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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- ---
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2002
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 0-18460
COMMUNITY CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 57-0866395
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1402C Highway 72 West
Greenwood, SC 29649
(Address of principal executive
offices, including zip code)
(864) 941-8200
(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 latest practicable date.
3,522,463 shares of common stock, $1.00 par value as of October 31, 2002
COMMUNITY CAPITAL CORPORATION
Index
PART I. FINANCIAL INFORMATION Page No.
- -----------------------------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -- September 30, 2002 and December 31, 2001 3
Condensed Consolidated Statements of Operations --
Nine months ended September 30, 2002 and 2001 and three months ended September 30, 2002 and 2001 4
Condensed Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income --
Nine months ended September 30, 2002 and 2001 5
Condensed Consolidated Statements of Cash Flows -- Nine months ended September 30, 2002 and 2001 6
Notes to Condensed Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-18
Item 4. Controls and Procedures 18
PART II. OTHER INFORMATION
- --------------------------
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
(a) Exhibits 20
(b) Reports on Form 8-K 20
COMMUNITY CAPITAL CORPORATION
Condensed Consolidated Balance Sheets
September 30, December 31,
(Dollars in thousands) 2002 2001
------------- ------------
(Unaudited)
Assets
Cash and cash equivalents:
Cash and due from banks 8,730 $ 9,275
Interest-bearing deposit accounts 103 16
--------- ---------
Total cash and cash equivalents 8,833 9,291
--------- ---------
Securities:
Securities available-for-sale 50,202 56,851
Securities held-to-maturity (estimated fair value of $550,000
at September 30, 2002 and December 31, 2001) 550 550
Nonmarketable equity securities 5,405 5,405
--------- ---------
Total securities 56,157 62,806
--------- ---------
Loans receivable 290,027 251,947
Less allowance for loan losses (4,282) (4,103)
--------- ---------
Loans, net 285,745 247,844
Premises and equipment, net 9,972 10,372
Accrued interest receivable 1,878 2,008
Intangible assets 4,035 4,338
Cash surrender value of life insurance 10,071 2,212
Other assets 2,086 1,811
--------- ---------
Total assets $ 378,777 $ 340,682
========= =========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 27,936 $ 25,083
Interest-bearing 246,127 233,247
--------- -------
Total deposits 274,063 258,330
Federal funds purchased and securities sold
under agreements to repurchase 26,953 7,464
Advances from the Federal Home Loan Bank 31,165 31,270
Obligations under capital leases 787 940
Accrued interest payable 674 1,052
Other liabilities 998 2,353
--------- ---------
Total liabilities 334,640 301,409
--------- ---------
Shareholders' Equity
Common stock, $1.00 par value; 10,000,000 shares authorized,
3,852,592 and 3,559,309 shares issued and outstanding
at September 30, 2002 and December 31, 2001, respectively 3,852 3,559
Capital surplus 34,695 32,548
Retained earnings 7,849 4,933
Accumulated other comprehensive income (loss) 1,384 168
Treasury stock at cost; 330,942 shares at September 30, 2002
and 189,024 shares December 31, 2001 (3,643) (1,935)
--------- ---------
Total shareholders' equity 44,137 39,273
--------- ---------
Total liabilities and shareholders' equity $ 378,777 $ 340,682
========= =========
3
COMMUNITY CAPITAL CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
Nine Months Ended Three Months Ended
(Dollars in thousands) September 30, September 30,
----------------------------------- --------------------------------
2002 2001 2002 2001
---------------- --------------- -------------- --------------
Interest income:
Loans, including fees $ 14,474 $ 17,413 $ 4,911 $ 5,206
Investment securities:
Taxable 1,176 2,519 362 624
Tax-exempt 917 945 305 307
Nonmarketable equity securities 157 191 51 50
Other interest income 4 69 - 44
---------------- --------------- -------------- --------------
Total 16,728 21,137 5,629 6,231
---------------- --------------- -------------- --------------
Interest expense:
Deposits 4,112 9,176 1,374 2,449
Federal Home Loan Bank advances 1,457 1,466 491 492
Other interest expense 315 601 120 78
---------------- --------------- -------------- --------------
Total 5,884 11,243 1,985 3,019
---------------- --------------- -------------- --------------
Net interest income 10,844 9,894 3,644 3,212
Provision for loan losses 663 1,100 340 600
---------------- --------------- -------------- --------------
Net interest income after provision for loan losses 10,181 8,794 3,304 2,612
---------------- --------------- -------------- --------------
Other operating income:
Service charges on deposit accounts 1,917 1,452 668 511
Residential mortgage origination fees 487 607 157 201
Commissions from sales of mutual funds 53 26 28 13
Income from fiduciary activities 201 95 80 38
Gain on sales of securities available-for-sale 106 288 - 288
Gain on sale of fixed assets - 24 - 24
Gain on sale of branches - 5,791 - -
Other operating income 440 490 169 140
---------------- --------------- -------------- --------------
Total 3,204 8,773 1,102 1,215
---------------- --------------- -------------- --------------
Other operating expenses:
Salaries and employee benefits 4,771 4,999 1,661 1,494
