UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 2009 Commission File No. 000-29640
COMMUNITY FIRST BANCORPORATION
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(Exact name of registrant as specified in its charter)
South Carolina 58-2322486
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
449 HIGHWAY 123 BYPASS
SENECA, SOUTH CAROLINA 29678
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(Address of principal executive offices, zip code)
(864) 886-0206
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(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 by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes [ ] No [ ] (Not yet applicable to Registrant)
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: Common Stock, no par
or stated value, 3,609,799 Shares Outstanding on April 30, 2009.
COMMUNITY FIRST BANCORPORATION
FORM 10-Q
Index
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets ...................................................................... 3
Consolidated Statements of Income ................................................................ 4
Consolidated Statements of Changes in Shareholders' Equity ....................................... 5
Consolidated Statements of Cash Flows ............................................................ 6
Notes to Unaudited Consolidated Financial Statements ............................................. 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............ 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk ....................................... 18
Item 4T. Controls and Procedures .......................................................................... 19
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders .............................................. 19
Item 6. Exhibits ......................................................................................... 19
SIGNATURE .......................................................................................................... 20
2
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
COMMUNITY FIRST BANCORPORATION
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
2009 2008
----- ----
(Dollars in thousands)
Assets
Cash and due from banks ............................................................. $ 6,766 $ 9,204
Interest bearing deposits due from banks ............................................ 4,011 12,969
Federal funds sold .................................................................. - 18,793
--------- ---------
Cash and cash equivalents ....................................................... 10,777 40,966
Securities available-for-sale ....................................................... 160,871 126,636
Securities held-to-maturity (fair value $11,651 for 2009
and $12,238 for 2008) ........................................................... 11,199 11,910
Other investments ................................................................... 1,340 1,220
Loans ............................................................................... 275,613 270,413
Allowance for loan losses ....................................................... (5,470) (5,475)
--------- ---------
Loans - net .................................................................. 270,143 264,938
Premises and equipment - net ........................................................ 8,677 8,655
Accrued interest receivable ......................................................... 2,759 2,776
Bank-owned life insurance ........................................................... 8,574 8,483
Other assets ........................................................................ 4,220 3,889
--------- ---------
Total assets ................................................................. $ 478,560 $ 469,473
========= =========
Liabilities
Deposits
Noninterest bearing ............................................................. $ 44,794 $ 41,962
Interest bearing ................................................................ 378,465 374,153
--------- ---------
Total deposits ............................................................... 423,259 416,115
Accrued interest payable ............................................................ 3,914 3,045
Long-term debt ...................................................................... 9,500 9,500
Other liabilities ................................................................... 1,099 885
--------- ---------
Total liabilities ............................................................ 437,772 429,545
--------- ---------
Shareholders' equity
Preferred stock - no par value; 10,000,000 shares authorized;
None issued and outstanding
Common stock - no par value; 10,000,000 shares authorized; .......................... - -
issued and outstanding - 3,609,811 for 2009 and
3,564,279 for 2008 .............................................................. 37,570 37,084
Additional paid-in capital .......................................................... 748 748
Retained earnings ................................................................... 2,183 1,769
Accumulated other comprehensive income .............................................. 287 327
--------- ---------
Total shareholders' equity ................................................... 40,788 39,928
--------- ---------
Total liabilities and shareholders' equity ................................... $ 478,560 $ 469,473
========= =========
See accompanying notes to unaudited consolidated financial statements.
3
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
2009 2008
---- ----
(Dollars in thousands,
except per share)
Interest income
Loans, including fees ........................................................... $4,049 $4,732
Interest bearing deposits due from banks ........................................ 16 2
Securities
Taxable ....................................................................... 1,506 1,017
Tax-exempt .................................................................... 209 206
Other investments ............................................................... - 13
Federal funds sold .............................................................. 3 386
------ ------
Total interest income ....................................................... 5,783 6,356
------ ------
Interest expense
Time deposits $100M and over .................................................... 1,093 1,153
Other deposits .................................................................. 1,816 2,396
Long-term debt .................................................................. 91 39
------ ------
Total interest expense ...................................................... 3,000 3,588
------ ------
Net interest income .................................................................. 2,783 2,768
Provision for loan losses ............................................................ 750 130
------ ------
Net interest income after provision .................................................. 2,033 2,638
------ ------
Other income
Service charges on deposit accounts ............................................. 323 360
ATM interchange and other fees .................................................. 140 129
Credit life insurance commissions ............................................... 6 4
Increase in value of bank-owned life insurance .................................. 92 93
Other income .................................................................... 10 23
------ ------
Total other income .......................................................... 571 609
------ ------
Other expenses
Salaries and employee benefits .................................................. 1,181 1,037
Net occupancy expense ........................................................... 135 119
Furniture and equipment expense ................................................. 93 110
Amortization of computer software ............................................... 95 75
ATM interchange and related expenses ............................................ 113 110
Other expense ................................................................... 480 436
------ ------
Total other expenses ........................................................ 2,097 1,887
------ ------
Income before income taxes ........................................................... 507 1,360
Income tax expense ................................................................... 93 400
------ ------
Net income ........................................................................... $ 414 $ 960
====== ======
Per share*
Net income ...................................................................... $ 0.12 $ 0.27
Net income, assuming dilution ................................................... 0.12 0.26
------
* Per share information has been retroactively adjusted to reflect a 5% stock
dividend effective December 20, 2008.
