U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
[_] Transition Report Under Section 13
or 15(d) of the Exchange Act
For the transition period ended ______________
Commission File Number 0-23521
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GREAT PEE DEE BANCORP, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 56-2050592
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
515 MARKET STREET, CHERAW, SC 29520
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(Address of principal executive office)
(843) 537-7656
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X
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No ____
As of May 1, 2001, 1,618,245 shares of the issuer's common stock, $.01 par
value, were outstanding. The registrant has no other classes of securities
outstanding.
This report contains 11 pages.
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Page No.
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Part 1. FINANCIAL INFORMATION
Item 1 - Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
March 31, 2001 and June 30, 2000......................... 3
Consolidated Statements of Operations
Three Months and Nine Months Ended
March 31, 2001 and 2000.................................. 4
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2001 and 2000................ 5
Notes to Consolidated Financial Statements............... 6
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K................. 10
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Part 1. FINANCIAL INFORMATION
Item 1 - Financial Statements
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Great Pee Dee Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
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March 31,
2001 June 30,
ASSETS (Unaudited) 2000*
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(In Thousands)
Cash on hand and in banks $ 1,147 $ 489
Interest-bearing balances in other banks 2,464 6,215
Federal funds sold 289 2,427
Investment securities available for sale, at fair value 463 405
Investment securities held to maturity, at amortized cost 4,829 4,712
Loans receivable, net 91,957 84,758
Loans held for sale 2,738 155
Accrued interest receivable 821 549
Premises and equipment, net 1,055 1,103
Stock in the Federal Home Loan Bank, at cost 573 573
Real estate acquired in settlement of loans 6 22
Other assets 2,065 2,434
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TOTAL ASSETS $108,407 $103,842
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposit accounts $ 73,637 $ 70,254
Advances from Federal Home Loan Bank 9,500 7,000
Accrued interest payable 59 172
Advance payments by borrowers for property taxes and insurance 94 97
Accrued expenses and other liabilities 103 53
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TOTAL LIABILITIES 83,393 77,576
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STOCKHOLDERS' EQUITY
Preferred stock, no par value, 400,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.01 par value, 3,600,000
shares authorized; 2,224,617 shares issued 22 22
Additional paid in capital 21,699 21,549
Unearned compensation (1,420) (1,571)
Retained earnings, substantially restricted 12,128 12,134
Accumulated other comprehensive loss (23) (60)
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32,406 32,074
Cost of common stock in treasury, 606,372 and
454,506 shares, respectively (7,392) (5,808)
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TOTAL STOCKHOLDERS' EQUITY 25,014 26,266
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $108,407 $103,842
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* Derived from audited financial statements
See accompanying notes.
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Great Pee Dee Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
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Three Months Ended Nine Months Ended
March 31, March 31,
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2001 2000 2001 2000
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(In Thousands Except Per Share Data)
INTEREST INCOME
Loans $ 1,825 $ 1,389 $ 5,226 $ 3,895
Investments 101 79 316 238
Deposits in other banks and federal funds sold 31 68 238 104
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TOTAL INTEREST INCOME 1,957 1,536 5,780 4,237
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INTEREST EXPENSE
Savings deposits 978 615 2,935 1,621
Borrowed funds 137 138 382 268
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TOTAL INTEREST EXPENSE 1,115 753 3,317 1,889
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NET INTEREST INCOME 842 783 2,463 2,348
PROVISION FOR LOAN LOSSES 12 98 12 98
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 830 685 2,451 2,250
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NON-INTEREST INCOME 147 39 401 93
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NON-INTEREST EXPENSES
Personnel costs 315 206 959 703
Occupancy 65 37 205 102
Other 249 303 691 511
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TOTAL NON-INTEREST EXPENSES 629 546 1,855 1,316
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INCOME BEFORE INCOME TAXES 348 178 997 1,027
PROVISION FOR INCOME TAXES 130 55 374 372
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NET INCOME $ 218 $ 123 $ 623 $ 655
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NET INCOME PER SHARE
Basic $ .15 $ .08 $ .41 $ .38
Assuming dilution .15 .08 .41 .38
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 1,496,364 1,649,607 1,512,373 1,743,983
Assuming dilution 1,496,551 1,649,607 1,512,435 1,745,665
CASH DIVIDEND PER SHARE $ .11 $ .10 $ .32 $ .29
See accompanying notes.
