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, 1997
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 (I.R.S. Employer
of incorporation) Identification No.)
1100 N. JEFFERIES BOULEVARD
WALTERBORO, SC 29488
(Address of principal executive
offices, including zip code)
(803) 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, $5.00 PAR VALUE
PAGE 1 OF 12
EXHIBIT INDEX ON PAGE 2
COMMUNITYCORP
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 1997 and
December 31, 1996...........................................................3
Condensed Consolidated Statements of Income - Three months ended
March 31, 1997 and 1996.....................................................4
Condensed Consolidated Statement of Shareholders' Equity - Three
months ended March 31, 1997.................................................5
Condensed Consolidated Statements of Cash Flows - Three months
ended March 31, 1997 and 1996...............................................6
Notes to Condensed Consolidated Financial Statements............... ........7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. ...........................................7-11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders........................11
Item 6. Exhibits and Reports on Form 8-K........................................11-12
(a) Exhibits. ..........................................................11-12
(b) Reports on Form 8-K. ......................................... .....11-12
2
COMMUNITYCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
1997 1996
ASSETS:
Cash and cash equivalents:
Cash and due from banks $ 2,137,196 $ 2,382,087
Federal funds sold 3,940,000 640,000
------------------- -------------------
6,077,196 3,022,087
Time deposits with other banks 10,000 10,000
Securities available-for-sale 10,169,286 10,187,941
Securities held-to-maturity (estimated market value of $6,609,561 and
$6,821,855 at March 31, 1997 and December 31, 1996, respectively) 6,635,505 6,810,399
Loans receivable 34,601,318 35,153,845
Less allowance for loan losses (663,505) (638,688)
------------------- -------------------
Loans, net 33,937,813 34,515,157
Accrued interest receivable 637,662 690,700
Premises, furniture & equipment, net 1,322,868 1,262,024
Other assets 305,560 280,190
------------------- -------------------
Total assets $ 59,095,890 $ 56,778,498
=================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 5,825,887 $ 5,673,918
Interest bearing 46,390,742 44,391,280
------------------- -------------------
52,216,629 50,065,198
Accrued interest and other liabilities 437,380 330,048
------------------- -------------------
Total liabilities 52,654,009 50,395,246
------------------- -------------------
SHAREHOLDERS' EQUITY:
Preferred stock, $5 par value, 3,000,000 shares authorized and unissued Common
stock, $5 par value, 3,000,000 shares
authorized, 300,000 shares issued and outstanding 1,500,000 1,500,000
Capital surplus 1,731,708 1,731,708
Unrealized gain (loss) on securities available-for-sale, net of deferred taxes (44,452) 38,800
Retained earnings 3,273,036 3,131,155
Treasury stock (1,083 shares in 1997 and 1996) (18,411) (18,411)
------------------- -------------------
Total shareholders' equity 6,441,881 6,383,252
------------------- -------------------
Total liabilities and shareholders' equity $ 59,095,890 $ 56,778,498
=================== ===================
See notes to condensed consolidated financial statements
3
COMMUNITYCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
---------- ----------
Interest income:
Loans, including fees $ 834,566 $ 738,402
Securities 255,917 157,865
Other interest income 34,701 60,114
---------- ----------
Total 1,125,184 956,381
---------- ----------
Interest expense:
Deposit accounts 516,224 437,306
Other interest expense 10,522
---------- ----------
516,224 447,828
---------- ----------
Net interest income 608,960 508,553
Provision for loan losses 30,000 30,000
---------- ----------
Net interest income after
provision for loan losses 578,960 478,553
---------- ----------
Other operating income:
Service charges 57,148 47,447
Other income 6,934 6,507
---------- ----------
Total 64,082 53,954
---------- ----------
Other operating expenses:
Salaries and benefits 140,564 117,075
Net occupancy expense 18,701 17,207
Equipment expense 42,029 24,629
Other operating expenses 103,867 90,669
---------- ----------
Total 305,161 249,580
---------- ----------
Income before taxes 337,881 282,927
Income tax provision 112,000 100,500
---------- ----------
Net income $ 225,881 $ 182,427
========== ==========
Earnings per share:
Weighted average common
shares outstanding $ 299,420 $ 300,000
========== ==========
Net income per common share $ .75 $ .61
========== ==========
See notes to condensed consolidated financial statements
4
COMMUNITYCORP
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
Unrealized
Gain (Loss) on
Securities Total
Common Stock Capital Available Retained Treasury Shareholders'
Shares Amount Surplus for Sale, net Earnings Stock Equity
Balance,
December 31, 1996 300,000 $ 1,500,000 $ 1,731,708 $ 38,800 $ 3,131,155 $ (18,411) $ 6,383,252
Cash dividends declared
- $.28 per share (84,000) (84,000)
Change in fair value
during for the period (83,252) (83,252)
Net income
for the period 225,881 225,881
------------ ------------ ------------ ------------ ------------- ------------ ------------
Balance,
March 31, 1997 300,000 $ 1,500,000 $ 1,731,708 $ (44,452)$ 3,273,036 $ (18,411) $ 6,441,881