See accompanying notes to unaudited consolidated financial statements.
4
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
Common Stock Accumulated
------------ Additional Other
Number of Paid-in Retained Comprehensive
Shares Amount Capital Earnings Income (Loss) Total
------ ------ ------- -------- ------------- -----
(Dollars in thousands)
Balance, January 1, 2008 .......................... 3,324,105 $ 35,009 $ 681 $ 2,140 $ 80 $ 37,910
----------
Comprehensive income:
Net income .................................... - - - 960 - 960
----------
Unrealized holding gains and losses
on available-for-sale securities
arising during the period, net of
income taxes of $340 ........................ - - - - 608 608
----------
Total other comprehensive income .......... 608
----------
Total comprehensive income .............. 1,568
----------
Exercise of employee stock options ................ 35,098 180 - - - 180
---------- ---------- ---------- ---------- ---------- ----------
Balance, March 31, 2008 ........................... 3,359,203 $ 35,189 $ 681 $ 3,100 $ 688 $ 39,658
========== ========== ========== ========== ========== ==========
Balance, January 1, 2009 .......................... 3,564,279 $ 37,084 $ 748 $ 1,769 $ 327 $ 39,928
----------
Comprehensive income:
Net income .................................... - - - 414 - 414
----------
Unrealized holding gains and losses
on available-for-sale securities
arising during the period, net of
income taxes of $23 ......................... - - - - (40) (40)
----------
Total other comprehensive income .......... (40)
----------
Total comprehensive income .............. 374
----------
Exercise of employee stock options ................ 45,532 486 - - - 486
---------- ---------- ---------- ---------- ---------- ----------
Balance, March 31, 2009 ........................... 3,609,811 $ 37,570 $ 748 $ 2,183 $ 287 $ 40,788
========== ========== ========== ========== ========== ==========
See accompanying notes to unaudited consolidated financial statements.
5
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2009 2008
---- ----
(Dollars in thousands)
Operating activities
Net income .............................................................................. $ 414 $ 960
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for loan losses ........................................................ 750 130
Depreciation ..................................................................... 112 112
Amortization of net loan fees and costs .......................................... 8 (58)
Securities accretion and premium amortization .................................... 228 6
Loss on sale of foreclosed assets ................................................ - 6
Increase in cash surrender value of bank-owned life insurance .................... (91) (93)
Decrease (increase) in interest receivable ....................................... 17 (13)
Increase in interest payable ..................................................... 869 442
Decrease (increase) in prepaid expenses and other assets ......................... 58 (5)
Increase in other accrued expenses ............................................... 217 347
-------- --------
Net cash provided by operating activities .................................... 2,582 1,834
-------- --------
Investing activities
Purchases of available-for-sale securities .............................................. (72,212) (22,296)
Maturities, calls and paydowns of securities available-for-sale ......................... 35,645 14,627
Maturities, calls and paydowns of securities held-to-maturity ........................... 709 219
Proceeds of sales of available-for-sale securities ...................................... 2,043 -
Purchases of other investments .......................................................... (125) (87)
Disposals of other investments .......................................................... 5 -
Net increase in loans made to customers ................................................. (6,150) (7,808)
Purchases of premises and equipment ..................................................... (134) (370)
Additional investment in foreclosed assets .............................................. (209) -
Proceeds of sale of foreclosed assets ................................................... 30 34
Investment in bank-owned life insurance ................................................. - (1,000)
-------- --------
Net cash used by investing activities ........................................ (40,398) (16,681)
-------- --------
Financing activities
Net increase in demand deposits, interest
bearing transaction accounts and savings accounts ................................... 3,117 5,619
Net increase in certificates of deposit and other
time deposits ....................................................................... 4,027 13,583
Cash paid in lieu of issuing fractional shares .......................................... (3) -
Exercise of employee stock options ...................................................... 486 180
-------- --------
Net cash provided by financing activities .................................... 7,627 19,382
-------- --------
Increase in cash and cash equivalents ........................................................ (30,189) 4,535
Cash and cash equivalents, beginning ......................................................... 40,966 34,673
-------- --------
Cash and cash equivalents, ending ............................................................ $ 10,777 $ 39,208
======== ========
See accompanying notes to unaudited consolidated financial statements.
6
COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Cash Flows - continued
(Unaudited)
Three Months Ended
March 31,
2009 2008
---- ----
(Dollars in thousands)
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for
Interest ..................................... $ 2,131 $ 3,145
Income taxes ................................. - -
Net transfers from loans to foreclosed assets .... 187 -
Noncash investing and financing activities:
Other comprehensive income ................... (40) 608
COMMUNITY FIRST BANCORPORATION
Notes to Unaudited Consolidated Financial Statements
Accounting Policies - A summary of significant accounting policies is included
in Community First Bancorporation's (the "Company") Annual Report on Form 10-K
for the year ended December 31, 2008 filed with the Securities and Exchange
Commission. Certain amounts in the 2008 financial statements have been
reclassified to conform to the current presentation.