Net occupancy expense 1,049 915 364 254
Amortization of intangible assets 302 2,330 90 110
Furniture and equipment expense 230 787 78 218
Other operating expenses 2,454 2,940 807 865
---------------- --------------- -------------- --------------
Total 8,806 11,971 3,000 2,941
---------------- --------------- -------------- --------------
Income before income taxes 4,579 5,596 1,406 886
Income tax provision 1,250 1,718 380 220
---------------- --------------- -------------- --------------
Net income $ 3,329 $ 3,878 $ 1,026 $ 666
================ =============== ============== ==============
Basic net income per share $ 0.97 $ 1.13 $ 0.29 $ 0.19
Diluted net income per share $ 0.91 $ 1.09 $ 0.28 $ 0.18
4
COMMUNITY CAPITAL CORPORATION
Condensed Consolidated Statement of Changes in Shareholders' Equity and
Comprehensive Income for the Nine months ended September 30, 2002 and 2001
(Unaudited)
Accumulated
Other
Common Stock Capital Retained Comprehensive Treasury
------------
Shares Amount Surplus Earnings Income Stock Total
---------- --------- --------- ---------- ------------- ---------- ---------
Balance,
December 31, 2000 3,300,395 $ 3,300 $ 30,826 $ 1,984 $ (578) $ (388) $ 35,144
Net income 3,878 3,878
Other
comprehensive
income, net of tax 1,392 1,392
---------
Comprehensive
income 5,270
---------
Exercise of stock options 77,440 77 449 526
5% stock dividend 164,388 165 1,167 (1,313) (19) -
Payment for fractional
shares (6) (6)
Purchase of treasury stock
(59,600 shares) (637) (637)
$.03 per share cash
dividend - - - (104) - - (104)
---------- --------- --------- ---------- ------------- ---------- ---------
Balance,
September 30, 2001 3,542,223 $ 3,542 $ 32,442 $ 4,439 $ 814 $ (1,044) $ 40,193
========== ========= ========= ========== ============= ========== =========
Balance,
December 31, 2001 3,559,309 3,559 32,548 4,933 168 (1,935) 39,273
Net income 3,329 3,329
Other
comprehensive
income, net of tax 1,216 1,216
---------
Comprehensive
income 4,545
---------
Exercise of stock options 293,283 293 2,147 2,440
Purchase of treasury stock
(141,918 shares) (1,708) (1,708)
$0.12 per share cash dividend - - - (413) - - (413)
---------- --------- --------- ---------- ------------- ---------- ---------
Balance,
September 30, 2002 3,852,592 $ 3,852 $ 34,695 $ 7,849 $ 1,384 $ (3,643) $ 44,137
========== ========= ========= ========== ============= ========== ========
5
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
--------------------------------------
2002 2001
---------------- ------------------
Cash flows from operating activities:
Net income
$ 3,329 $ 3,878
Adjustments to reconcile net income to net cash (used) provided
by operating activities:
Depreciation 710 1,118
Provision for possible loan losses 663 1,100
Amortization of intangible assets 303 2,330
Amortization less accretion on investments 29 93
Amortization of deferred loan costs 252 341
Gains on sales of securities available-for-sale (106) (288)
Gain on sale of premises and equipment - (24)
Gain on sale of other real estate (1) -
Loss on sale of other real estate 26 -
Gain on sale of branches - (5,791)
Disbursements for mortgages held for sale (21,508) (24,233)
Proceeds of sales of residential mortgages 19,911 22,530
(Increase) decrease in interest receivable 130 752
Increase (decrease) in interest payable (378) (473)
(Increase) decrease in other assets (8,171) (362)
Increase (decrease) in other liabilities (2,041) 885
---------- -----------
Net cash provided (used) by operating activities (6,852) 1,856
---------- -----------
Cash flows from investing activities:
Net increase in loans to customers (37,704) (14,367)
Purchases of securities available-for-sale (7,730) (250)
Proceeds from maturities of securities available-for-sale 11,164 39,376
Proceeds from sales of securities available-for-sale 5,134 -
Sale of nonmarketable equity securities - 31
Proceeds from sales of premises and equipment 80 109
Proceeds from sales of other real estate 404 -
Purchases of premises and equipment (390) (445)
Acquisition of branches - (8,406)
---------- -----------
Net cash provided (used) by investing activities (29,042) 16,048
---------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposit accounts 15,734 (3,229)
Net increase (decrease) in federal funds purchased and repos 19,488 (6,153)
Proceeds from other borrowings - 300
Repayments of other borrowings - (5,145)
Repayments of Federal Home Loan Bank borrowings (105) (1,104)
Dividends paid (413) -
Proceeds from exercise of stock options 2,440 525
Purchase of treasury stock (1,708) (636)
Payment of cash dividend - (104)
Payment for fractional shares of stock - (6)
Net cash provided (used) by financing activities 35,436 (15,552)
---------- -----------
Net increase (decrease) in cash and cash equivalents (458) 2,352
Cash and cash equivalents, beginning of period 9,291 9,335
---------- -----------
Cash and cash equivalents, end of period $ 8,833 $ 11,687
========== ===========
6
COMMUNITY CAPITAL CORPORATION
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 that would substantially
duplicate those contained in the most recent annual report to shareholders. The
financial statements as of September 30, 2002 and for the interim periods ended
September 30, 2002 and 2001 are unaudited and include all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation. The financial information as of December 31, 2001 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 our 2001 Annual
Report.
