U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One) FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
------
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2001
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
-------
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from _________to_________
Commission File Number 33-76644
COMMUNITYCORP
(Exact name of registrant as specified in its charter)
South Carolina 57-1019001
(State or other jurisdiction of (I.R.S. Employer
incorporation) Identification No.)
1100 N. Jefferies Boulevard
Walterboro, SC 29488
(Address of principal executive
offices, including zip code)
(843) 549-2265
(Registrant's telephone number, including area code)
------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the date of this filing.
300,000 shares of common stock, $5 par value
COMMUNITYCORP
Index
PART I. FINANCIAL INFORMATION Page No.
- -----------------------------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 2001 and December 31, 2000.............................3
Condensed Consolidated Statements of Income - Three months ended March 31, 2001 and 2000.................4
Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income -
Three months ended March 31, 2001......................................................................5
Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2001 and 2000.............6
Notes to Condensed Consolidated Financial Statements.....................................................7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.....................8-11
PART II. OTHER INFORMATION
- --------------------------
Item 6. Exhibits and Reports on Form 8-K.........................................................................12
(a) Exhibits............................................................................................12
(b) Reports on Form 8-K.................................................................................12
COMMUNITYCORP
Condensed Consolidated Balance Sheets
March 31, December 31,
----------------------------
2001 2000
----- ----
Assets: (Unaudited)
Cash and cash equivalents:
Cash and due from banks $ 3,283,463 $ 5,215,660
Federal funds sold and securities purchased under
agreements to resell 27,415,000 3,610,000
-------------- -------------
Total cash and cash equivalents 30,698,463 8,825,660
-------------- -------------
Investment securities:
Securities available-for-sale 11,927,417 18,866,657
Nonmarketable equity securities 330,800 330,375
Securities held-to-maturity (estimated market value of
$3,873,209 and $4,583,562 at March 31, 2001 and December 31,
2000, respectively) 3,826,254 4,597,772
-------------- -------------
Total investment securities 16,084,471 23,794,804
-------------- -------------
Loans receivable 68,898,427 67,794,723
Less allowance for loan losses (1,176,963) (1,173,832)
-------------- -------------
Loans, net 67,721,464 66,620,891
Accrued interest receivable 837,097 1,076,924
Premises, furniture & equipment, net 2,113,665 2,160,046
Other assets 400,867 590,474
-------------- -------------
Total assets $ 117,856,027 $ 103,068,799
============== =============
Liabilities and Shareholders' Equity:
Liabilities:
Deposits:
Noninterest-bearing $ 8,384,149 $ 9,800,324
Interest-bearing 97,728,621 81,997,468
-------------- -------------
106,112,770 91,797,792
Short-term borrowings 540,000 530,000
Accrued interest payable 872,250 735,659
Other liabilities 179,310 125,492
-------------- -------------
Total liabilities 107,704,330 93,188,943
-------------- -------------
Shareholders' Equity:
Preferred stock, $5 par value, 3,000,000 shares authorized - -
and unissued
Common stock, $5 par value, 3,000,000 shares authorized, 1,500,000 1,500,000
300,000 shares issued and outstanding
Capital surplus 1,731,708 1,731,708
Accumulated other comprehensive income (loss) 39,051 (71,480)
Retained earnings 7,673,394 7,500,834
Treasury stock (18,544 shares in 2001 and 18,294 shares in 2000) (792,456) (781,206)
-------------- -------------
Total shareholders' equity 10,151,697 9,879,856
-------------- -------------
Total liabilities and shareholders' equity $ 117,856,027 $ 103,068,799
============== =============
See notes to condensed consolidated financial statements
3
COMMUNITYCORP
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
2001 2000
---------- ---------
Interest income:
Loans, including fees $ 1,592,434 $ 1,410,661
Securities 275,531 358,276
Other interest income 258,229 66,641
---------- ----------
Total 2,126,194 1,835,578
---------- ----------
Interest expense:
Deposit accounts 1,139,378 822,698
Other interest expense 18,740 2,919