============ ============ ============ ============ ============= ============ ============
See notes to condensed consolidated financial statements
5
COMMUNITYCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 225,881 $ 182,427
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 40,100 20,850
Provision for possible loan losses 30,000 30,000
Amortization less accretion on investments 2,912 4,949
Amortization of deferred loan costs 15,235 12,227
(Increase) decrease in interest receivable
and other assets 71,527 (28,263)
Increase (decrease) in interest payable
and other liabilities 107,331 (188,874)
----------- -----------
Net cash provided by operating
activities 492,986 33,316
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in loans to customers 532,109 (429,857)
Purchases of securities available-for-sale (128,525) (1,561,536)
Maturities of securities available-for-sale 20,246 705,480
Purchases of securities held-to-maturity -- (1,892,119)
Maturities of securities held-to-maturity 171,806 608,447
Purchases of premises and equipment (100,944) (12,284)
----------- -----------
Net cash provided (used) by investing activities 494,692 (2,581,869)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits accounts 2,151,431 2,963,661
Decrease in short-term borrowings -- (396,061)
Dividends paid (84,000) (75,000)
----------- -----------
Net cash provided by financing activities 2,067,431 2,492,600
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,055,109 (55,953)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,022,087 6,628,028
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,077,196 $ 6,572,075
=========== ===========
Cash paid during the period for:
Income taxes $ -- $ 288,629
Interest $ 540,781 $ 452,836
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, 1996 and for the interim periods ended
March 31, 1997 and 1996 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, 1996 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 1996 Annual Report.
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, 1997 compared to December 31, 1996, and the results of operations for the
three months ended March 31, 1997 compared to the three months ended March 31,
1996. 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 and quarter ended March 31, 1997, net interest income
increased $100,407 or 19.74% over the same period in 1996. The net interest
margin realized on earning assets increased slightly from 4.42% for the three
months ended March 31, 1996 to 4.45% for the same period in 1997. The interest
rate spread also increased by 15 basis points from 3.56% at March 31, 1996 to
3.71% at March 31, 1997.
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, 1997, the provision
charged to expense was $30,000. This was the same amount for the comparable
period in 1996. Based on present information, management believes the allowance
for loan losses is adequate at March 31, 1997 to meet presently known and
inherent risks in the loan portfolio.
NON-INTEREST INCOME
Non-interest income during the three months ended March 31, 1997 was $64,082, an
increase of $10,128 or 18.77% from the comparable period in 1996. The increase
is primarily a result of an increase in service charges from $47,447 at March
31, 1996 to $57,148 at March 31, 1997. Overdraft and NSF fees increased by
$5,378 to $38,502 at March 31, 1997. This change is a result of the increase in
deposit accounts over the two periods and an increase in the NSF fee from $15 to
$17 in July, 1996. Deposits at March 31, 1996 were $43,603,268 compared to
$52,216,629 at March 31, 1997.
7
COMMUNITYCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS -- continued
NON-INTEREST EXPENSE
Total non-interest expense for the three months and quarter ended March 31, 1997
was $305,159 or 22.27% higher than the three months and quarter ended March 31,
1996. Salaries and employee benefits increased from $117,075 at March 31, 1996
to $140,564 for the three months ended March 31, 1997. This increase is due to
the addition of two full time employees, including a loan officer, and pay
raises. Equipment expense for the three months and quarter ended March 31, 1997
was $42,029 compared to $24,629 for the same period in 1996. This increase is
due to depreciation on the computer system which was installed in January, 1997.
INCOME TAXES
The income tax provision for the three months and quarter ended March 31, 1997
was $112,000 as compared to $100,500 for the same period in 1996. The effective
tax rates were 33.15% and 35.52% at March 31, 1997 and 1996, respectively.
NET INCOME
The combination of the above factors resulted in net income for the three months
and quarter ended March 31, 1997 of $225,881 as compared to $182,427 for the
same period in 1996. This represents an increase of $43,454 or 23.82% over the
same period in 1996.
ASSETS AND LIABILITIES
During the first three months of 1997, total assets increased $8,787,016 or
17.47% when compared to March 31, 1996. The primary source of growth in assets
was in investment securities with an increase of $4,735,509 or 39.24% over the
comparable period in 1996 and in loans receivable with an increase of $3,952,279
or 13.18% over the comparable period in 1996. Total deposits increased
$8,613,361 over the 1996 amount of $43,603,268. Within the deposit area, regular
savings increased $4,313,800 or 74.01% over the same period in 1996.
LOANS
The demand for loans leveled off in the Walterboro marketplace during the first
three months of 1997. Net loans decreased $577,344 or 1.67% during the period.