Note 2 - Supplemental Cash Flow Information
(Dollars in thousands) Nine Months Ended
September 30,
2002 2001
---------- ----------
Cash paid during the period for:
Income taxes $ 2,979 $ 871
Interest 6,262 11,716
Details of the sale of branches:
Deposits, including accrued interest payable less premium $ - $ (61,309)
Premises and equipment - 3,568
Loans, including accrued interest receivable - 49,346
Other, net - (11)
---------- ----------
Cash paid for net liabilities sold $ - $ (8,406)
========== ==========
Note 3 - Advances from the Federal Home Loan Bank
Advances from the Federal Home Loan Bank of Atlanta to us were $31,165,000 as of
September 30, 2002. Of this amount, the following have scheduled maturities
greater than one year:
Maturing on Interest Rate Principal
------------------------ -------------------------------- ---------
(Dollars in thousands)
03/17/05 6.60% - fixed $ 5,000
10/13/05 5.84% - fixed, callable 10/14/02 3,000
03/26/08 5.51% - fixed, callable 03/26/03 1,500
02/02/09 4.95% - fixed 650
03/17/10 5.92% - fixed, callable 12/17/02 5,000
03/30/10 6.02% - fixed, callable 12/30/02 2,000
03/30/10 6.02% - fixed, callable 12/30/02 4,000
--------
$ 21,150
========
Note 4 - Shareholders' Equity
We purchased 141,918 shares of treasury stock at an average price of $12.03 per
share through our stock repurchase program. There were 293,283 options exercised
by the employees and directors of the Company with total proceeds of $2,440,000
at an average exercise price of $8.32. On January 16, 2002, the Board of
Directors declared a cash dividend of $0.03 per share, which was paid to
shareholders on March 8, 2002. On April 17, 2002, the Board of Directors
declared a cash dividend of $0.04 per share, which was paid to shareholders on
June 7, 2002. On July 18, 2002, the Board of Directors declared a cash dividend
of $0.05 per share. This was our fifth consecutive quarterly cash dividend and
was paid to shareholders on September 6, 2002.
7
COMMUNITY CAPITAL CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5 - Earnings Per Share
A reconciliation of the numerators and denominators used to calculate basic and
diluted earnings per share for the nine and three month periods ended September
30, 2002 and 2001 are as follows:
Nine Months Ended September 30, 2002
----------------------------------------
(Dollars in thousands, except per share) Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Basic earnings per share
Income available to common shareholders $ 3,329 3,425,803 $ 0.97
==========
Effect of dilutive securities
Stock options - 214,872
---------- ---------
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $ 3,329 3,640,675 $ 0.91
========== ========= ==========
Nine Months Ended September 30, 2001
----------------------------------------
(Dollars in thousands, except per share) Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Basic earnings per share
Income available to common shareholders $ 3,878 3,431,386 $ 1.13
==========
Effect of dilutive securities
Stock options - 122,951
---------- ---------
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $ 3,878 3,554,337 $ 1.09
========== ========= ==========
Three Months Ended September 30, 2002
----------------------------------------
(Dollars in thousands, except per share) Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ----------
Basic earnings per share
Income available to common shareholders $ 1,026 3,536,865 $ 0.29
==========
Effect of dilutive securities
Stock options - 189,503
---------- ---------
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $ 1,026 3,726,368 $ 0.28
========== ========= ==========
8
COMMUNITY CAPITAL CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5 - Earnings Per Share - (continued)
Three Months Ended September 30, 2001
--------------------------------------------
Income Shares Per Share
(Dollars in thousands, except per share) (Numerator) (Denominator) Amount
----------- ------------- -----------
Basic earnings per share
Income available to common shareholders $ 666 3,450,448 $ 0.19
===========
Effect of dilutive securities
Stock options - 220,862
----------- -------------
Diluted earnings per share
Income available to common shareholders
plus assumed conversions $ 666 3,671,310 $ 0.18
=========== ============= ===========
Note 6 - Comprehensive Income
The following tables set forth the amounts of other comprehensive income
included in equity along with the related tax effects for the nine and three
month periods ended September 30, 2002 and 2001:
Pre-tax (Expense) Net-of-tax
(Dollars in thousands) Amount Benefit Amount
----------- ----------- -----------
For the Nine Months Ended September 30, 2002:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 1,948 $ (660) $ 1,288
Less: reclassification adjustment for gains realized in net
income (106) 34 (72)
----------- ----------- -----------
Net unrealized gains (losses) on securities 1,842 (626) 1,216
----------- ----------- -----------
Other comprehensive income $ 1,842 $ (626) $ 1,216
=========== =========== ===========
Pre-tax (Expense) Net-of-tax
(Dollars in thousands) Amount Benefit Amount
----------- ----------- -----------
For the Nine Months Ended September 30, 2001:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 2,397 $ (815) $ 1,582
Less: reclassification adjustment for gains realized in net
income (288) 98 (190)
----------- ----------- -----------
Net unrealized gains (losses) on securities 2,109 (717) 1,392
----------- ----------- -----------
Other comprehensive income $ 2,109 $ (717) $ 1,392
=========== =========== ===========
9
COMMUNITY CAPITAL CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6 - Comprehensive Income - (continued)
- -----------------------------
Pre-tax (Expense) Net-of-tax
(Dollars in thousands) Amount Benefit Amount
----------- ----------- -----------
For the Three Months Ended September 30, 2002:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 904 $ (307) $ 597
Less: reclassification adjustment for gains realized in net
income - - -
----------- ----------- -----------
Net unrealized gains (losses) on securities 904 (307) 597
----------- ----------- -----------
Other comprehensive income $ 904 $ (307) $ 597
=========== =========== ===========
Pre-tax (Expense) Net-of-tax
(Dollars in thousands) Amount Benefit Amount
----------- ----------- -----------
For the Three Months Ended September 30, 2001:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 1,283 $ (436) $ 847
Less: reclassification adjustment for gains realized in net
income (288) 98 (190)
----------- ----------- -----------
Net unrealized gains (losses) on securities 995 (338) 657
----------- ----------- -----------
Other comprehensive income $ 995 $ (338) $ 657
=========== =========== ===========
10
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is a discussion of our financial condition as of September 30,
2002 compared to December 31, 2001 and the results of operations for the nine
and three months ended September 30, 2002 compared to the nine and three months
ended September 30, 2001. These comments should be read in conjunction with our
condensed consolidated financial statements and accompanying footnotes appearing
in this report.