---------- ----------
1,158,118 825,617
---------- ----------
Net interest income 968,076 1,009,961
Provision for loan losses 62,000 75,000
---------- ----------
Net interest income after provision for
loan losses 906,076 934,961
Other operating income:
Service charges 78,402 80,941
Other income 48,792 43,649
---------- ----------
Total 127,194 124,590
---------- ----------
Other operating expenses:
Salaries and benefits 272,057 222,123
Net occupancy expense 37,367 36,451
Equipment expense 60,722 60,309
Other operating expenses 190,725 147,765
---------- ----------
Total 560,871 466,648
---------- ----------
Income before taxes 472,399 592,903
Income tax provision 144,901 186,683
---------- ----------
Net income $ 327,498 $ 406,220
========== ==========
Earnings per share:
Weighted average common shares outstanding 281,692 284,261
========== ==========
Net income per common share $ 1.16 $ 1.43
========== ==========
See notes to condensed consolidated financial statements
4
COMMUNITYCORP
Condensed Consolidated Statement of Shareholders' Equity and Comprehensive
Income for the three months ended March 31, 2001
(Unaudited)
Common Stock Capital Accumulated Retained Treasury
-------------
Other
Comprehensive
Shares Amount Surplus Income Earning Stock Total
------- ------- -------- ------- -------- ------ -----
Balance, 300,000 $1,500,000 $1,731,708 $ (71,480) $7,500,834 $(781,206) $ 9,879,856
December 31, 2000
Cash dividends (154,938) (154,938)
declared -$.50 per
share
Net income for the 327,498 327,498
period
Other comprehensive 110,531 110,531
-------
income, net of taxes
Comprehensive 438,029
-------
income
Purchase of (11,250) (11,250)
------- ---------- ---------- -------- ---------- --------- ------------
Treasury Stock
Balance,
March 31, 2001 300,000 $1,500,000 $1,731,708 $ 39,051 $ 7,673,394 $ (792,456) $ 10,151,697
======= ========== ========== ======== =========== ========== ============
See notes to condensed consolidated financial statements
5
COMMUNITYCORP
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
---------
2001 2000
------------ -----------
Cash flows from operating activities:
Net income $ 327,498 $ 406,220
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 46,967 45,107
Provision for possible loan losses 62,000 75,000
Amortization less accretion on investments 3,882 4,654
Amortization of deferred loan costs 19,983 13,760
(Increase) decrease in interest receivable 239,827 73,317
Increase (decrease) in interest payable 136,591 36,494
(Increase) decrease in other assets 130,765 (39,384)
Increase (decrease) in other liabilities 53,818 134,316
------------ -----------
Net cash provided by operating activities 1,021,331 749,484
------------ -----------
Cash flows from investing activities:
Net increase in loans to customers (1,182,556) (3,093,908)
Purchases of securities available-for-sale (2,899,531) (800,000)
Maturities of securities available-for-sale 10,005,266 103,375
Maturities of securities held-to-maturity 770,089 191,449
Purchases of premises and equipment (586) (8,811)
------------ -----------
Net cash used by investing activities 6,692,682 (3,607,895)
------------ -----------
Cash flows from financing activities:
Net increase (decrease) in deposits accounts 14,314,978 622,839
Increase in short-term borrowings 10,000 (30,000)
Dividends paid (154,938) (141,962)
Purchase of treasury stock (11,250) (396,180)
------------ -----------
Net cash provided (used) by financing activities 14,158,790 54,697
------------ -----------
Net decrease in cash and cash equivalents 21,872,803 (2,803,714)
Cash and cash equivalents, beginning of period 8,825,660 10,393,770
------------ -----------
Cash and cash equivalents, end of period $ 30,698,463 $ 7,590,056
============ ===========
Cash paid during the period for:
Income taxes $ 191,088 $ 28,205
Interest $ 1,021,527 $ 789,123
See notes to condensed consolidated financial statements
6
COMMUNITYCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying consolidated financial statements have been prepared in
accordance with the requirements for interim financial statements and,
accordingly, they are condensed and omit disclosures, which would substantially
duplicate those contained in the most recent annual report to shareholders. The
financial statements as of March 31, 2001 and for the interim periods ended
March 31, 2001 and 2000 are unaudited and, in the opinion of management, include
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation. The financial information as of December 31, 2000 has
been derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in
Communitycorp's 2000 Annual Report.
