UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2005
OR
| ¨ | 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 000-16461
COMMUNITY BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 63-0868361 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| 68149 Main Street, Blountsville, Alabama | 35031 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(205) 429-1000
(Registrant’s Telephone Number, Including Area Code)
(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: x Yes ¨ No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act): ¨ Yes x No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
As of April 25, 2005, there were 8,524,505 shares of the registrant’s common stock, $.10 par value per share, outstanding.
PART 1
Item 1. Financial Statements.
Community Bancshares, Inc. and Subsidiaries
Consolidated Balance Sheets
| (Unaudited) March 31, 2005 |
December 31, 2004 |
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| Assets |
||||||||
| Cash and due from banks |
$ | 19,010,468 | $ | 33,669,110 | ||||
| Interest-bearing deposits in banks |
3,657,390 | 5,368,342 | ||||||
| Federal funds sold |
17,635,000 | 13,475,000 | ||||||
| Cash and cash equivalents |
40,302,858 | 52,512,452 | ||||||
| Securities available for sale |
148,990,958 | 147,167,933 | ||||||
| Loans, net of allowance for loan losses of $4,589,321 and $4,624,584 |
300,212,718 | 295,754,943 | ||||||
| Capitalized lease receivable |
2,831,204 | 2,863,755 | ||||||
| Accrued interest receivable |
3,174,277 | 2,766,104 | ||||||
| Premises and equipment, net |
21,187,453 | 21,177,897 | ||||||
| Goodwill and other intangible assets, net |
2,346,253 | 2,366,107 | ||||||
| Foreclosed assets |
10,260,956 | 11,126,227 | ||||||
| Other assets |
18,051,540 | 17,688,360 | ||||||
| Total assets |
$ | 547,358,217 | $ | 553,423,778 | ||||
| Liabilities and stockholders’ equity |
||||||||
| Deposits: |
||||||||
| Noninterest-bearing |
$ | 64,085,400 | $ | 70,279,948 | ||||
| Interest-bearing |
378,569,455 | 378,346,834 | ||||||
| Total deposits |
442,654,855 | 448,626,782 | ||||||
| Other short-term borrowings |
551,461 | 621,490 | ||||||
| FHLB long-term debt |
38,000,000 | 38,000,000 | ||||||
| Capitalized lease obligations |
3,880,256 | 3,893,234 | ||||||
| Junior subordinated debt (Note 6) |
10,310,000 | 10,310,000 | ||||||
| Accrued interest payable |
1,451,414 | 1,729,478 | ||||||
| Other liabilities |
8,469,402 | 7,366,030 | ||||||
| Total liabilities |
505,317,388 | 510,547,014 | ||||||
| Commitments and contingencies (Note 9) |
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| Stockholders’ equity |
||||||||
| Preferred stock (par value $.10 per share; 200,000 shares authorized; no shares issued or outstanding) |
— | — | ||||||
| Common stock (par value $.10 per share; 20,000,000 shares authorized; 8,726,162 and 8,701,162 shares issued as of March 31, 2005 and December 31, 2004, respectively; 2,191,897 shares of which are exchangeable for preferred stock) |
872,616 | 870,116 | ||||||
| Additional paid-in-capital |
49,282,796 | 49,162,306 | ||||||
| Stock warrant outstanding |
242,524 | 242,524 | ||||||
| Treasury common stock, at cost (99,869 shares, as of both March 31, 2005 and December 31, 2004) |
(980,428 | ) | (980,428 | ) | ||||
| Retained earnings (deficit) |
(1,548,687 | ) | (1,899,382 | ) | ||||
| Unearned ESOP common stock (101,788 and 106,092 shares as of March 31, 2005 and December 31, 2004, respectively) |
(1,528,018 | ) | (1,571,058 | ) | ||||
| Accumulated other comprehensive loss |
(4,299,974 | ) | (2,947,314 | ) | ||||
| Total stockholders’ equity |
42,040,829 | 42,876,764 | ||||||
| Total liabilities and stockholders’ equity |
$ | 547,358,217 | $ | 553,423,778 | ||||
The accompanying notes are an integral part of these consolidated financial statements
2
Community Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| Three months ended March 31, |
||||||||
| 2005 |
2004 |
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| Interest income: |
||||||||
| Loans, including fees |
$ | 6,198,754 | $ | 6,345,206 | ||||