Management Opinion - In the opinion of management, the accompanying unaudited
consolidated financial statements of Community First Bancorporation reflect all
adjustments necessary for a fair presentation of the results of the periods
presented. Such adjustments were of a normal, recurring nature.
Nonperforming Loans - As of March 31, 2009, there were $14,634,000 in nonaccrual
loans and no loans 90 days or more past due and still accruing interest.
Earnings Per Share - Basic earnings per common share is computed by dividing net
income applicable to common shares by the weighted average number of common
shares outstanding. Diluted earnings per share is computed by dividing
applicable net income by the weighted average number of common shares
outstanding and any dilutive potential common shares and dilutive stock options.
It is assumed that all dilutive stock options are exercised at the beginning of
each period and that the proceeds are used to purchase shares of the Company's
common stock at the average market price during the period. All 2008 per share
information has been retroactively adjusted to give effect to a 5% stock
dividend effective December 20, 2008. Net income per share and net income per
share, assuming dilution, were computed as follows:
7
(Unaudited)
Three Months Ended
March 31,
2009 2008
---- ----
(Dollars in thousands,
except per share amounts)
Net income per share, basic
Numerator - net income ............................................................ $ 414 $ 960
========= ==========
Denominator
Weighted average common shares issued and outstanding ........................... 3,584,647 3,507,319
========= ==========
Net income per share, basic .......................................... $ .12 $ .27
========= ==========
Net income per share, assuming dilution
Numerator - net income ............................................................ $ 414 $ 960
========= ==========
Denominator
Weighted average common shares issued and outstanding ........................... 3,584,647 3,507,319
Effect of dilutive stock options ................................................ - 178,000
--------- ----------
Total shares ......................................................... 3,584,647 3,685,319
========= ==========
Net income per share, assuming dilution .............................. $ .12 $ .26
========= ==========
Stock-Based Compensation - The Company's 1998 stock option plan terminated on
March 19, 2008 and no further options may be issued under the plan. A total of
346,743 unexpired and non-forfeited options outstanding under the plan remain
exercisable until their expiration dates.
New Accounting Pronouncements - Statement of Financial Accounting Standards No.
160 "Noncontrolling Interests in Consolidated Financial Statements, an amendment
of ARB No. 51" ("SFAS No. 160") was effective as of January 1, 2009 and is
required to be applied prospectively with retrospective presentation and
disclosure requirements for comparative financial statements. Early adoption was
prohibited. SFAS No. 160 seeks to improve the relevance, comparability and
transparency of financial information that a reporting entity provides in its
consolidated financial statements by separately identifying and reporting
several financial statement components into amounts that are attributable to the
reporting entity or that are attributable to noncontrolling interests. SFAS No.
160 also specifies the conditions under which an entity is required to
deconsolidate its interest in a subsidiary. The Company currently has no
consolidated subsidiaries that are not wholly-owned nor are any transactions
contemplated that would result in such a condition. Therefore, the adoption of
SFAS No. 160 in January 2009 had no effect on the Company's consolidated
financial statements.
SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities,"
was effective as of January 1, 2009. This standard requires enhanced disclosure
about an entity's derivative and hedging activities to improve the transparency
of financial reporting. The Company does not engage in any material derivative
or hedging activities. Therefore, the implementation of SFAS No. 161 had no
effect on the Company's consolidated financial statements.
Financial Accounting Standards Board ("FASB") Staff Position No. 142-3,
"Determination of the Useful Life of Intangible Assets" ("FSP 142-3"), amends
the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under SFAS No. 142, "Goodwill and Other Intangible Assets." This Staff Position
was effective for the Company on January 1, 2009 and had no impact on the
Company's financial position, results of operations or cash flows.
FASB Staff Position No. APB 14-1, "Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
("FSP APB 14-1") specifies that issuers of convertible debt instruments that may
be settled in cash upon conversion should separately account for the liability
and equity components that will reflect the entity's nonconvertible debt
borrowing rate when interest cost is recognized in a subsequent period. This FSP
provides guidance for initial and subsequent measurement as well as
derecognition provisions. This FSP was effective for the Company on January 1,
2009 and had no effect on the Company's financial position, results of
operations or cash flows.
FASB Staff Position No. EITF 03-6-1, "Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities" ("FSP EITF
03-6-1") provides that unvested share-based payment awards that contain
non-forfeitable rights to dividends or dividend equivalents are participating
securities and must be included in the earnings per share computation. FSP EITF
03-6-1 was effective for the Company on January 1, 2009 and had no effect on the
Company's financial position, results of operations or cash flows.