Balances within the major loans receivable categories as of March 31, 1997 and
December 31, 1996 are as follows:
March 31, December 31,
1997 1996
Commercial and industrial $23,026,477 $24,135,094
Real estate 4,574,499 4,564,843
Consumer 6,245,590 5,791,518
Agricultural 270,252 255,994
Other, net 484,500 406,396
----------- -----------
$34,601,318 $35,153,845
=========== ===========
8
COMMUNITYCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS -- continued
RISK ELEMENTS IN THE LOAN PORTFOLIO
The following is a summary of risk elements in the loan portfolio:
March 31,
1997 1996
- -------------------------------------------------------------------------------------------------------
Loans:
Nonaccrual loans $ 477,247 $ 242,735
Accruing loans more than 90 days past due $ -- $ --
Loans identified by the internal review mechanism:
Criticized $ 110,757 $ --
Classified $ 729,188 $ 663,429
Activity in the Allowance for Loan Losses is as follows:
March 31,
1997 1996
------------ ------------
Balance, January 1, $ 638,688 $ 617,457
Provision for loan losses for the period 30,000 30,000
Net loans (charged off) recovered for the period (5,183) (4,248)
------------ ------------
Balance, end of period $ 663,505 $ 643,209
============ ============
Gross loans outstanding, end of period $ 34,601,318 $ 30,628,743
Allowance for Loan Losses to
loans outstanding 1.92% 2.10%
DEPOSITS
Total deposits increased $2,151,431 or 4.30% from December 31, 1996. Expressed
in percentages, non-interest bearing deposits increased 2.68% and interest
bearing deposits increased 4.50%.
Balances within the major deposit categories as of March 31, 1997 and December
31, 1996 are as follows:
March 31, December 31,
1997 1996
Non-interest bearing demand deposits $ 5,825,887 $ 5,673,918
Interest bearing demand deposits 6,828,568 6,886,479
Savings deposits 16,294,325 15,314,272
Certificates of deposit 23,267,849 22,190,529
-------------------- --------------------
$ 52,216,629 $ 50,065,198
==================== ====================
9
COMMUNITYCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS -- continued
LIQUIDITY
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 64.99% at March 31, 1997 and 68.94% at
December 31, 1996.
Securities available-for-sale which totaled $10,169,296 at March 31, 1997, serve
as a ready source of liquidity. The Company also has lines of credit available
with correspondent banks to purchase federal funds for periods from one to seven
days. At March 31, 1997, unused lines of credit totaled $2,500,000.
CAPITAL RESOURCES
Total shareholders' equity increased $58,629 to $6,441,881 at March 31, 1997.
The increase is primarily attributable to earnings for the period of $225,881
less dividends paid of $84,000. A negative change of $83,252 in the fair value
of securities available-for-sale resulted in a decrease.
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 I capital (essentially common shareholders' equity less intangible
assets) and Tier II 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 I capital to
risk-weighted assets must be at least 4.0% and the ratio of total capital (Tier
I 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 I
capital to adjusted quarterly average total assets of 3.0%.
The following table summarizes the Company's risk-based capital at March 31,
1997:
Shareholders' equity $ 6,486,333
Less: intangibles (40,106)
------------
Tier I capital 6,446,227
Plus: allowance for loan losses (1) 499,936
------------
Total capital $ 6,946,163
============
Risk-weighted assets $ 40,034,985
============
Risk based capital ratios
Tier I 16.10%
Total capital 17.35%
Leverage ratio 10.91%
(1) limited to 1.25% of risk-weighted assets
10
COMMUNITYCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS -- continued
The Company has entered into an agreement with a construction company to build a
branch in Ravenel, South Carolina. During the quarter ended March 31, 1997, the
Company incurred costs of approximately $31,000 with an estimated cost to
complete of $630,000.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 29, 1997, the Company held its Annual Meeting of Shareholders for the
purpose of (a) electing three directors for three-year terms, and (b) ratifying
the appointment of Tourville, Simpson & Henderson, certified public accountants,
as the Company's independent auditors for the fiscal year ending December 31,
1997.
The nominees for director received the number of affirmative votes of
shareholders required for such nominee's election in accordance with the Bylaws
of the Company with 197,720 shareholders voting for the nominees out of a total
300,000 outstanding shareholders. There were no abstentions or no votes.
Tourville, Simpson & Henderson also received the requisite number of affirmative
votes required for approval pursuant to the Bylaws of the Company. Of the
300,000 outstanding shareholders of the Company, 197,720 shareholders voted for
their selection as independent auditors. There were no abstentions or no votes.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended March 31, 1997
Items 1, 2, 3 and 5 are not applicable.
11
COMMUNITYCORP
PART II - OTHER INFORMATION
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:
W. Roger Crook
President & Chief Executive Officer
Date: May 2, 1997 By:
Gwen P. Bunton
Chief Financial Officer
12