SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2002
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 1934
For the transition period from _______ to _______
Commission File Number: 000-25345
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COMMUNITY CAPITAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-2413468
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(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
P.O. Drawer 71269, Albany, Georgia 31708
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(Address of principal executive offices)
(229) 446-2265
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of June 30, 2002:
1,440,699 SHARES
Transitional Small Business Disclosure Format (check one):
Yes No X
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PART I - FINANCIAL INFORMATION Page No.
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ITEM 1. Financial Statements
Consolidated balance sheets (unaudited) as of
December 31, 2001 and June 30, 2002 3
Consolidated statements of income (unaudited)
for the three and six months ended June 30,2001 and 2002 4
Consolidated statements of comprehensive income (loss) (unaudited)
for the three and six months ended June 30, 2001 and 2002 5
Consolidated Statements of cash flows (unaudited) for the
six months ended June 30, 2001 and 2002 6
Item 2. Management's Discussion and Analysis of
Financial Condition and results of operations 8
PART II - OTHER INFORMATION
ITEM 2. Changes in Securities and use of proceeds 11
ITEM 4. Submission of matters to a vote of Security Holders 11
ITEM 5. Other Matters 11
ITEM 6. Exhibits and reports on Form 8-K: 11
Exhibit 99.1 - President/CEO and CFO Certification 13
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COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
June 30,2002 December 31, 2001
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ASSETS
------
Cash and due from banks $ 5,842 $ 4,471
Federal funds sold 1,591 4,483
Securities available for sale 20,561 14,999
Loans 74,201 61,801
Less allowance for loan losses 742 618
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Loans, net 73,459 61,183
Premises and equipment 2,687 2,600
Other assets 1,343 949
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$ 105,483 $ 88,685
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
Non-interest bearing $ 6,577 $ 6,103
Interest bearing 79,827 63,728
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Total deposits 86,404 69,831
Other borrowings 9,068 9,251
Other liabilities 596 418
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TOTAL LIABILITIES 96,068 79,500
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Shareholders' equity:
Preferred Stock, par value not stated; 2,000,000 shares authorized;
no shares issued $ - - $ - -
Common Stock, $1.00 par value, 10,000,000 shares authorized;
1,499,560 shares issued 1,500 1,500
Capital surplus 8,085 8,085
Retained earnings (deficit) 20 (213)
Accumulated other comprehensive income 223 180
Less cost of treasury stock, 58,861 shares as of June 30, 2002 and
52,690 shares as of December 31, 2001 (413) (365)
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TOTAL SHAREHOLDERS' EQUITY 9,415 9,185
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$ 105,483 $ 88,685
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COMMUNITY CAPITAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
Three months ended Six months ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
---------- ---------- ---------- ----------
2002 2001 2002 2001
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INTEREST INCOME
Loans 1,324 1,098 2,619 2,096
Taxable securities 254 245 435 513
Tax exempt securities 10 - - 14
Deposits in banks 6 27 11 36
Federal funds sold 10 45 28 74
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TOTAL INTEREST INCOME 1,604 1,416 3,107 2,719
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INTEREST EXPENSE
Deposits 567 685 1,106 1,296
Other borrowed money 117 73 232 143
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TOTAL INTEREST EXPENSE 684 758 1,338 1,439
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NET INTEREST INCOME 920 658 1,769 1,280
Provision for loan losses 248 86 320 173
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 672 572 1,449 1,107
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OTHER INCOME
Service charges on deposit accounts 90 74 171 128
Financial service fees 35 88 50 123
Mortgage origination fees 39 47 92 83
Gain on sale of investment securities 42 - - 42 - -
Other service charges, commissions and fees 12 8 29 21
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TOTAL OTHER INCOME 218 217 384 355
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OTHER EXPENSES
Salaries and employee benefits 289 348 705 675
Equipment and occupancy expense 112 89 193 168
Marketing expense 48 37 71 54
Data processing expense 73 38 128 72
Administrative expenses 113 89 210 172
Other operating expenses 78 53 167 97
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TOTAL OTHER EXPENSES 713 667 1,474 1,257
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INCOME BEFORE INCOME TAXES 177 122 359 203
Income tax expense 65 - - 126 - -
---------- ---------- ---------- ----------
NET INCOME 112 122 233 203
========== ========== ========== ==========
NET INCOME PER COMMON SHARE $ 0.08 $ 0.08 $ 0.16 $ 0.14
========== ========== ========== ==========
DILUTED NET INCOME PER COMMON SHARE $ 0.08 $ 0.08 $ 0.16 $ 0.14
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,442,609 1,462,193 1,444,343 1,462,986
========== ========== ========== ==========
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COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three and six months ended June 30, 2001 and 2002