8
FASB Staff Position SFAS 133-1 and FIN 45-4 "Disclosures about Credit
Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and
FASB Interpretation No. 45; and Clarification of the Effective Date of FASB
Statement No. 161" ("FSP SFAS 133-1 and FIN 45-4") amends SFAS 133 to require
the seller of credit derivatives to disclose the nature of the credit
derivative, the maximum potential amount of future payments, the fair value of
the derivative, and the nature of any recourse provisions. Disclosures must be
made for entire hybrid instruments that have embedded credit derivatives. FSP
SFAS 133-1 and FIN 45-4 also amends FASB Interpretation No. 45 ("FIN 45") to
require disclosure of the current status of the payment/performance risk of the
credit derivative guarantee. If an entity utilizes internal groupings as a basis
for the risk, disclosure must also be made of how the groupings are determined
and how the risks are managed. FSP SFAS 133-1 and FIN 45-4 clarifies the
effective date of SFAS 161 such that required disclosures should be provided for
any reporting period (annual or interim) beginning after November 15, 2008. The
adoption of this Staff Position had no material effect on the Company's
financial position, results of operations or cash flows.
FSP SFAS 140-4 and FIN 46(R)-8 "Disclosures by Public Entities (Enterprises)
about Transfers of Financial Assets and Interest in Variable Interest Entities"
was issued in December 2008 to require public companies to disclose additional
information about transfers of financial assets and any involvement with
variable interest entities. The FSP also requires certain disclosures for public
entities that are sponsors and servicers of qualifying special purpose entities.
The FSP was effective for the Company as of January 1, 2009. Application of this
FSP had no impact on the financial position, results of operations or cash flows
of the Company.
In April, 2009 FASB issued FSP No. FAS 107-1 and APB 28-1 "Interim Disclosures
about Fair Value of Financial Instruments." This FSP amends FASB Statement No
107 to require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements and amends APB Opinion No. 28 to require those disclosures in
summarized financial information at interim reporting periods. This FSP is
effective for interim reporting periods ending after June 15, 2009. The Company
will adopt this FSP as of its mandatory adoption date.
In April, 2009 FASB issued FSP No. FAS 157-4 "Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly." This FSP provides
additional guidance for estimating fair value in accordance with FASB Statement
No. 157 when the volume and level of activity for the asset or liability have
significantly decreased. The FSP also includes guidance on identifying
circumstances that indicate a transaction is not orderly. This FSP is effective
for interim and annual reporting periods ending after June 15, 2009 and is to be
applied prospectively. Early adoption for periods ending after March 15, 2009 is
permitted in limited circumstances. The Company will adopt this FSP as of its
mandatory adoption date.
In April, 2009 FASB issued FSP No. FAS 115-2 and FAS 124-2 "Recognition and
Presentation of Other-Than-Temporary Impairments." This FSP amends the
other-than-temporary guidance in U.S. Generally Accepted Accounting Principles
for debt securities to make the guidance more operational and to improve the
presentation and disclosure of other-than-temporary impairments on debt and
equity securities in the financial statements. The FSP does not amend existing
recognition and measurement guidance related to other-than-temporary impairments
of equity securities. The FSP requires that entities disclose information for
interim and annual periods to enable users of its financial statements to
understand the types of available-for-sale and held-to-maturity debt and equity
securities held, including information about investments in an unrealized loss
position for which an other-than-temporary impairment has or has not been
recognized and information that enables users to understand the reasons that an
other-than-temporary impairment of a debt security was not recognized in
earnings and the methodology and inputs used to calculate the portion of the
total other-than-temporary impairment that was recognized in earnings. This FSP
is effective for interim and annual periods ending after June 15, 2009 with
early adoption for periods ending after March 15, 2009 permitted in limited
circumstances. The Company will adopt this FSP as of its mandatory adoption
date.
Fair Value Measurements - Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly fashion
between market participants at the measurement date. A three-level hierarchy is
used for fair value measurements based upon the transparency of the inputs to
the valuation of an asset or liability as of the measurement date. In developing
estimates of the fair values of assets and liabilities, no consideration of
large position discounts for financial instruments quoted in active markets is
allowed. However, an entity is required to consider its own creditworthiness
when valuing its liabilities. For disclosure purposes, fair values for assets
and liabilities are shown in the level of the hierarchy that correlates with the
9
lowest level input that is significant to the fair value measurement in its
entirety.
The three levels of the fair value input hierarchy are described as follows:
Level 1 inputs reflect quoted prices in active markets for identical assets or
liabilities.
Level 2 inputs reflect observable inputs that may consist of quoted market
prices for similar assets or liabilities, quoted prices that are not in an
active market, or other inputs that are observable in the market and can be
corroborated by observable market data for substantially the full term of the
assets or liabilities being valued.
Level 3 inputs reflect the use of pricing models and/or discounted cash flow
methodologies using other than contractual interest rates or methodologies that
incorporate a significant amount of management judgment, use of the entity's own
data, or other forms of unobservable data.
The following is a summary of the measurement attributes applicable to assets
and liabilities that are measured at fair value on a recurring basis:
Fair Value Measurement at Reporting Date Using
----------------------------------------------
Quoted Prices
in Active Significant
Markets for Other Significant
Identical Observable Unobservable
Assets Inputs Inputs
Description March 31, 2009 (Level 1) (Level 2) (Level 3)
-------------- --------- --------- ---------
(Dollars in thousands)
Securities available-for-sale $ - $ 160,871 $ -
Pricing for the Company's securities available-for-sale is obtained from an
independent third-party that uses a process that may incorporate current market
prices, benchmark yields, broker/dealer quotes, issuer spreads, two-sided
markets, benchmark securities, bids, offers, other reference data and industry
and economic events that a market participant would be expected to use in
valuing the securities. Not all of the inputs listed apply to each individual
security at each measurement date. The independent third party assigns specific
securities into an "asset class" for the purpose of assigning the applicable
level of the fair value hierarchy used to value the securities. The techniques
used after adoption of SFAS No. 157 are consistent with the methods used
previously.