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Great Pee Dee Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
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Nine Months Ended
March 31,
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2001 2000
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(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 623 $ 655
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 312 83
Provision for loan losses 12 98
Provision for foreclosed asset 16 -
Release of ESOP shares 105 117
Amortization of stock awards under recognition
and retention plan 93 204
Treasury stock issued as compensation 12 -
(Increase) decrease in loans held for sale (2,583) 525
Change in assets and liabilities:
Increase in accrued interest receivable (272) (115)
Decrease in accrued interest payable (113) (39)
Other 197 (185)
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NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES (1,598) 1,343
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of:
Available for sale investment securities - (50)
Held to maturity investment securities (799) (900)
Proceeds from maturities of held-to-maturity investments 682 105
Net increase in loans (7,227) (6,217)
Purchases of property and equipment (63) (89)
Net cash received in branch acquisition - 11,572
Other 16 10
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NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES (7,391) 4,431
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts 3,383 510
Proceeds from FHLB advances 2,500 8,000
Increase (decrease) in advances from borrowers (3) -
Purchase of treasury stock (1,639) (3,946)
Cash dividends paid (483) (518)
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NET CASH PROVIDED
BY FINANCING ACTIVITIES 3,758 4,046
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NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (5,231) 9,820
CASH AND CASH EQUIVALENTS, BEGINNING 9,131 1,583
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CASH AND CASH EQUIVALENTS, ENDING $ 3,900 $11,403
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See accompanying notes.
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Great Pee Dee Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
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NOTE A - BASIS OF PRESENTATION
In management's opinion, the financial information, which is unaudited, reflects
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial information as of and for the three and
nine month periods ended March 31, 2001 and 2000, in conformity with generally
accepted accounting principles. The financial statements include the accounts of
Great Pee Dee Bancorp, Inc. (the "Company") and its wholly-owned subsidiary,
First Federal Savings and Loan Association of Cheraw ("First Federal" or the
"Bank"). Operating results for the three and nine month periods ended March 31,
2001 are not necessarily indicative of the results that may be expected for the
fiscal year ending June 30, 2001.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the financial
statements filed as part of the Company's annual report on Form 10-KSB. This
quarterly report should be read in conjunction with such annual report.
NOTE B - NET INCOME PER SHARE
Basic income per share has been computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. In
accordance with generally accepted accounting principles, ESOP shares are only
considered outstanding for earnings per share calculations when they are earned
or committed to be released.
Diluted net income per share reflects the dilutive effects of outstanding common
stock options.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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This Quarterly Report on Form 10-QSB may contain certain forward-looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to various
factors which could cause actual results to differ materially from these
estimates. These factors include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting the
Company's operations, pricing, products and services.
Comparison of Financial Condition at March 31, 2001 and June 30, 2000
The Company's total assets increased by $4.6 million during the nine months
ended March 31, 2001, from $103.8 million at June 30, 2000 to $108.4 million at
the period end. Loan growth of $7.2 million during the nine months, as well as
an increase of $2.6 million in loans held for sale, was funded principally by
additional FHLB advances of $2.5 million, an increase of $3.4 million in
customer deposits, and by conversion of liquid assets to loans. During the nine
months ended March 31, 2001, the Company purchased 157,101 treasury shares at a
total cost of approximately $1.6 million. Total stockholders' equity was $25.0
million at March 31, 2001 as compared with $26.3 million at June 30, 2000, a
decrease of $1.3 million that resulted principally from the purchase of treasury
shares. At March 31, 2001, the Bank continued to significantly exceed all
applicable regulatory capital requirements.