(Dollars in thousands)
Three Months Ended Six Months Ended
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June 30, June 30, June 30, June 30,
2002 2001 2002 2001
NET INCOME (LOSS) $ 112 $ 122 $ 233 $ 203
Other comprehensive Income
Net unrealized holding gains
(losses) arising during period 290 18 108 107
Tax (expense) benefit on
unrealized holding gains (99) (6) (37) (29)
---------------------- ----------------------
Reclassification adjustment for
gains included in net income, net
of income taxes of $14 (28) - - (28) - -
---------------------- ----------------------
COMPREHENSIVE INCOME $ 275 $ 134 $ 276 $ 281
====================== ======================
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COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months ended June 30, 2001 and 2002
(Dollars in thousands)
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 233 $ 203
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 89 79
Provision for loan losses 320 173
Provision for deferred taxes (69) - -
Increase in interest receivable (46) (73)
Net (gain) on sale of investments available for
sale (42) - -
Other operating activities (131) (154)
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Net cash provided by operating activities 354 228
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (176) (48)
Net decrease (increase) in federal funds sold 2,892 (4,358)
Net (increase) in loans (12,596) (10,374)
Proceeds from maturities of securities available
for sale 6,429 8,274
Proceeds for sale if securities 3,976 - -
Purchase of securities available for sale (15,851) (9,778)
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Net cash used in Investing activities (15,326) (16,284)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 16,573 16,985
Proceeds from FHLB advances - - - -
Repayment of other borrowings (183) (183)
Treasury stock transactions, net (47) (14)
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Net cash provided by financing activities 16,343 16,788
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Net increase in cash 1,371 732
Cash and due from banks at beginning of period 4,471 3,392
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Cash and due from banks at end of period $ 5,842 $ 4,124
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SUPPLEMENTAL DISCLOSURE
Cash paid for interest $ 1,318 $ 1,494
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Cash paid for income taxes $ 91,128 $ - -
====================
NON-CASH TRANSACTION
Unrealized (gains) losses on securities available
for sale $ (65) $ (107)
====================
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COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Community Capital Bancshares, Inc. (the "Company") is a bank holding company
whose business is conducted by its wholly-owned subsidiary, Albany Bank & Trust
(the "Bank"). The Bank is a commercial bank located in Albany, Georgia. The Bank
provides a full range of banking services in its primary market area of
Dougherty County and the surrounding counties. The Bank commenced its banking
operations on April 28, 1999.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiary. Significant intercompany transactions and accounts are
eliminated in consolidation.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
balance sheet date and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Material
estimates that are particularly susceptible to significant change in the near
term relate to the determination of the allowance for loan losses, the valuation
of foreclosed real estate and deferred taxes.
The interim financial statements included herein are unaudited but reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the financial position and results of operations for the interim
period presented. All such adjustments are of a normal recurring nature. The
results of operations for the period ended June 30, 2002 are not necessarily
indicative of the results of a full year's operations.
The accounting principles followed by the Company and the methods of applying
these principles conform with accounting principles generally accepted in the
United States of America and with general practices within the banking industry.
INCOME TAXES
Deferred income tax assets and liabilities are determined using the balance
sheet method. Under this method, the net deferred tax asset or liability is
determined based on the tax effects of the temporary differences between the
book and tax basis of the various balance sheet assets and liabilities and gives
current recognition to changes in the tax rates and laws.
The Company and the Bank file a consolidated income tax return. Each entity
provides for income taxes based on its contribution to the income taxes
(benefits) of the consolidated group.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This discussion is intended to assist in an understanding of the Company's
financial condition and results of operations. This analysis should be read in
conjunction with the financial statements and related notes appearing in Item 1
of the June 30, 2002 Form 10-QSB and Management's Discussion and Analysis of
Financial Condition and Results of Operations appearing in the Company's Form
10-KSB for the year ended December 31, 2001.
FINANCIAL CONDITION
As of June 30, 2002 the Company's total assets were $105,483,000 representing an
increase of $16,798,000 or 18.94% from December 31, 2001. Earning assets
consist of federal funds sold, investment securities and loans. These assets
provide the majority of the Company's earnings. The mix of earning assets is a
reflection of management's philosophy regarding earnings versus risk.