In February 2008, the Financial Accounting Standards Board Staff issued FASB
Staff Position No. FAS 157-2 ("FSP 157-2") which delayed for one year the
effective date of the application of Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" ("SFAS No. 157") to nonfinancial assets and
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). In accordance
with FSP 157-2, the Company only partially applied SFAS No. 157 in periods
ending prior to March 31, 2009. The following is a summary of the measurement
attributes applicable to assets and liabilities measured at fair value on a
non-recurring basis during the three month period ended March 31, 2009 and which
remained outstanding at the end of the period and the related gains and losses
recognized during the period:
Fair Value Measurement at Reporting Date Using
----------------------------------------------
Quoted Prices
in Active Significant
Markets for Other Significant
Identical Observable Unobservable Total
Assets Inputs Inputs Gains
Description March 31, 2009 (Level 1) (Level 2) (Level 3) (Losses)
-------------- --------- --------- --------- --------
(Dollars in thousands)
Collateral-dependent impaired loans $ - $ 4,162 $ - $ (1)
Other real estate - 177 - (83)
Repossessions - 280 - -
10
The fair value measurements shown above were made to adjust cost-based
measurements to fair value measurements due to changes in the circumstances of
individual assets during the period. With respect to collateral-dependent
impaired loans, the measurements reflect management's belief that the Company
will receive repayment solely from the liquidation of the underlying collateral.
As a practical expedient, SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan," allows such loans to be valued by comparing the fair value of the
collateral securing the loan with the loan's carrying value. If the carrying
value exceeds the fair value of the collateral, the excess is charged to the
allowance for loan losses. If the fair value of the collateral exceeds the
loan's carrying amount, no adjustment is made and the loan continues to be
carried at historical cost. Accordingly, any such loans are not included in the
table.
The value of other real estate obtained through loan foreclosure is accounted
for under the provisions of Statement of Accounting Standards No. 144
"Accounting for the Impairment or Disposal of Long Lived Assets." Accordingly,
the values of such properties are adjusted upon the acquisition of each property
to the lower of the recorded investment in the loan or the fair value of the
property as determined by a recently performed independent appraisal less the
estimated costs to sell. Similarly, the fair value of repossessions is measured
by reference to dealers' quotes or other market information believed to reliably
reflect the value of the specific property held. Immaterial adjustments may be
made by management to reflect property-specific factors such as age or
condition. Losses recognized when loans are initially transferred to or
otherwise included in any of the categories shown above are reported as loan
losses. Subsequent to initial recognition, changes in fair value measurements of
other real estate and repossessions are included in other income or other
expenses, as applicable.
CAUTIONARY NOTICE WITH RESPECT TO FORWARD-LOOKING STATEMENTS
This report contains "forward-looking statements" within the meaning of
the securities laws. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to comply with
the terms of the safe harbor, the Company notes that a variety of factors could
cause the Company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the Company's
forward-looking statements.
All statements that are not historical facts are statements that could
be "forward-looking statements." You can identify these forward-looking
statements through the use of words such as "may," "will," "should," "could,"
"would," "expect," "anticipate," "assume," indicate," "contemplate," "seek,"
"plan," "predict," "target," "potential," "believe," "intend," "estimate,"
"project," "continue," or other similar words. Forward-looking statements
include, but are not limited to, statements regarding the Company's future
business prospects, revenues, working capital, liquidity, capital needs,
interest costs, income, business operations and proposed services.
These forward-looking statements are based on current expectations,
estimates and projections about the banking industry, management's beliefs, and
assumptions made by management. Such information includes, without limitation,
discussions as to estimates, expectations, beliefs, plans, strategies, and
objectives concerning future financial and operating performance. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
results may differ materially from those expressed or forecasted in such
forward-looking statements. The risks and uncertainties include, but are not
limited to:
o future economic and business conditions;
o lack of sustained growth and disruptions in the economies of the
Company's market areas;
o government monetary and fiscal policies;
o the effects of changes in interest rates on the levels,
composition and costs of deposits, loan demand, and the values of
loan collateral, securities, and interest sensitive assets and
liabilities;
o the effects of competition from a wide variety of local,
regional, national and other providers of financial, investment,
and insurance services, as well as competitors that offer banking
products and services by mail, telephone, computer and/or the
Internet;
o credit risks;
o higher than anticipated levels of defaults on loans;
o perceptions by depositors about the safety of their deposits;
o capital adequacy;
o the failure of assumptions underlying the establishment of the
allowance for loan losses and other estimates, including the
value of collateral securing loans;
o ability to weather the current economic downturn;
o loss of consumer or investor confidence;
o availability of liquidity sources;
11
o the risks of opening new offices, including, without limitation,
the related costs and time of building customer relationships and
integrating operations as part of these endeavors and the failure
to achieve expected gains, revenue growth and/or expense savings
from such endeavors;
o changes in laws and regulations, including tax, banking and
securities laws and regulations;
o changes in accounting policies, rules and practices;
o changes in technology or products may be more difficult or
costly, or less effective, than anticipated;
o the effects of war or other conflicts, acts of terrorism or other
catastrophic events that may affect general economic conditions
and economic confidence; and
o other factors and information described in this report and in any
of the other reports that we file with the Securities and
Exchange Commission under the Securities Exchange Act of 1934.