NOTE 2 - COMPREHENSIVE INCOME
- -----------------------------
The components of other comprehensive income and related tax effects are as
follows:
Pre-tax (Expense) Net-of-tax
Amount Benefit Amount
------------- ------------- ------------
For the Three Months Ended March 31, 2001:
Unrealized gains (losses) on securities available-for-sale $ 168,948 $ (58,417) $ 110,531
Plus: reclassification adjustment for
gains (losses) realized in net income - - -
------------- ------------- ------------
Net unrealized gains (losses) on securities 168,948 (58,417) 110,531
------------- ------------- ------------
Other comprehensive income $ 168,948 $ (58,417) $ 110,531
============= ============= ============
Pre-tax (Expense) Net-of-tax
Amount Benefit Amount
------------- ------------- ------------
For the Three Months Ended March 31, 2000:
Unrealized gains (losses) on securities available-for-sale $ (154,907) $ 53,433 $ (101,474)
Plus: reclassification adjustment for
gains (losses) realized in net income - - -
------------- ------------- ------------
Net unrealized gains (losses) on securities (154,907) 53,433 (101,474)
------------- ------------- ------------
Other comprehensive income $ (154,907) $ 53,433 $ (101,474)
============= ============= ============
Accumulated other comprehensive income consists solely of the unrealized gain on
securities available for sale, net of the deferred tax effects.
7
COMMUNITYCORP
Item 2. Management's Discussion and Analysis of Financial Condition
- -------------------------------------------------------------------
The following is a discussion of the Company's financial condition as of March
31, 2001 compared to December 31, 2000, and the results of operations for the
three months ended March 31, 2001 compared to the three months ended March 31,
2000. These comments should be read in conjunction with the Company's condensed
consolidated financial statements and accompanying footnotes appearing in this
report.
Results of Operations
- ---------------------
Net Interest Income
- -------------------
For the three months ended March 31, 2001, net interest income decreased
$41,885, or 4.15%, as compared to the same period in 2000. Interest and fees on
loans increased $181,773, or 12.89% to $1,592,434 for the three months ended
March 31, 2001 as compared to the same period in 2000. However, interest on
securities decreased $82,745 to $275,531 for the three months ended March 31,
2001 when compared to 2000. Interest expense increased $332,501 to $1,158,118
for the three months ended March 31, 2001. The net interest margin realized on
earning assets decreased from 4.51% for the three months ended March 31, 2000 to
3.61% for the same period in 2001. The interest rate spread also decreased by 95
basis points from 3.91% at March 31, 2000 to 2.96% at March 31, 2001.
Provision and Allowance for Loan Losses
- ---------------------------------------
The provision for loan losses is the charge to operating earnings that
management feels is necessary to maintain the allowance for possible loan losses
at an adequate level. For the three months ended March 31, 2001, the provision
charged to expense was $62,000, as compared to $75,000 in the same period in
2000. The allowance for loan losses is 1.71% of total loans at March 31, 2001,
as compared to 1.79% at March 31, 2000. Based on present information, management
believes the allowance for loan losses is adequate at March 31, 2001 to meet
presently known and inherent risks in the loan portfolio.
Noninterest Income
- ------------------
Noninterest income increased $2,604 to $127,194 for the three months ended March
31, 2001 from the comparable period in 2000. Other income, including
miscellaneous banking fees, increased $5,143 or 11.78%, from March 31, 2000 to
$48,792 for the three months ended March 31, 2001. Service charges on deposit
accounts decreased 3.14% from March 31, 2000 to $78,402 for the same period in
2001.
Noninterest Expense
- -------------------
Total noninterest expense for the three months ended March 31, 2001 was
$560,871, or 20.19%, higher than the three months ended March 31, 2000. Salaries
and employee benefits increased from $222,123 for the three months ended March
31, 2000 to $272,057 for the three months ended March 31, 2001. This increase is
primarily attributable to annual pay raises. Other operating expenses increased
$42,960, or 29.07%, to $190,725 for the three months ended March 31, 2001 when
compared to the same period in 2000.