Federal funds sold represent an overnight investment of funds and can be
converted immediately to cash. At June 30, 2002, federal funds sold were
$1,591,000 as compared to the year-end amount of $4,483,000. This is a decrease
of $2,892,000, and represents an allocation of funds to higher yielding loans
and investments.
Investment securities consist primarily of U.S. Government and Agency
securities. These investments are used to provide fixed maturities and as
collateral for advances and large public fund deposits. During the year,
investment securities increased $5,562,000. During the second quarter, the
Company sold approximately $3,700,000 in securities which management felt would
be called. These sales generated gains of $42,000. All securities are classified
as available for sale under FASB 115 and are carried at current market values.
The loan portfolio is the largest earning asset and is the primary source of
earnings for the Company. At June 30, 2002 net loans were $73,459,000. The
loan portfolio increased $12,276,000 or 20.06% during the year. At June 30,
2002, the allowance for loan losses was $742,000 or 1.00% of total loans.
Management believes that this is an adequate but not excessive amount based upon
the composition of the current loan portfolio and current economic conditions.
The relationship of the allowance to total loans will vary over time based upon
Management's evaluation of the loan portfolio. Management evaluates the
adequacy of the allowance on a monthly basis and adjusts it accordingly by a
monthly charge to earnings using the provision for loan losses. During the
year, the provision for potential loan losses was $320,000 as compared to the
2001 amount of $173,000. The uncollectible loans in the current year were
primarily the result of two unrelated customers. Management feels that these
loans are not indicative of the overall quality of the loan portfolio. At June
30, 2002 loans past due 30 days or more were $158,000 or 0.21% of outstanding
loans. There were no loans on non-accrual status.
Non-earning assets consist of premises and equipment, and other assets.
Premises and equipment increased $87,000 during the year as a result of
acquisitions of $176,000 and depreciation expense of $89,000. Other assets
consist primarily of accrued interest receivable and increased $394,000 as a
result of the larger amount of loans and investments upon which accrued interest
is calculated.
The Company funds its assets primarily through deposits from customers.
Additionally, it will borrow funds from other sources to provide longer term
fixed rate funding for its assets. The Company must pay interest on the
majority of these funds and attempts to price these funds competitively in the
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market place but at a level that it can safely re-invest the funds profitably.
At June 30, 2002, total deposits were $86,404,000 as compared to the year-end
amount of $69,831,000. This is an increase of $16,573,000 or 23.73%. The
Company is beginning to see a slowing of its growth in deposits. This is a
result of the declining interest rate environment that is causing customers to
seek higher yields in other areas of investments.
Interest bearing deposits are comprised of the following categories:
June 30, 2002 December 31, 2001
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Interest bearing demand and savings $ 24,067,000 $ 21,443,000
Certificates of deposit in
denominations of $100,000 or greater 16,181,000 14,787,000
Other Certificates of deposit 39,579,000 27,498,000
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Total $ 79,827,000 $ 63,728,000
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Other borrowings consist of Federal Home Loan Bank advances and are secured by
one to four family loans and investment securities owned by the Company. No new
advances were obtained during the current year.
CAPITAL ADEQUACY
The following table presents the Company's regulatory capital position as of
June 30, 2002.
Tier 1 Capital Ratio, actual 12.91%
Tier 1 Capital minimum requirement 4.00%
Tier 2 Capital Ratio, actual 13.93%
Tier 2 Capital minimum requirement 8.00%
Leverage Ratio 9.33%
Leverage Ratio minimum requirement 4.00%
The Company's ratios are well above the required regulatory minimums and provide
a sufficient basis to support future growth of the Company.
RESULTS OF OPERATIONS
Net income for the current year is $233,000 as compared to the 2001 amount of
$203,000. The increased net income was a result of an overall increase in the
Company's net interest income and increased non-interest income.
Total interest income increased $389,000 or 14.27% from the previous year. This
was the result of increased interest income on loans, which increased $523,000.
The increase in income was the result of the larger loan portfolio in the
current year and loan income increased in spite of the significantly lower
interest rate environment in the current year.
Interest expense for 2002 is $1,338,000. This is the major expense item for the
Company and decreased $101,000 from the previous year. This decrease is the
result of the lower rates paid on deposits. The amount of deposits increased
from the previous year, yet the Company was able to reduce the overall amount of
this expense item due to the declining rate environment.
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The provision for loan losses in the current year is $320,000 as compared to the
prior year's amount of $173,000. This increase is due to the charge off of
uncollectible loans and the resulting increased provision to keep the Allowance
for loan losses at an acceptable level. During the 2002 the Company had net
charge offs of $197,000.