| Interest on investment securities: |
||||||||
| Taxable securities |
1,428,705 | 1,414,476 | ||||||
| Tax-exempt securities |
29,477 | 73,149 | ||||||
| Federal funds sold |
60,098 | 39,272 | ||||||
| Other |
85,893 | 49,933 | ||||||
| Total interest income |
7,802,927 | 7,922,036 | ||||||
| Interest expense: |
||||||||
| Deposits |
2,381,163 | 2,216,389 | ||||||
| Short-term borrowings |
1,514 | 644 | ||||||
| FHLB long-term debt |
569,609 | 569,610 | ||||||
| Capitalized lease obligations |
53,054 | 39,579 | ||||||
| Junior subordinated debentures |
271,875 | 334,935 | ||||||
| Other long-term debt |
— | 32,787 | ||||||
| Total interest expense |
3,277,215 | 3,193,944 | ||||||
| Net interest income |
4,525,712 | 4,728,092 | ||||||
| Provision for loan losses |
259,085 | 299,385 | ||||||
| Net interest income, after provision for loan losses |
4,266,627 | 4,428,707 | ||||||
| Noninterest income: |
||||||||
| Service charges on deposits |
662,379 | 663,426 | ||||||
| Insurance commissions |
639,918 | 674,322 | ||||||
| Bank club dues |
77,410 | 92,601 | ||||||
| Debt cancellation fees |
(5,283 | ) | (15,217 | ) | ||||
| Securities gains (losses), net |
(2,484 | ) | 237,992 | |||||
| Foreclosed assets, net |
— | 2,605 | ||||||
| Other |
743,927 | 144,983 | ||||||
| Total noninterest income |
2,115,867 | 1,800,712 | ||||||
| Noninterest expense: |
||||||||
| Salaries and employee benefits |
3,002,931 | 3,072,187 | ||||||
| Occupancy |
541,456 | 600,521 | ||||||
| Furniture and equipment |
379,804 | 364,748 | ||||||
| Insurance |
321,730 | 292,027 | ||||||
| Director and committee fees |
103,250 | 117,650 | ||||||
| Professional services |
396,247 | 658,119 | ||||||
| Foreclosed assets, net |
40,910 | — | ||||||
| Disposal or impairment of assets |
23,537 | 23,367 | ||||||
| Litigation, fraud or burglary |
— | 18,076 | ||||||
| Other |
1,026,080 | 1,025,394 | ||||||
| Total noninterest expense |
5,835,945 | 6,172,089 | ||||||
| Income before income taxes |
546,549 | 57,330 | ||||||
| Income taxes |
(195,854 | ) | (2,287 | ) | ||||
| Net income |
$ | 350,695 | $ | 55,043 | ||||
| Earnings per share: |
||||||||
| Basic |
$ | 0.04 | $ | 0.01 | ||||
| Diluted |
$ | 0.04 | $ | 0.01 | ||||
The accompanying notes are an integral part of these consolidated financial statements
3
Community Bancshares, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
Three months ended March 31, 2004 and 2005
| Shares of Common Stock Issued |
Common Stock |
Additional Paid in Capital |
Stock Warrant Outstanding |
Treasury Common Stock |
Retained Earnings |
Unearned ESOP Common Stock |
Accumulated Other Comprehensive Income (Loss) |
Total |
||||||||||||||||||||||||
| Balance at December 31, 2003 |
6,978,671 | $ | 697,868 | $ | 40,996,918 | $ | — | $ | (894,029 | ) | $ | (2,075,986 | ) | $ | (1,741,248 | ) | $ | (1,665,903 | ) | $ | 35,317,620 | |||||||||||
| Comprehensive income: |
||||||||||||||||||||||||||||||||
| Net income during period |
— | — | — | — | 55,043 | — | — | 55,043 | ||||||||||||||||||||||||
| Change in unrealized gain (loss) on securities available for sale net of reclassification adjustment and tax effect |
— | — | — | — | — | — | 635,645 | 635,645 | ||||||||||||||||||||||||
| Total comprehensive income |
690,688 | |||||||||||||||||||||||||||||||
| Issuance of common stock at $5.35 per share |
1,586,771 | 158,676 | 8,330,549 | — | — | — | — | — | 8,489,225 | |||||||||||||||||||||||
| Common stock issuance costs |
— | — | (815,047 | ) | 242,524 | — | — | — | — | (572,523 | ) | |||||||||||||||||||||
| Common stock issued in lieu of cash paid for directors’ fees at $5.35 per share |
20,720 | 2,072 | 108,478 | — | — | — | — | — | 110,550 | |||||||||||||||||||||||
| Release of ESOP common stock |
— | — | (11,398 | ) | — | — | — | 35,620 | — | 24,222 | ||||||||||||||||||||||
| Treasury common stock acquired |
— | — | — | — | (16,384 | ) | — | — | — | (16,384 | ) | |||||||||||||||||||||
| Balance at March 31, 2004 |
8,586,162 | $ | 858,616 | $ | 48,609,500 | $ | 242,524 | $ | (910,413 | ) | $ | (2,020,943 | ) | $ | (1,705,628 | ) | ||||||||||||||||