8
COMMUNITYCORP
Item 2. Management's Discussion and Analysis of Financial Condition
- -------------------------------------------------------------------
Income Taxes
- ------------
The income tax provision for the three months ended March 31, 2001 was $144,901
as compared to $186,683 for the same period in 2000. The decrease was primarily
a result of a decrease in income before taxes. The effective tax rates were
30.67% and 31.49% at March 31, 2001 and 2000, respectively.
Net Income
- ----------
The combination of the above factors resulted in net income for the three months
ended March 31, 2001 of $327,498 as compared to $406,220 for the same period in
2000. This represents a decrease of $78,722, or 19.38%, less than the same
period in 2000. The decrease in net income is primarily attributable to a
significant decrease in our interest rate spread from 3.91% for the three months
ended March 31, 2000 to 2.96% for the same period in 2001. Other operating
expenses also increased $94,223 to $560,871 for the three months ended March 31,
2001 when compared to the same period in 2000. This increase was primarily
attributable to an increase in salaries and benefits and a writedown of $20,983
on other real estate owned.
Assets and Liabilities
- ----------------------
During the first three months of 2001, total assets increased $14,787,228, or
14.35%, when compared to December 31, 2000. Cash and cash equivalents increased
$21,872,803 from December 31, 2000 primarily because of an increase of
$23,805,000 in federal funds sold and repurchase agreements. Federal funds sold
increased $17,805,000 from December 31, 2000 to $21,415,000 at March 31, 2001.
The increase was primarily a result of approximately $14,300,000 in funds
received from a local municipality in a interest-bearing deposit and those funds
invested in federal funds. This increase was also due to a number of securities
available for sale being called and those funds being placed in federal funds
until needed for loans or until the market is more acceptable for investment
purchases. Total investment securities decreased $7,710,333 from December 31,
2000 to $16,084,471 at March 31, 2001. Loans increased $1,103,704, or 1.63%, to
$68,898,427 at March 31, 2001. Total deposits also increased by 15.59%, or
$14,314,978, from December 31, 2000 to $106,112,770 at March 31, 2001. While
noninterest-bearing deposits decreased slightly, interest-bearing deposits
increased $15,731,153 or 19.2% to $97,728,621 at March 31, 2001. This increase
was largely the result of funds received from Charleston County totaling
approximately $14,300,000. Those funds were deposited at the Bank on a temporary
basis.
Loans
- -----
The demand for loans remained stable in the Walterboro marketplace during the
first three months of 2001. Gross loans increased $1,103,704, or 1.63%, during
the period. Balances within the major loans receivable categories as of March
31, 2001 and December 31, 2000 are as follows:
March 31, December 31,
2001 2000
-------------- --------------
Commercial and industrial $ 46,962,772 $ 45,815,207
Real estate 6,763,698 6,665,664
Consumer 14,561,169 14,812,904
Agricultural 187,282 151,364
Other, net 423,506 349,584
-------------- --------------
$ 68,898,427 $ 67,794,723
============== ==============
9
COMMUNITYCORP
Item 2. Management's Discussion and Analysis of Financial Condition
- -------------------------------------------------------------------
Risk Elements in the Loan Portfolio
- -----------------------------------
The following is a summary of risk elements in the loan portfolio:
March 31,
-----------------------------
2001 2000
------------- -------------
Loans: Nonaccrual loans $ 1,096,532 $ 1,020,349
Accruing loans more than 90 days past due $ 3,000 $ -
Loans identified by the internal review mechanism:
Criticized $ - $ 75,431
Classified $ 1,764,786 $ 787,735
Activity in the Allowance for Loan Losses is as follows:
March 31,
-----------------------------
2001 2000
------------- -------------
Balance, January 1, $ 1,173,832 $ 1,086,980
Provision for loan losses for the period 62,000 75,000
Net loans (charged-off) recovered for the period (58,869) (38,280)
------------- -------------
Balance, end of period $ 1,176,963 $ 1,123,700
============= =============
Gross loans outstanding, end of period $ 68,898,427 $ 62,704,883
Allowance for loan losses to loans outstanding 1.71% 1.79%
Deposits
- --------
Total deposits increased $14,314,978, or 15.59%, from December 31, 2000. The
largest change was an increase in interest bearing deposits. Interest bearing
deposits increased $15,731,153 to $97,728,621 at March 31, 2001. Expressed in
percentages, interest bearing deposits increased 19.18%. As discussed earlier,
approximately $14,300,000 was received from Charleston County and placed in an
interest bearing deposit account. We expect those specific deposits to be held
at the Bank on a temporary basis.