Results of Operations
Net Interest Income
For the nine months ended September 30, 2002, net interest income, the major
component of our net income, was $10,844,000 compared to $9,894,000 for the same
period of 2001, an increase of $950,000 or 9.60%. For the three months ended
September 30, 2002, net interest income was $3,644,000 compared to $3,212,000
for the comparable period of 2001. The improvements in the 2002 year to date
period was primarily attributable to the increase in the volume of loans and the
decrease in the cost of funds. The average rate realized on interest-earning
assets decreased to 6.95% from 7.96%, while the average rate paid on
interest-bearing liabilities decreased to 2.78% from 4.75% for the nine month
periods ended September 30, 2002 and 2001, respectively.
The net interest spread and net interest margin were 4.17% and 4.56%,
respectively, for the nine-month period ended September 30, 2002, compared to
3.21% and 3.92% for the nine month period ended September 30, 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 nine months ended September 30, 2002 and 2001, the
provision was $663,000 and $1,100,000, respectively. For the three months ended
September 30, 2002 and 2001, the provision for loan losses was $340,000 and
$600,000, respectively. Our nonperforming loans totaled $2,308,000 at September
30, 2002 compared to $1,989,000 at September 30, 2001. Criticized and classified
loans have increased from $16,510,000 at September 30, 2001 to $16,836,000 at
September 30, 2002. The increase in nonperforming and criticized and classified
loans was primarily due to deteriorating economic conditions. The allowance for
loan losses was 1.48% of total loans at September 30, 2002, as compared to 1.44%
at September 30, 2001.
There are risks inherent in making all loans, including risks with respect to
the period of time over which loans may be repaid, risks resulting from changes
in economic and industry conditions, risks inherent in dealing with individual
borrowers, and, in the case of a collateralized loan, risks resulting from
uncertainties about the future value of the collateral. We maintain an allowance
for loan losses based on, among other things, historical experience, an
evaluation of economic conditions, and regular reviews of delinquencies and loan
portfolio quality. Our judgment about the adequacy of the allowance is based
upon a number of assumptions about future events, which we believe to be
reasonable, but which may not prove to be accurate. Thus, there is a risk that
charge-offs in future periods could exceed the allowance for loan losses or that
substantial additional increases in the allowance for loan losses could be
required. Additions to the allowance for loan losses would result in a decrease
of our net income and possibly, our capital. Based on present information, we
believe the allowance for loan losses is adequate at September 30, 2002 to meet
presently known and inherent risks in the loan portfolio.
Noninterest Income
Total noninterest income for the nine months ended September 30, 2002 was
$3,204,000, a decrease of $5,569,000, or 63.48% compared to $8,773,000 for the
nine months ended September 30, 2001. The primary reason for the significant
decrease was that we realized a gain of $5,791,000 on the sale of branches
during the second quarter of 2001. Total noninterest income for the quarter
ended September 30, 2002 decreased $113,000, or 9.30% to $1,102,000, compared to
$1,215,000 at September 30, 2001. The reason for the decrease in the quarterly
period was due to the fact we had gains on sales of securities totaling $288,000
in 2001 and no gains in the same period in 2002.
Service charge income increased $465,000, or 32.02% from the nine months ended
September 30, 2001 to the nine months ended September 30, 2002 and $157,000, or
30.72% from the three months ended September 30, 2001 to the three months
September 30, 2002. This increase is primarily from our new overdraft product
that allows customers a limited dollar amount of overdrafts on their deposit
accounts for a fee.
Residential mortgage origination fees decreased 19.76% to $487,000 from $607,000
for the nine months ended September 30, 2002, compared to the nine months ended
September 30, 2001 and decreased 21.89% to $157,000 from $201,000 for the three
months ended September 30, 2002, compared to the three months ended September
30, 2001. Mortgage originations have declined as rates leveled off and as fewer
customers are refinancing their mortgages.
11
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
We realized a gain on the sale of securities of $106,000 during the first nine
months of 2002, compared to $288,000 during the first nine months of 2001. We
also realized a gain on the sale of fixed assets of $24,000 in the third quarter
of 2001. We did not realize a gain on the sale of fixed assets in the third
quarter of 2002.
The income from fiduciary activities increased $106,000, or 111.58% from the
nine month period ended September 30, 2001 to the nine month period ended
September 30, 2002, and $42,000, or 110.53% from the three month period ended
September 30, 2001 to the three month period ended September 30, 2002.
Commissions on the sale of mutual funds increased $27,000, or 103.85% from the
nine months ended September 30, 2001 to the nine months ended September 30, 2002
and $15,000, or 115.38% for the three months ended September 30, 2001 to the
three months ended September 30, 2002.
Noninterest Expense
Total noninterest expense for the first nine months of 2002 was $8,806,000, a
decrease of $3,165,000, or 26.44%, when compared to the first nine months of
2001. The primary reason for the decrease was due to the $1,916,000 write off of
intangible assets as a result of the sale of the branches in the second quarter
of 2001. For the quarter ended September 30, 2002, noninterest expense was
$3,000,000, an increase of $59,000, or 2.01%, over the comparable period of
2001.