All forward-looking statements are expressly qualified in their
entirety by this cautionary notice. The Company has no obligation, and does not
undertake, to update, revise or correct any of the forward-looking statements
after the date of this report. The Company has expressed its expectations,
beliefs and projections in good faith and believes they have a reasonable basis.
However, there is no assurance that these expectations, beliefs or projections
will result or be achieved or accomplished.
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Changes in Financial Condition
During the first three months of 2009, the Company invested heavily in
securities available-for-sale. Securities purchased were composed of
approximately $63,000,000 of debt obligations of government-sponsored
enterprises and approximately $9,000,000 of mortgage-backed securities issued by
government-sponsored enterprises. Approximately $36,000,000 of securities were
called during the three-month period and sales approximated $2,000,000. The
$34,000,000 net increase in securities available-for-sale during the period was
financed principally by reducing the amounts of cash and cash equivalents held
from $40,966,000 as of December 31, 2008 to $10,777,000 as of March 31, 2009.
Interest rates associated with holdings of federal funds sold, reserve balances
held at the Federal Reserve bank and other short-term earning assets were
extremely low during the 2009 period because continuing central bank efforts to
stabilize credit markets and restore confidence in the financial system
generally took the form of lowering interest rates. However, the Federal Reserve
announced recently that it would change its principal strategy in the short-term
to one of "quantitative easing," or increasing the money supply principally by
repurchasing U. S. Treasury or other debt obligations, primarily from banks and
other financial intermediaries.
Loan demand during the 2009 three-month period was comparatively weak
and loans outstanding increased by only $5,200,000, or 1.9%. Deposits increased
$7,144,000, or 1.7%, during the period.
Results of Operations
The Company recorded consolidated net income of $414,000 or $.12 per
share for the first quarter of 2009 compared with $960,000, or $.27 per share
for the first quarter of 2008. Net income per share, assuming dilution was $.12
for the 2009 period and $.26 for the 2008 period. Net income per share amounts
for 2008 have been retroactively adjusted to reflect a five percent stock
dividend effective December 20, 2008.
12
Summary Income Statement
------------------------
(Dollars in thousands)
For the Three Months Ended March 31, 2009 2008 Dollar Change Percentage Change
---- ---- ------------- -----------------
Interest income .............................. $5,783 $6,356 $ (573) -9.0%
Interest expense ............................. 3,000 3,588 (588) -16.4%
------ ------ ------
Net interest income .......................... 2,783 2,768 15 0.5%
Provision for loan losses .................... 750 130 620 476.9%
Noninterest income ........................... 571 609 (38) -6.2%
Noninterest expenses ......................... 2,097 1,887 210 11.1%
Income tax expense ........................... 93 400 (307) -76.8%
------ ------ ------
Net income ................................... $ 414 $ 960 $ (546) -56.9%
====== ====== ======
Net Interest Income
Net interest income is the principal source of the Company's earnings.
For the first quarter of 2009, net interest income totaled $2,783,000, an
increase of $15,000 or .5% over the amount for the same period of 2008. The
yield on interest earning assets decreased to 5.05% for the 2009 period,
compared with 6.26% for the 2008 period and the average rates paid for interest
bearing liabilities were 3.02% and 4.09%, respectively. Accordingly, the average
interest rate spread for the 2009 period was 14 basis points lower than for the
2008 period. Net yield on earning assets decreased to 2.43% in the 2009 period
from 2.73% for the 2008 period.
Average loans in the 2009 period were $272,379,000, an increase of
$22,124,000, or 8.8%, over the amount for the same period of 2008. A decrease in
the yield earned on loans to 6.03% for the 2009 three-month period from 7.61%
for the 2008 three month period was the primary cause of a $683,000 reduction in
interest income on loans. Management estimates that approximately $174,000 of
previously accrued interest income related to nonaccrual loans was reversed
against income during the 2009 period.
Average taxable securities for the 2009 quarter were $51,864,000 more
than for the same period of 2008. The effects of this increase more than offset
the negative effects of a reduction in the average yield earned on these
investments from 4.64% for the 2008 quarter to 4.36% for the 2009 quarter.
As mentioned previously, yields on federal funds sold and other
short-term investments were extremely low in the 2009 period. The Company's
investment in such instruments during the 2009 quarter resulted in a yield of
only .15% compared with a yield of 3.23% for the 2008 quarter. The earning
potential of these instruments currently is so unattractive that the Company has
shifted funds into other more productive earning assets categories.