Balances within the major deposit categories as of March 31, 2001 and December
31, 2000 are as follows:
March 31, December 31,
2001 2000
------------- -------------
Noninterest-bearing demand deposits $ 8,384,149 $ 9,800,324
Interest-bearing demand deposits 27,050,300 17,203,993
Savings deposits 19,907,141 15,548,984
Certificates of deposit 50,771,180 49,244,491
------------- -------------
$106,112,770 $ 91,797,792
============ =============
Liquidity
- ---------
10
COMMUNITYCORP
Item 2. Management's Discussion and Analysis of Financial Condition
- -------------------------------------------------------------------
Liquidity needs are met by the Company through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liability side
for interest-bearing deposit accounts. The level of liquidity is measured by the
loan-to-total funds ratio, which was at 64.60% at March 31, 2001 and 73.43% at
December 31, 2000.
Securities available-for-sale, which totaled $11,927,417 at March 31, 2001,
serves as a ready source of liquidity. The Company also has lines of credit
available with correspondent banks to purchase federal funds. At March 31, 2001,
unused lines of credit totaled $2,500,000.
Capital Resources
- -----------------
Total shareholders equity increased from $9,879,856 at December 31, 2000 to
$10,151,697 at March 31, 2001. The increase of $271,841 is attributable to
earnings for the period of $327,498 before the payment of $154,938 in dividends.
The increase was also attributable to an increase of $110,531 in the fair value
of securities available-for-sale for the period. Equity was negatively affected
by the purchase of treasury stock of $11,250 during the period.
Bank holding companies, such as the Company, and their banking subsidiaries are
required by banking regulators to meet certain minimum levels of capital
adequacy, which are expressed in the form of certain ratios. Capital is
separated into Tier 1 capital (essentially common shareholders' equity less
intangible assets) and Tier 2 capital (essentially the allowance for loan losses
limited to 1.25% of risk-weighted assets). The first two ratios, which are based
on the degree of credit risk in the Company's assets, provide the weighting of
assets based on assigned risk factors and include off-balance sheet items such
as loan commitments and stand-by letters of credit. The ratio of Tier 1 capital
to risk-weighted assets must be at least 4.0% and the ratio of total capital
(Tier 1 capital plus Tier 2 capital) to risk-weighted assets must be at least
8.0%. The capital leverage ratio supplements the risk-based capital guidelines.
Banks and bank holding companies are required to maintain a minimum ratio of
Tier 1 capital to adjusted quarterly average total assets of 3.0%.
The following table summarizes the Company's risk-based capital at March 31,
2001:
Shareholders' equity $ 10,112,646
Less: intangibles -
-------------
Tier 1 capital 10,112,646
Plus: allowance for loan losses (1) 1,050,739
Total capital $ 11,163,385
=============
Risk-weighted assets $ 84,059,148
=============
Risk-based capital ratios
Tier 1 capital (to risk-weighted assets) 12.03%
Total capital (to risk-weighted assets) 13.28%
Tier 1 capital (to total average assets) 8.88%
(1) limited to 1.25% of risk-weighted assets
Regulatory Matters
- ------------------
The management of the Company is not aware of any current recommendations by
regulatory authorities which, if they were to be implemented, would have a
material effect on liquidity, capital resources or operations.
11
COMMUNITYCORP
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended March 31, 2001.
Items 1, 2, 3, 4, and 5 are not applicable.
12
COMMUNITYCORP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITYCORP
By: /s/ W. ROGER CROOK
-----------------------------------
W. Roger Crook
President & Chief Executive Officer
Date: May 11, 2001 By: /s/ GWEN P. BUNTON
----------------------- -----------------------------------
Gwen P. Bunton
Chief Financial Officer
13