UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549

FORM 10-Q

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter period ended June 30, 2002

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 33-81890

Community Bankshares, Inc.

(Exact name of registrant as specified in its charter)

Georgia

 

58-1415887

(State or other jurisdiction of

 

(IRS Employer

incorporation or organization)

 

Identification No.)

 

 

 

448 North Main Street,

 

 

Cornelia, Georgia

 

30531

(Address of principal executive offices)

 

(Zip Code)

 (706) 778-2265

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal
year, if changed since last report)

 Indicate by check mark whether the registrant has (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  þ     No     ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 7, 2002: 2,175,418

 

COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES

INDEX

 

 

 

 

 

Page No.

 

 

 

PART I.

FINANCIAL INFORMATION

 2

 

 

 

Item 1.

Financial Statements

 2

 

 

 

 

Consolidated Balance Sheets -

 

 

June 30, 2002 and December 31, 2001

2

 

 

 

 

Consolidated Statements of Income

 

 

and Comprehensive Income for Three

 

 

Months Ended June 30, 2002 and 2001

  
  and Six Months Ended June 30, 2002  
  and 2001

3

     

 

Consolidated Statements of Cash Flows -

 

 

Six Months Ended June 30, 2002 and 2001

4

 

 

 

 

Notes to Consolidated  Financial Statements

5

 

 

 

Item 2.

Management’s Discussion and Analysis of

 

 

Financial Condition and Results of Operations

10

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

16

 

 

 

Item 6.

Exhibits and Reports on Form 8 - K

16

 

 

 

 

Signatures

17

 

 

PART I - FINANCIAL INFORMATION

ITEM 1.            FINANCIAL STATEMENTS

COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
  (Dollars in thousands)

   

(Unaudited)

      

Assets

  

2002

    

  2001
   
   
           

Cash and due from banks

$

37,512 

  

$

37,182

Interest-bearing deposits in banks

  

308 

    

410

Federal funds sold

  

13,510 

    

16,360

Securities available-for-sale

  

94,482 

    

77,901

Securities held-to-maturity (fair value
     $29,812 and $30,384)

  

28,432 

    


29,602

Restricted equity securities

  

1,215 

    

1,215
           

Loans

  

463,668 

    

455,791

Less allowance for loan losses

  

6,868 

    

6,652
   
   

          Loans, net

  

456,800 

    

449,139
   
   
           

Premises and equipment

  

15,356 

    

15,879

Other assets

  

18,394 

    

18,521
   
   
 

 

        

          Total assets

$

666,009 

  

$

646,209
   
   
           

Liabilities, Redeemable Common Stock and Shareholders' Equity

          
           

Deposits

        

 

    Non-interest-bearing demand

$

83,024 

  

$

81,174

    Interest-bearing demand

  

131,777 

    

131,034

    Savings

  

30,425 

    

26,500

    Time, $100,000 and over

  

118,910 

    

113,545

    Other time

  

217,211 

    

209,962
   
   

          Total deposits

  

581,347 

 

  

562,215
           

Other borrowings

  

11,958 

    

12,070

Other liabilities

  

10,705 

    

13,321
   
   

          Total liabilities

  

604,010 

    

587,606
   
   
         

Redeemable common stock held by ESOP, net of unearned ESOP
shares related to ESOP debt guarantee of $1,550,000 at June 30, 2002
and December 31, 2001, respectively

  

14,844 

    

15,160
   
   
         

Shareholders' equity

          

    Common stock, par value $1; 5,000,000
        shares authorized; 2,186,330 outstanding

  

2,186 

    

2,186

    Capital surplus

  

6,182 

    

6,182

    Retained earnings

  

38,354 

    

35,071

    Accumulated other comprehensive income,
         net of tax

  


884 

    


4

    Less 10,912 shares of Treasury stock at June 30, 2002

  

(451)

    

0
   
   

          Total shareholders' equity

  

 47,155 

    

43,443
   
   
           

  Total liabilities, redeemable common stock and shareholders' equity

$

666,009 

  

$

646,209
   
   
           

See Notes to Consolidated Financial Statements.