The primary component of noninterest expense is salaries and benefits, which
were $4,771,000, and $4,999,000 for the nine months ended September 30, 2002 and
2001, respectively and $1,661,000 and $1,494,000 for the three months ending
September 30, 2002 and 2001, respectively. Net occupancy expense increased
$134,000 for the nine month period ending September 30, 2002, an increase of
14.64% over the related period in 2001.
Income Taxes
For the nine months ended September 30, 2002 and 2001, the effective income tax
rate was 27.30% and 30.70%, respectively, and the income tax provision was
$1,250,000 and $1,718,000, respectively. For the quarter ended September 30,
2002, the effective tax rate was 27.03% compared to 24.83% for the third quarter
of 2001.
Net Income
The combination of the above factors resulted in net income of $3,329,000 for
the nine months ended September 30, 2002 compared to $3,878,000 for the
comparable period in 2001. For the quarter ended September 30, 2002, net income
was $1,026,000, an increase of $360,000 when compared to the third quarter of
2001. This increase is primarily a result of the expansion of net interest
margin.
Assets and Liabilities
During the first nine months of 2002, total assets increased $38,095,000, or
11.18%, when compared to December 31, 2001. We experienced an increase of 15.11%
in the loan area during the first nine months of 2002; however, this growth was
offset by a decrease in securities of $6,649,000 from December 31, 2001 to
September 30, 2002. Proceeds from maturities of securities were used to fund
loan growth. Cash surrender value of life insurance increased $7,859,000 to
$10,071,000 at September 30, 2002. This increase was attributable to our
purchases of additional life insurance policies on our key officers. On the
liability side, total deposits increased $15,733,000, or 6.09%, to $274,063,000
at September 30, 2002. Federal funds purchased and securities sold under
agreements to repurchase increased $19,489,000 to $26,953,000 at September 30,
2002 from December 31, 2001. This increase was primarily attributable to an
increase in federal funds purchased to fund loan growth. Federal funds purchased
totaled $21,853,000 at September 30, 2002. Payments for income taxes of
$2,979,000 were the primary reason for the reduction of other liabilities by
$1,355,000 or 57.59% from $2,353,000 at December 31, 2001 to $998,000 at
September 30, 2002. This tax liability was accrued in 2001 primarily for the
gain on the sale of the branches.
Investment Securities
Investment securities decreased 10.59% to $56,157,000 at September 30, 2002. The
decrease was primarily due to a decrease in securities available-for-sale.
Proceeds from the maturities of securities were used to fund loan growth.
12
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Loans
Loans receivable increased $38,080,000, or 15.11%, since December 31, 2001.
Balances within the major loan receivable categories as of September 30, 2002
and December 31, 2001 are as follows:
(Dollars in thousands) September 30, December 31,
2002 2001
------------- ------------
Commercial and agricultural $ 28,925 $ 33,395
Real estate 221,893 177,821
Home equity 20,759 18,939
Consumer, installment 13,091 16,915
Consumer, credit card and checking 2,200 1,312
Residential mortgages held for sale & other 3,159 3,565
------------ --------------
$ 290,027 $ 251,947
============ ==============
Risk Elements in the Loan Portfolio
The following is a summary of risk elements in the loan portfolio:
(Dollars in thousands) September 30, December 31,
2002 2001
------------- ------------
Loans:
Nonaccrual loans $ 1,682 $ 1,567
Accruing loans more than 90 days past due 626 -
------------ -----------
2,308 1,567
============ ===========
The $626,000 in accruing loans that are more than 90 days past due are
considered well-secured or in the process of collection. Nineteen loans comprise
the total of nonaccrual loans; however, one loan totaling $536,741 comprised a
significant portion of this total.
Activity in the Allowance for Loan Losses is as follows:
(Dollars in thousands) September 30,
2002 2001
------------- ------------
Balance, January 1, $ 4,103 $ 3,060
Provision for loan losses for the period 663 1,100
Chargeoffs
Recoveries (589) (680)
105 61
------------ ------------
Balance, end of period $ 4,282 $ 3,541
============ ============
Gross loans outstanding, end of period $ 290,027 $ 246,629
Allowance for loan losses to loans outstanding 1.48% 1.44%
13
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Premises and Equipment
Purchases of fixed assets during the first nine months of 2002 totaled $390,000.
Of this amount, $97,000 of these purchases were in the third quarter of 2002.
Total fixed assets, net of depreciation, decreased $400,000 during the first
nine months of 2002.
Deposits
Total deposits increased $15,733,000, or 6.09%, from December 31, 2001.
Expressed in percentages, noninterest-bearing deposits increased 13.79% and
interest bearing deposits increased 5.26%.