Impact of New Branch on Operating Results
Comparability of the Company's operating results for the current three and nine
month periods with the corresponding periods of the prior fiscal year is most
dramatically impacted by the acquisition on March 3, 2000 of the full service
branch in Florence, South Carolina. The Company has incurred additional
interest and non-interest expenses as it undertakes to fully assimilate the new
branch into its overall operations, contributing to a decline in net income for
the nine months ended March 31, 2001 as compared with the corresponding period
of the preceding fiscal year. Net income for the three months ended March 31,
2001 is significantly improved over net income for the three months ended March
31, 2000. Management is pleased with the overall progress of both the Company
and the Florence branch, and believes that this growth will positively impact
future operating results and shareholder value.
Comparison of Results of Operations for the Three Months Ended March 31, 2001
and 2000
Net Income. Net income for the quarter ended March 31, 2001 was $218,000, or
$.15 per share, as compared with net income of $123,000, or $.08 per share, for
the three months ended March 31, 2000, an increase of $95,000 or $.07 per share.
Net income was significantly impacted during the current quarter by the
amortization of intangibles associated with the acquisition of the full service
branch in Florence, South Carolina. The quarterly amortization amounted to
$67,000 for the current quarter as compared with $20,000 for the quarter ended
March 31, 2000. During the quarter ended March 31, 2000, the Company's made a
loan loss provision of $98,000, principally as a result of the Florence Branch
purchase, while the provision for loan losses for the quarter ended March 31,
2001 was $12,000, a decrease of $86,000. In addition, during the quarter ended
March 31, 2000, the Company recognized non-recurring costs of $154,000 incurred
in connection with the branch purchase.
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Net Interest Income. Net interest income for the quarter ended March 31, 2001
was $842,000 as compared with $783,000 during the quarter ended March 31, 2000,
an increase of $59,000. The Company's net interest margin was 2.23% during the
quarter ended March 31, 2001 as compared with to 2.38% for the quarter ended
March 31, 2000. This narrowing of the net interest margin resulted principally
from lingering impact of interest rate increases during calendar 2000, since the
Company's cost of interest-bearing liabilities generally adjusts more quickly to
rate changes than do yields on its interest-earning assets.
Provision for Loan Losses. The provision for loan losses was $12,000 and
$98,000 for the quarters ended March 31, 2001 and 2000, respectively. The
higher provision for the prior quarter was made as a result of the Florence
Branch purchase discussed above. At March 31, 2001, nonaccrual loans
aggregated $586,000 while the allowance for loan losses stood at $547,000.
Non-Interest Income. Non-interest income increased significantly from $39,000
for the quarter ended March 31, 2000 to $147,000 for the quarter ended March 31,
2001. This increase results from higher fee income generated as a result of the
Florence branch purchase and from an increase in income derived from the
origination and sale of mortgage loans.
Non-Interest Expenses. Non-interest expenses increased to $629,000 during the
quarter ended March 31, 2001 as compared with $546,000 for the quarter ended
March 31, 2000, an increase of $83,000. The increase in non-interest expense
reflects increases in personnel costs and occupancy that are primarily due to
the addition of the full service branch in Florence, South Carolina in March
2000. Personnel costs increased from $206,000 to $315,000 while occupancy costs
increased from $37,000 to $65,000. Other non-interest expenses decreased from
$303,000 for the quarter ended March 31, 2000 to $249,000 for the quarter ended
March 31, 2001, principally for the reasons explained under the caption "Net
Income" above.
Provision for Income Taxes. The provision for income taxes, as a percentage of
income before income taxes, was 37.4% and 30.9% for the quarters ended March 31,
2001 and 2000, respectively.