Net interest income after the provision for loan losses was $1,449,000 in 2002
as compared to the 2001 amount of $1,107,000. This is an increase of $342,000
or 30.89%.
Other income increased $29,000 to $384,000 in 2002. Service charges on deposit
accounts increased $43,000 or 33.59% due to the larger number of deposit
accounts. The other significant item is gain resulting from the sale of
investment securities of $42,000. Financial service fees declined in the
current year to $50,000 from the 2001 amount of $123,000. The decline is the
result of current conditions in the financial markets. This decrease was offset
in part by the increases in fees earned by originating long term mortgage loans.
These fees increased $9,000 to $92,000 and relate to mortgage loans which are
originated by bank personnel but funded by other firms for sale in the secondary
market. During the current year, the Bank received approval to begin offering
Trust services. It is anticipated that the Bank will begin offering these
services during the third quarter of this year.
Non-interest expense increased $217,000 to $1,474,000 in 2002. This is an
increase of 17.26%. The largest area of increase was in Data processing. These
costs are paid to third party providers and the contracts are based upon the
Company's size and total number of accounts. This expense item increased
$56,000 to $128,000 in the current year.
Equipment and occupancy expense increased $25,000 over the prior year. A
portion of this increase is attributable to the opening of two loan production
offices during the second quarter of the current year. These offices should
provide additional profitability to the Company in the future as volumes
increase to cover fixed operating costs. Administrative expenses were $210,000
in the current year as compared to $172,000 in 2001. The increase in this area
is the result of increases in supply expense and legal, audit and other
professional costs during the current year. These increases are to be expected
in a growth situation such as the Company is currently experiencing.
During 2002 the Company utilized the remainder of its tax loss carryovers
generated during its start up period. Income tax expense for the current year
is $126,000 and there was no income tax expense in the previous year.
Fully diluted net income per share for the current year is $0.16 and increased
$0.02 from the previous year.
FORWARD-LOOKING STATEMENTS
This document contains statements that constitute "forward-looking statements"
within the meaning of Sections 27A of the Securities Act of 1933, as amended,
and Sections 21E of the Securities Exchange Act of 1934, as amended. The words
"believe", "estimate", "expect", "intend", "anticipate" and similar expressions
and variations thereof identify certain of such forward-looking statements,
which speak only as of the dates that they were made. The Company undertakes no
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obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise. Users are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties that the actual results may
differ materially from those indicated in the forward-looking statements as a
result of various factors. Users are therefore cautioned not to place undue
reliance on these forward-looking statements.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On April 24, 2002, Community Capital granted 14 options to purchase 2,131
shares of its common stock, $1.00 par value, to selected directors as
compensation for their services to Albany Bank & Trust and Community Capital.
Each option is exercisable upon the grant date at $8.15 per share and has a
maximum term of ten years. Since the options were granted to directors, the
option grants did not involve a public offering, and therefore were exempt from
registration under Section 4(2) of the Securities Act of 1933.
Additionally, during fiscal year 2002, Community Capital has issued 1,641
shares to employees pursuant to purchases made by employees under the Community
Capital Bancshares, Inc. Employee Stock Purchase Plan. The following table sets
forth information regarding the shares purchased under this plan.
Number of shares
Date Purchased purchased Purchase Price
-------------- ---------------- --------------
April 5, 2002 817 $ 5,923.15
July 5, 2002 824 $ 5,883.91
Because these shares were sold to employees pursuant to an employee stock
purchase plan, the transactions did not involve a public offering and
therefore were exempt from registration under Section 4(2) of the Securities Act
of 1933.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 22, 2002, the Company held its annual meeting of shareholders at
which the following director nominees were elected to a three-year term by the
votes indicated:
Directors Votes For Votes Withheld
--------- --------- --------------
Robert M. Beauchamp 1,457,808 41,752
Glenn A. Dowling 1,457,808 41,752
Mary Helen Dykes 1,457,808 41,752
Mark M. Shoemaker 1,457,808 41,752
Lawrence B. Willson 1,457,808 41,752
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) REPORTS ON FORM 8-K
None
(b) OTHER EXHIBITS
Certification by the Chief Executive Officer
and Chief Financial Officer. See page 14.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITY CAPITAL BANCSHARES, INC.
August 13, 2002 /s/ Robert E. Lee
--------------- -----------------------------
Date Robert E. Lee,
President
August 13, 2002 /s/ David J. Baranko
--------------- -----------------------------
Date David J. Baranko
Chief Financial Officer
(Duly authorized officer and
principal financial / accounting
officer)
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