Balances within the major deposit categories as of September 30, 2002 and
December 31, 2001 are as follows:
(Dollars in thousands) September 30, 2002 December 31, 2001
------------------ -----------------
Noninterest-bearing demand deposits $ 28,543 $ 25,083
Interest-bearing demand deposits 35,669 32,503
Money market accounts 64,231 61,863
Savings deposits 28,566 26,653
Certificates of deposit 117,054 112,228
------------------ -----------------
$ 274,063 $ 258,330
================== =================
Advances from the Federal Home Loan Bank
Advances from the Federal Home Loan Bank of Atlanta to us were $31,165,000 as of
September 30, 2002. Of this amount, the following have scheduled maturities
greater than one year:
Maturing on Interest Rate Principal
---------------------- -------------------------------- ---------
(Dollars in thousands)
03/17/05 6.60% - fixed 5,000
10/13/05 5.84% - fixed, callable 10/14/02 3,000
03/26/08 5.51% - fixed, callable 03/26/03 1,500
02/02/09 4.95% - fixed 650
03/17/10 5.92% - fixed, callable 12/17/02 5,000
03/30/10 6.02% - fixed, callable 12/30/02 2,000
03/30/10 6.02% - fixed, callable 12/30/02 4,000
---------
$ 21,150
=========
14
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Capital
Quantitative measures established by the federal banking agencies to ensure
capital adequacy requires us to maintain minimum ratios of Tier 1 and total
capital as a percentage of assets and off-balance-sheet exposures, adjusted for
risk weights ranging from 0% to 100%. Tier 1 capital consists of common
shareholders' equity, excluding the unrealized gain or loss on securities
available-for-sale, minus certain intangible assets. Tier 2 capital consists of
the allowance for loan losses subject to certain limitations. Total capital for
purposes of computing the capital ratios consists of the sum of Tier 1 and Tier
2 capital. The regulatory minimum requirements are 4% for Tier 1 and 8% for
total risk-based capital.
We are also required to maintain capital at a minimum level based on total
average assets, which is known as the leverage ratio. Only the strongest banks
are allowed to maintain capital at the minimum requirement of 3%. All others are
subject to maintaining ratios at least 1% to 2% above the minimum.
The following table summarizes our capital ratios and the regulatory minimum
requirements at September 30, 2002:
Tier 1 Total Tier 1
Risk-based Risk-based Leverage
------------- ------------- -----------
Actual ratio:
Community Capital Corporation 13.97% 15.23% 10.69%
CapitalBank 12.35% 13.61% 9.44%
Regulatory minimums:
For capital adequacy purposes 4.00% 8.00% 4.00%
To be well-capitalized under prompt action provisions 6.00% 10.00% 5.00%
Liquidity and Capital Resources
Shareholders' equity was increased by the $2,440,000 proceeds from the exercise
of stock options and net income of $3,329,000. Shareholders' equity decreased by
$413,000 paid to shareholders for cash dividends. Due to changes in the market
rates of interest, the fair value of our securities available-for-sale
increased, which had the effect of increasing shareholders' equity by $1,216,000
net of the deferred taxes for the nine months ended September 30, 2002 when
compared to December 31, 2001.
For the near term, maturities and sales of securities available-for-sale are
expected to be a primary source of liquidity as we deploy these funds into loans
to achieve the desired mix of assets and liabilities. We also expect to build
our deposit base. Advances from the Federal Home Loan Bank and the Bankers Bank
will also continue to serve as a funding source, at least for the near future.
We have the ability to receive an additional $28,861,000 in advances under the
term of our agreement with the Federal Home Loan Bank. Short-term borrowings by
CapitalBank are not expected to be a primary source of liquidity for the near
term; however, we have approximately $28,944,000 of unused lines of credit to
purchase federal funds.
15
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Off-Balance Sheet Risk
Through the operations of CapitalBank, we have made contractual commitments to
extend credit in the ordinary course of our business activities. These
commitments are legally binding agreements to lend money to our customers at
predetermined interest rates for a specified period of time. At September 30,
2002, we had issued commitments to extend credit of $46,026,000 and standby
letters of credit of $1,048,000 through various types of commercial lending
arrangements. Approximately $18,984,000 of these commitments to extend credit
had variable rates.
The following table sets forth the length of time until maturity for unused
commitments to extend credit and standby letters of credit at September 30,
2002.
After One After Three
Within Through Through Within Greater
One Three Twelve One Than
(Dollars in thousands) Month Months Months Year One Year Total
----------- ------------- -------------- ---------- ------------ -----------
Unused commitments to
extend credit $ 408 $ 2,267 $ 17,432 $20,107 $ 25,919 $ 46,026
Standby letters of credit 121 46 881 1,048 - 1,048
------ -------- --------- ------- -------- --------
Totals $ 529 $ 2,313 $ 18,313 $21,155 $ 25,919 $ 47,074
We evaluate each customer's credit worthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by us upon extension of
credit, is based on our credit evaluation of the borrower. Collateral varies but
may include accounts receivable, inventory, property, plant and equipment,
commercial and residential real estate.
Critical Accounting Policies
We have adopted various accounting policies that govern the application of
accounting principles generally accepted in the United States in the preparation
of our financial statements. Our significant accounting policies are described
in the footnotes to the consolidated financial statements at December 31, 2001
as filed on our annual report on Form 10-K. Certain accounting policies involve
significant judgments and assumptions by us that have a material impact on the
carrying value of certain assets and liabilities. We consider these accounting
policies to be critical accounting policies. The judgments and assumptions we
use are based on historical experience and other factors, which we believe to be
reasonable under the circumstances. Because of the nature of the judgments and
assumptions we make, actual results could differ from these judgments and
estimates which could have a material impact on our carrying values of assets
and liabilities and our results of operations.
We believe the allowance for loan losses is a critical accounting policy that
requires the most significant judgments and estimates used in preparation of our
consolidated financial statements. Refer to the portion of this discussion that
addresses our allowance for loan losses for a description of our processes and
methodology for determining our allowance for loan losses.
Regulatory Matters
We are 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.
16
COMMUNITY CAPITAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Advisory Note Regarding Forward-Looking Statements
Certain of the statements contained in this report on Form 10-Q that are not
historical facts are forward-looking statements subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. We caution
readers of this report that such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of us to be materially different from those
expressed or implied by such forward-looking statements. Although we believe
that our expectations of future performance is based on reasonable assumptions
within the bounds of our knowledge of our business and operations, there can be
no assurance that actual results will not differ materially from our
expectations.