Comparison of Results of Operations for the Nine months Ended March 31, 2001 and
2000
Net Income. Net income for the nine months ended March 31, 2001 was $623,000,
or $.41 per share, as compared with net income of $655,000, or $.38 per share,
for the nine months ended March 31, 2000, a net income decrease of $32,000. Net
income was most significantly impacted during the current nine months by the
amortization of intangibles associated with the acquisition of the full service
branch in Florence, South Carolina. The nine months' amortization amounted to
$201,000. The nine months ended March 31, 2000 reflected amortization of only
$20,000, but included non-recurring costs of $154,000 incurred in connection
with the branch purchase.
Net Interest Income. Net interest income for the nine months ended March 31,
2001 was $2.5 million, an increase of $115,000 over the corresponding amount for
the nine months ended March 31, 2000. The Company's net interest margin was
2.12% during the nine months ended March 31, 2001 as compared with to 2.48% for
the nine months ended March 31, 2000. This narrowing of the net interest margin
resulted principally from increasing interest rates during calendar year 2000,
since the Company's cost of interest-bearing liabilities generally adjusts more
quickly to rate changes than do yields on its interest-earning assets.
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Provision for Loan Losses. The provision for loan losses was $12,000 and
$98,000 for the nine months ended March 31, 2001 and 2000, respectively. The
higher provision for the prior nine month period was made as a result of the
Florence Branch purchase discussed above. At March 31, 2001, nonaccrual loans
aggregated $586,000 while the allowance for loan losses stood at $547,000.
Non-Interest Income. Non-interest income increased significantly from $93,000
for the nine months ended March 31, 2000 to $401,000 for the nine months ended
March 31, 2001. This increase results from higher fee income generated as a
result of the Florence branch purchase and from an increase in income derived
from the origination and sale of mortgage loans.
Non-Interest Expenses. Non-interest expenses increased to $1.9 million during
the nine months ended March 31, 2001 as compared with $1.3 million for the nine
months ended March 31, 2000, an increase of $539,000. The 41% overall increase
in non-interest expense reflects increases in all expense categories that are
primarily due to the addition of the full service branch in Florence, South
Carolina in March 2000. Personnel costs increased from $703,000 to $959,000.
Occupancy costs increased from $102,000 to $205,000, while other non-interest
expenses increased by $180,000 from $511,000 to $691,000.
Provision for Income Taxes. The provision for income taxes, as a percentage of
income before income taxes, was 37.5% and 36.2% for the nine months ended March
31, 2001 and 2000, respectively.
Liquidity and Capital Resources
The objective of the Company's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses First
Federal's ability to meet deposit withdrawals on demand or at contractual
maturity, to repay borrowings as they mature, and to fund new loans and
investments as opportunities arise.
The Company's primary sources of internally generated funds are principal and
interest payments on loans receivable and cash flows generated from operations.
External sources of funds include increases in deposits and advances from the
FHLB of Atlanta.
First Federal is required under applicable federal regulations to maintain
specified levels of "liquid" investments in qualifying types of United States
Government, federal agency and other investments having maturities of five years
or less. Current OTS regulations require that a savings association maintain
liquid assets of not less than 4% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less.
Monetary penalties may be imposed for failure to meet applicable liquidity
requirements. At March 31, 2001, First Federal's liquidity, as measured for
regulatory purposes, was 9.0%, or $4.2 million in excess of the minimum OTS
requirement.
First Federal is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on First
Federal's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, First Federal must meet
specific capital guidelines that involve quantitative measures of First
Federal's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. First Federal's capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. At March 31, 2001, First
Federal's level of capital substantially exceeded all applicable requirements.
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Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None
(b) Reports on Form 8-K.
During the quarter ended March 31, 2001, the Company filed no reports
on Form 8-K.
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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.
GREAT PEE DEE BANCORP, INC.
Date: May 3, 2001 By: /s/ Herbert W. Watts
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Herbert W. Watts
Chief Executive Officer
Date: May 3, 2001 By: /s/ Johnnie L. Craft
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Johnnie L. Craft
Chief Financial Officer
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