          

2

 

COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHESIVE INCOME
THREE MONTHS ENDED JUNE 30, 2002 AND 2001 AND
SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Dollars in thousands, except per share amounts)
(Unaudited)

 

COMMUNITY BANKSHARES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHESIVE INCOME

THREE MONTHS ENDED JUNE 30, 2002 AND 2001 AND

SIX MONTHS ENDED JUNE 30, 2002 AND 2001

(Dollars in thousands, except per share amounts)

(Unaudited)
    Three Months Ended
June 30,		   Six Months Ended
June 30,
   
 
   

2002 

  

2001 

  

2002 

  

2001 
   
 
 
 
                 

Interest income

                

    Loans

$

9,307 

$

10,872 

$

18,703 

$

21,811

    Taxable securities

  

739 

  

687 

  

1,366 

  

1,385

    Nontaxable securities

  

742 

  

628 

  

1,439 

  

1,221

    Deposits in banks

  

3 

  

7 

  

6 

  

14

    Federal funds sold

  

107 

  

228 

  

211 

  

448
   
 
 
 

          Total interest income 

  

10,898 

  

12,422 

  

21,725 

  

24,879
   
 
 
 
               

Interest expense on deposits

              

    Deposits

  

3,985 

  

5,942 

  

8,264 

  

11,964

    Other borrowings

  

169 

  

163 

  

337 

  

327
   
 
 
 

          Total interest expense

  

4,154 

  

6,105 

  

8,601 

  

12,291
   
 
 
 
                 

          Net interest income

  

6,744 

  

6,317 

  

13,124 

  

12,588

Provision for loan losses 

  

524 

  

394 

  

1,053 

  

800
   
 
 
 

          Net interest income after 
               Provision for loan losses

  


6,220 

  


5,923 

  


12,071 

  


11,788
   
 
 
 
                   

Other income

                

    Service charges on deposit accounts

  

1,326 

  

1,096 

  

2,491 

  

2,065

    Other service charges and fees

  

365 

  

281 

  

702 

  

572

    Gains on sale of loans

  

33 

  

11 

  

47 

  

63

    Nonbank subsidiary non-interest income

  

2,218 

  

2,478 

  

4,157 

  

6,137

    Security transactions, net

  

(6)

  

-- 

  

139 

  

--

    Other operating income

  

177 

  

156 

  

393 

  

377
   
 
 
 

          Total other income

4,113 

  

4,022 

  

7,929 

  

9,214
   
 
 
 
                 

Other expenses

                

    Salaries and employee benefits

4,281 

4,101 

8,675 

8,512

    Equipment expense

796 

841 

1,565 

1,642

    Occupancy expense

450 

445 

903 

872

    Other operating expenses

2,165 

2,254 

4,375 

4,803
    
 
 
 

          Total other expenses

7,692 

7,641 

15,518 

15,829
   
 
 
 
                

          Income before income taxes

2,641 

2,304 

4,482 

5,173
               

Income tax expense

768 

649 

1,253 

1,551
   
 
 
 
                 

          Net income

$

1,873 

$

1,655 

$

3,229 

$

3,622
   
 
 
 
                 

Other comprehensive income:

                

     Unrealized gains (losses) on securities:
          Unrealized holding gains (losses)  arising during  Periods


1,184 


(110)


963 


357

            Reclassification adjustment  for (gains) losses realized in net 
                    income


4 


- -- 


(83)


- --
   
 
 
 

     Total other comprehensive income (loss)

1,188 

(110)

880 

357
   
 
 
 
               

          Comprehensive income

$

3,061 

$

1,545 

$

4,109 

$

3,979
   
 
 
 
                 

Basic earnings per common share 

$

0.86 

$

0.76 

$

1.48 

$

1.66
   
 
 
 

Diluted earnings per common share

$

0.85 

$

0.75 

$

1.47 

$

1.64
   
 
 
 

Cash dividends per share of common stock

$

0.06 

$

0.05 

$

0.12 

$

.10
   
 
 
 
         

See Notes to Consolidated Financial Statements.