Factors which could cause actual results to differ from expectations include,
among other things: (1) the challenges, costs and complications associated with
the continued development of our branches; (2) the potential that loan
charge-offs may exceed the allowance for loan losses or that such allowance will
be increased as a result of factors beyond the control of us; (3) our dependence
on senior management; (4) competition from existing financial institutions
operating in our market areas as well as the entry into such areas of new
competitors with greater resources, broader branch networks and more
comprehensive services; (5) adverse conditions in the stock market, the public
debt market, and other capital markets (including changes in interest rate
conditions); (6) changes in deposit rates, the net interest margin, and funding
sources; (7) inflation, interest rate, market, and monetary fluctuations; (8)
risks inherent in making loans including repayment risks and value of
collateral; (9) the strength of the United States economy in general and the
strength of the local economies in which we conduct operations may be different
than expected resulting in, among other things, a deterioration in credit
quality or a reduced demand for credit, including the resultant effect on our
loan portfolio and allowance for loan losses; (10) fluctuations in consumer
spending and saving habits; (11) the demand for our products and services; (12)
technological changes; (13) the challenges and uncertainties in the
implementation of our expansion and development strategies; (14) the ability to
increase market share; (15) the adequacy of expense projections and estimates of
impairment loss; (16) the impact of changes in accounting policies by the
Securities and Exchange Commission; (17) unanticipated regulatory or judicial
proceedings; (18) the potential negative effects of future legislation affecting
financial institutions (including without limitation laws concerning taxes,
banking, securities, and insurance); (19) the effects of, and changes in, trade,
monetary and fiscal policies and laws, including interest rate policies of the
Board of Governors of the Federal Reserve System; (20) the timely development
and acceptance of products and services, including products and services offered
through alternative delivery channels such as the Internet; (21) the impact on
our business, as well as on the risks set forth above, of various domestic or
international military or terrorist activities or conflicts; (22) other factors
described in this report and in other reports we have filed with the Securities
and Exchange Commission; and (23) our success at managing the risks involved in
the foregoing.
17
COMMUNITY CAPITAL CORPORATION
Item 4. Controls and Procedures
Quarterly evaluation of the company's Disclosure Controls and Internal Controls.
Within the 90 days prior to the date of this Quarterly Report on Form 10-Q, the
company evaluated the effectiveness of the design and operation of its
"disclosure controls and procedures" (Disclosure Controls), and its "internal
controls and procedures for financial reporting" (Internal Controls). This
evaluation (the "Controls Evaluation") was done under the supervision and with
the participation of management, including our Chief Executive Officer ("CEO")
and Chief Financial Officer ("CFO"). Rules adopted by the SEC require that in
this section of the Quarterly Report we present the conclusions of the CEO and
the CFO about the effectiveness of our Disclosure Controls and Internal Controls
based on and as of the date of the Controls Evaluation.
CEO and CFO Certifications. Appearing immediately following the Signatures
section of this Quarterly Report there is a form of Certification. The form of
Certification is required in accord with Section 302 of the Sarbanes-Oxley Act
of 2002 (the "Section 302 Certification"). This section of the Quarterly Report
that you are currently reading is the information concerning the Controls
Evaluation referred to in the Section 302 Certifications, and this information
should be read in conjunction with the Section 302 Certifications for a more
complete understanding of the topics presented.
Disclosure Controls and Internal Controls. Disclosure Controls are procedures
that are designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934 (the
"Exchange Act"), such as this Quarterly Report, is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Disclosure Controls are also designed with the objective of ensuring that
such information is accumulated and communicated to our management, including
the CEO and CFO, as appropriate to allow timely decisions regarding required
disclosure. Internal Controls are procedures that are designed with the
objective of providing reasonable assurance that (1) our transactions are
properly authorized; (2) our assets are safeguarded against unauthorized or
improper use; and (3) our transactions are properly recorded and reported, all
to permit the preparation of our financial statements in conformity with
generally accepted accounting principles.
Limitations on the Effectiveness of Controls. The company's management,
including the CEO and CFO, does not expect that our Disclosure Controls or our
Internal Controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.
Scope of the Controls Evaluation. The CEO/CFO evaluation of our Disclosure
Controls and our Internal Controls included a review of the controls' objectives
and design, the controls' implementation by the company and the effect of the
controls on the information generated for use in this Quarterly Report. In the
course of the Controls Evaluation, we sought to identify data errors, controls
problems or acts of fraud and to confirm that appropriate corrective action,
including process improvements, were being undertaken. This type of evaluation
will be done on a quarterly basis so that the conclusions concerning controls
effectiveness can be reported in our Quarterly Reports on Form 10-Q and Annual
Report on Form 10-K. Our Internal Controls are also evaluated on an ongoing
basis by other personnel in our company and by our independent auditors in
connection with their audit and review activities. The overall goals of these
various evaluation activities are to monitor our Disclosure Controls and our
Internal Controls and to make modifications as necessary; our intent in this
regard is that the Disclosure Controls and the Internal Controls will be
maintained as dynamic systems that change (including with improvements and
corrections) as conditions warrant.
