)
---------- ----------
Total Liabilities and
Shareholders' Equity $ 516,609 $ 506,429
========== ==========
</TABLE>
Refer to notes to the financial statements.
2
<PAGE> 3
BEACH FIRST NATIONAL BANCSHARES, INC.
MYRTLE BEACH, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED STATEMENT OF INCOME
<TABLE>
<CAPTION>
For the three months
ended March 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Interest income $ 35,181
-------
Total Revenues $ 35,181
-------
Expenses:
Salary expense $ 20,244 Company
Interest expense 11,819
Rent expense 600 was
Depreciation expense 973
Supplies expense 990 not
Miscellaneous other expenses 11,939
-------
Total Expenses $ 46,565 Operational
-------
Net (Loss) $(11,384)
=======
</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)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Net cash used by pre-operating
activities of the development stage $ (60,209) Company
----------
Cash flows from Financing Activities:
Issuance of common stock $ - - was
Advances from organizers - -
Notes payable 116,000 not
----------
Net cash provided by
financing activities $ 116,000 Operational
----------
Net increase in cash $ 55,791
Cash at beginning of period 4,639
----------
Cash at end of period $ 60,430
==========
</TABLE>
Refer to notes to the financial statements.
4
<PAGE> 5
BEACH FIRST NATIONAL BANCSHARES, INC.
MYRTLE BEACH, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 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 Beach First National Bank (In
Organization) (thee "Bank") to be located in Myrtle Beach, South Carolina. Its
Registration Statement to sell stock was declared effective by the Securities
and Exchange Commission on September 29, 1995. 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. Having met all of the conditions to breaking escrow, the Company broke
escrow on May 3, 1996 and received $5,952,790 in principal and $145,491 in
earned interest.
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 March 31, 1996, the Escrow
Agent held $5,435,970 from the sale of 543,597 shares of stock.
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.
5
<PAGE> 6
BEACH FIRST NATIONAL BANCSHARES, INC.
MYRTLE BEACH, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 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.
Registration costs associated with an unsuccessful offering are charged to
operations in the period during which the offering is deemed unsuccessful.
Income Taxes. The Company will be subject to taxation whenever
taxable income is generated. As of March 31, 1996, no income taxes had been
accrued since no taxable income had been generated.
Net (Loss) Per Share. Information concerning net 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 loss was 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. The line of credit matures April 24, 1996 and
carries an interest rate of
6
<PAGE> 7
BEACH FIRST NATIONAL BANCSHARES, INC.
MYRTLE BEACH, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
prime. Proceeds from the above line of credit have been and are expected to
continue to be used to fund organizational costs, registration costs and
pre-opening expenses. As of March 31, 1996, the outstanding balance on the
above line of credit was $310,000. Interest accrued, on the above line of
credit, for the three-month period ended March 31, 1996 amounted to $5,725.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
In connection with the Company's formation and the organization of its
subsidiary Bank, the Company has entered into three separate agreements with a
bank consulting firm, a law firm and an accounting firm to assist it in: (i)
preparing and filing all organizational and incorporation papers; (ii)
preparing and filing applications with the bank regulatory authorities
concerning the formation of a bank holding company and the organization of a
national banking association; (iii) preparing a Registration Statement on Form
S-1, including the financial audit and filing same with the Securities and
Exchange Commission; and (iv) drafting of employment agreements, stock option
plans and other matters relating to compensation. The aggregate cost of the
above services is estimated to range from $58,000 to $105,000, depending upon
the degree of complexity and time spent on the above projects.
NOTE 5 - OTHER ASSETS
Other assets at September 30, 1995, consisted of the following:
<TABLE>
<S> <C> <C>
a. Prepaid expenses, legal 5,000
b. Prepaid expenses, consultants 2,500
c. Prepaid expense, insurance 6,642
------
Total other assets $14,142
======
</TABLE>
7
<PAGE> 8
BEACH FIRST NATIONAL BANCSHARES, INC.
MYRTLE BEACH, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
NOTE 6 - RELATED PARTY TRANSACTIONS
Please refer to Note 3, above, concerning a $350,000 line of credit
guaranteed by the group of organizers.
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 three-month period ended March 31, 1996, amounted to $1,463.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 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. Having met all of the conditions to breaking escrow, the Company broke
escrow on May 3, 1996 and received $5,952,790 in principal and $145,491 in
earned interest.
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 Registration Statement became effective on September
29, 1995. By the end of business, March 31, 1996, the proceeds from the sale
of 543,597 shares of common stock were in escrow.
Presently, to fund its operations, the Company is dependent upon a
$350,000 line of credit with an unrelated financial institution and a $65,000
loan from its group of organizers. After the escrow account is broken, the
Company will pay-off its debt and inject $5.25 million into the Bank's capital
accounts.
Results of Operations
Since the Company was not operating for the period ended March 31,
1995, no comparisons are provided. This discussion will therefor concentrate
on the March 31, 1996 results. For the three-month period ended September 30,
1996, net loss amounted to $11,384 on revenues of $35,181. The majority of the
loss is represented by salary expense ($20,244) and by interest expense
($11,819).
9
<PAGE> 10
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 three months ended March 31, 1996.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. OTHER INFORMATION.
(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).
<PAGE> 11
4.1. Provisions in the Company's Articles of Incorporation
and Bylaws defining the rights of holders of the
Common Stock (incorporated by 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).*
21.1. Subsidiaries of the Company.
27 Financial Data Schedule (for SEC use only)
- - ----------------------------
* Denotes executive compensation contract or arrangement.
(b) Reports on Form 8-K. The Company did not file any
reports on Form 8-K during the quarter ended March 31, 1996.
<PAGE> 12
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: 5/15/96 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 BEACH FIRST
NATIONAL BANCHARES, INC. UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,371
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 516,609
<DEPOSITS> 0
<SHORT-TERM> 527,000
<LIABILITIES-OTHER> 102,126
<LONG-TERM> 0
0
0
<COMMON> 10
<OTHER-SE> (112,527)
<TOTAL-LIABILITIES-AND-EQUITY> 516,609
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 35,181
<INTEREST-TOTAL> 35,181
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 11,819
<INTEREST-INCOME-NET> 23,362
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 34,746
<INCOME-PRETAX> (11,384)
<INCOME-PRE-EXTRAORDINARY> (11,384)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,384)
<EPS-PRIMARY> (1,138)
<EPS-DILUTED> (1,138)
<YIELD-ACTUAL> 0
<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>