Interest rates paid for interest-bearing deposits decreased to 3.00%
for the 2009 period from 4.10% for the 2008 period due to the Company's response
to prevailing lower rates generally. Rates paid for long-term debt in the 2009
period were slightly higher than for the 2008 period due to higher rates paid
for additional amounts borrowed and outstanding for the 2009 period.
13
Average Balances, Yields and Rates
Three Months Ended March 31,
----------------------------
2009 2008
---- ----
Interest Interest
Average Income/ Yields/ Average Income/ Yields/
Balances Expense Rates (1) Balances Expense Rates (1)
-------- ------- --------- -------- ------- ---------
(Dollars in thousands)
Assets
Interest-bearing deposits due from banks .......... $ 21,975 $ 16 0.30% $ 415 $ 2 1.94%
Securities
Taxable ...................................... 139,934 1,506 4.36% 88,070 1,017 4.64%
Tax exempt (2) ............................... 20,488 209 4.14% 20,613 206 4.02%
---------- ------- ---------- -------
Total investment securities .............. 160,422 1,715 4.34% 108,683 1,223 4.53%
Other investments ................................. 1,221 - 0.00% 846 13 6.18%
Federal funds sold ................................ 8,034 3 0.15% 48,050 386 3.23%
Loans (2) (3) ..................................... 272,379 4,049 6.03% 250,255 4,732 7.61%
---------- ------- ---------- -------
Total interest earning assets ............ 464,031 5,783 5.05% 408,249 6,356 6.26%
Cash and due from banks ........................... 8,568 8,250
Allowance for loan losses ......................... (5,419) (2,581)
Unrealized securities gains (losses) .............. 1,414 778
Premises and equipment ............................ 8,766 8,842
Other assets ...................................... 14,095 12,196
---------- ----------
Total assets ............................. $ 491,455 $ 435,734
========== ==========
Liabilities and shareholders' equity
Interest bearing deposits
Interest bearing transaction accounts ........ $ 59,355 $ 98 0.67% $ 59,745 $ 335 2.26%
Savings ...................................... 29,076 23 0.32% 42,225 209 1.99%
Time deposits $100M and over ................. 135,504 1,093 3.27% 103,047 1,153 4.50%
Other time deposits .......................... 169,246 1,695 4.06% 143,297 1,852 5.20%
---------- ------- ---------- -------
Total interest bearing deposits .......... 393,181 2,909 3.00% 348,314 3,549 4.10%
Long-term debt .................................... 9,500 91 3.88% 4,500 39 3.49%
---------- ------- ---------- -------
Total interest bearing liabilities ....... 402,681 3,000 3.02% 352,814 3,588 4.09%
Noninterest bearing demand deposits ............... 44,192 39,777
Other liabilities ................................. 4,004 4,327
Shareholders' equity .............................. 40,578 38,816
---------- ----------
Total liabilities and shareholders' equity ....... $ 491,455 $ 435,734
========== ==========
Interest rate spread .............................. 2.03% 2.17%
Net interest income and net yield
on earning assets ............................ $ 2,783 2.43% $ 2,768 2.73%
Interest free funds supporting earning assets ..... $ 61,350 $ 55,435
-----------------------------------------
(1) Yields and rates are annualized.
(2) Yields on tax exempt instruments have not been adjusted to a tax-equivalent
basis.
(3) Nonaccruing loans are included in the loan balance and income from such
loans is recognized on a cash basis.
14
The Company continues to pursue strategies that are expected to
increase its market share in its local market areas in Anderson and Oconee
Counties of South Carolina. The Company serves Oconee County from four offices
which are located in Seneca, Walhalla and Westminster. The Company serves the
Anderson County market from offices in Anderson and Williamston.