18
COMMUNITY CAPITAL CORPORATION
Item 4. Controls and Procedures - Continued
Among other matters, we sought in our evaluation to determine whether there were
any "significant deficiencies" or "material weaknesses" in the company's
Internal Controls, or whether the company had identified any acts of fraud
involving personnel who have a significant role in the company's Internal
Controls. This information was important both for the Controls Evaluation
generally and because items 5 and 6 in the Section 302 Certifications of the CEO
and CFO require that the CEO and CFO disclose that information to our Board's
Audit Committee and to our independent auditors and to report on related matters
in this section of the Quarterly Report. In the professional auditing
literature, "significant deficiencies" are referred to as "reportable
conditions"; these are control issues that could have a significant adverse
effect on the ability to record, process, summarize and report financial data in
the financial statements. A "material weakness" is defined in the auditing
literature as a particularly serious reportable condition where the internal
control does not reduce to a relatively low level the risk that misstatements
caused by error or fraud may occur in amounts that would be material in relation
to the financial statements and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We also
sought to deal with other controls matters in the Controls Evaluation, and in
each case if a problem was identified, we considered what revision, improvement
and/or correction to make in accord with our on-going procedures.
In accord with SEC requirements, the CEO and CFO note that, since the date of
the Controls Evaluation to the date of this Quarterly Report, there have been no
significant changes in Internal Controls or in other factors that could
significantly affect Internal Controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Conclusions. Based upon the Controls Evaluation, our CEO and CFO have concluded
that, subject to the limitations noted above, our Disclosure Controls are
effective to ensure that material information relating to the company is made
known to management, including the CEO and CFO, particularly during the period
when our periodic reports are being prepared, and that our Internal Controls are
effective to provide reasonable assurance that our financial statements are
fairly presented in conformity with generally accepted accounting principles.
Item 3 of Part I is not applicable.
Item 5. Other Information
On September 18, 2002, our the Board of Directors voted unanimously to amend the
bylaws to add Article II, Section 2.10, "Business to be Conducted at Annual or
Special Meeting." The amendment imposes advance written notice requirements on
any shareholder proposals to be presented by shareholders at an annual or
special meeting.
On July 18, 2002, the Company declared a cash dividend on each outstanding share
of the Company's common stock, par value $1.00 per share (the "Common Stock"),
in the amount of $0.05 per share of Common Stock, which dividend was paid on
September 6, 2002, to holders of record as of the close of business on August 9,
2002.
Item 6. Exhibits And Reports on Form 8-K
(a) Exhibit 3.3 Bylaws of Registrant (Incorporated by Reference to
Exhibit 3.3 filed in connection with the Registrant's
Form 10K for the fiscal year ended December 31, 1995)
Exhibit 3.4 Amendment to Bylaws of Registrant dated September 18,
2002
Exhibit 10.21 Salary Continuation Agreement between CapitalBank and
William G. Stevens dated October 17, 2002
Exhibit 10.22 Salary Continuation Agreement between CapitalBank and
Ralph W. Brewer dated October 17, 2002
Exhibit 10.23 Split Dollar Agreement between CapitalBank and Ralph W.
Brewer dated October 17, 2002
Exhibit 10.24 Salary Continuation Agreement between CapitalBank and
Helen A. Austin dated October 17, 2002
19
COMMUNITY CAPITAL CORPORATION
Item 6. Exhibits And Reports on Form 8-K - Continued
Exhibit 10.25 Split Dollar Agreement between CapitalBank and Helen A.
Austin dated October 17, 2002
Exhibit 10.26 Salary Continuation Agreement between CapitalBank and
James A. Lollis dated October 17, 2002
Exhibit 10.27 Split Dollar Agreement between CapitalBank and James A.
Lollis dated October 17, 2002
Exhibit 10.28 Salary Continuation between CapitalBank and Taylor T.
Stokes dated October 17, 2002
Exhibit 10.29 Split Dollar Agreement CapitalBank and Taylor T. Stokes
dated October 17, 2002
Exhibit 10.30 Salary Continuation Agreement between CapitalBank and
Walter G. Stevens dated October 17 2002
Exhibit 10.31 Split Dollar Agreement between CapitalBank and Walter G.
Stevens dated October 17, 2002
Exhibit 10.32 Salary Continuation Agreement between CapitalBank and
Sonja Hazel Hughes dated October 17, 2002
Exhibit 10.33 Salary Continuation Agreement between CapitalBank and
Steve O. White dated October 17, 2002
Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
(b) Reports on Form 8-K. The following reports were filed on Form 8-K during
the quarter ended September 30, 2002.
The Company filed: (1) a Form 8-K on August 13, 2002 regarding the submission by
the Company's Chief Executive Officer and Chief Financial Officer to the SEC of
the certifications required by Section 906 of the Sarbanes-Oxley Act of 2002;
and (2) a Form 8-K on August 20, 2002 regarding the Company's signing of a
Branch Development Agreement with Nuevo Latino Investment Company, L.L.C.
concerning the development of a branch to be located in Greenville, South
Carolina.
Items 1, 2, 3, and 4 of Part II are not applicable.
20
COMMUNITY CAPITAL CORPORATION
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.
By: /s/ WILLIAM G. STEVENS
-------------------------------------
William G. Stevens
President & Chief Executive Officer
Date: November 12, 2002 By: /s/ R. WESLEY BREWER
-------------------------------------
R. Wesley Brewer
Chief Financial Officer
21
COMMUNITY CAPITAL CORPORATION
CERTIFICATION
I, William G. Stevens, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Community Capital
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 /S/ WILLIAM G. STEVENS
------------------------- ------------------------------------
William G. Stevens
President & Chief Executive Officer
22
COMMUNITY CAPITAL CORPORATION
CERTIFICATION
I, R. Wesley Brewer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Community Capital
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
6. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 /S/ R. WESLEY BREWER
-------------------------- -------------------------------
R. Wesley Brewer
Chief Financial Officer
23