Provision and Allowance for Loan Losses
The Company provided $750,000 and $130,000 for loan losses in the first
quarters of 2009 and 2008, respectively. As of March 31, 2009, the allowance for
loan losses was 1.98% of loans compared with 2.02% of loans at December 31, 2008
and 1.03% as of March 31, 2008. During the 2009 three month period, net
charge-offs totaled $755,000, compared with $106,000 in net charge offs during
the same period of 2008. As of March 31, 2009, nonaccrual loans totaled
$14,634,000 and there were no loans 90 days or more past due and still accruing
interest. Approximately 90% of those nonaccrual loans were secured by real
estate. As of March 31, 2008, nonaccrual loans totaled $444,000 and there were
no loans 90 days or more past due and still accruing interest. The activity in
the allowance for loan losses is summarized in the table below:
Three Months Three Months
Ended Year Ended Ended
March 31, December 31, March 31,
2009 2008 2008
---- ---- ----
(Dollars in thousands)
Allowance at beginning of period ................................. $ 5,475 $ 2,574 $ 2,574
Provision for loan losses ........................................ 750 4,550 130
Net charge-offs .................................................. (755) (1,649) (106)
--------- --------- ---------
Allowance at end of period ....................................... $ 5,470 $ 5,475 $ 2,598
========= ========= =========
Allowance as a percentage of loans outstanding
at period end .................................................. 1.98% 2.02% 1.03%
Loans at end of period ........................................... $ 275,613 $ 270,413 $ 251,891
========= ========= =========
15
Non-Performing and Potential Problem Loans
90 Days or
More Past Due Total Percentage Percentage
Non-accrual and Still Non-Performing of Total Potential of Total
Loans Accruing Loans Loans Problem Loans Loans
----- -------- ----- ----- ------------- -----
(Dollars in thousands)
January 1, 2008 ................... $ 625 $ - $ 625 0.26% $ 3,088 1.26%
Net change ........................ (181) - (181) 962
-------- ------- -------- -------
March 31, 2008 .................... 444 - 444 0.18% 4,050 1.61%
Net change ........................ 1,436 - 1,436 1,338
-------- ------- -------- -------
June 30, 2008 ..................... 1,880 - 1,880 0.73% 5,388 2.10%
Net change ........................ 2,845 - 2,845 1,194
-------- ------- -------- -------
September 30, 2008 ................ 4,725 - 4,725 1.77% 6,582 2.46%
Net change ........................ 7,074 - 7,074 328
-------- ------- -------- -------
December 31, 2008 ................. 11,799 - 11,799 4.36% 6,910 2.56%
Net change ........................ 2,835 - 2,835 2,367
-------- ---- -- -------- -------
March 31, 2009 .................... $ 14,634 $ - $ 14,634 5.31% $ 9,277 3.37%
======== ======= ======== =======
Potential problem loans include loans, other than non-performing loans,
that management has identified as having possible credit problems sufficient to
cast doubt upon the abilities of the borrowers to comply with the current
repayment terms. However, the amount of potential problem loans does not reflect
management's expectations of losses, if any, that may be realized from those
loans. As of March 31, 2009, approximately 76.9% of the dollar amount of
potential problem loans had real estate as collateral, 19.5% had vehicles and
other items as collateral, and approximately 3.6% represented unsecured loans.
South Carolina's 11.4% unemployment rate was the third highest rate of
unemployment of the 50 states as of March 31, 2009. The unemployment rate for
Oconee and Anderson Counties was about 14% and 12%, respectively as of March 31,
2009. Worsening of this condition or a prolonged period at or near current
levels, continuing increases in prices for fuel and food, declining values of
homes and other real properties, declining demand for products manufactured
locally, and other events could continue to have adverse effects on those areas
and potentially lead to further deterioration of the abilities of the Company's
loan customers to repay their debts. These events could lead to higher amounts
of nonaccrual, past due and potential problem loans and higher loan losses, all
of which could result in higher provisions for loan losses.
Noninterest Income
Noninterest income totaled $571,000 for the first quarter of 2009,
compared with $609,000 for the first quarter of 2008. Service charges on deposit
accounts in the 2009 period were $323,000 representing a decrease of $37,000
from the prior year period. ATM interchange and other fees for the 2009 period
increased by $11,000 over the 2008 amount. Other income for the 2009 period was
$13,000 less than for the 2008 period.
Noninterest Expenses
Noninterest expenses totaled $2,097,000 for the first quarter of 2009,
compared with $1,887,000 for the first quarter of 2008, representing an increase
of $210,000 or 11.1%. Salaries and employee benefits increased by $144,000, or
13.9%, to $1,181,000. Amounts accrued in recognition of certain deferred
compensation and other benefits totaled $172,000 in the 2009 period, compared
with $139,000 in the 2008 period. In addition, the Bank's staff increased to 93
full-time equivalent employees as of March 31, 2009 from 88 as of March 31,
2008. Among those new staff positions was a special assets officer who was hired
late in the 2009 period to provide assistance in identifying and administering
distressed loans.
Other expense increased by $44,000 over the 2008 including an increase
in FDIC insurance expense to $70,000 for the 2009 period from $15,000 for the
2008 period. Expenses related to FDIC insurance are expected to increase more
significantly through the remainder of 2009 due to a higher assessment base,
projected increases in the assessment rate, and a special assessment proposed by
the Federal Deposit Insurance Corporation.
16
Income tax expense for the first quarter of 2009 decreased by $307,000
from the amount for the same period of 2008 due to lower net income before
income taxes and proportionally higher amounts of tax-exempt investment income.
Tax-exempt interest income was 41.2% of income before income taxes in the 2009
period compared with 15.1% of income before income taxes for the 2008 period.
Liquidity
Liquidity is the ability to meet current and future obligations through
the liquidation or maturity of existing assets or the acquisition of additional
liabilities. The Company manages both assets and liabilities to achieve
appropriate levels of liquidity. Cash and short-term investments are the
Company's primary sources of asset liquidity. These funds provide a cushion
against short-term fluctuations in cash flow from both deposits and loans.
Securities available-for-sale provide the Company's principal source of
secondary asset liquidity. However, the availability of this source is
influenced by market conditions to a significant extent. Individual and
commercial deposits are the Company's primary source of funds for credit
activities. The Company also has significant amounts of credit availability
under its FHLB lines of credit and federal funds purchased facilities.
As of March 31, 2009, the ratio of loans to total deposits was 65.1%,
compared with 65.0% as of December 31, 2008. Total deposits as of March 31, 2009
were $423,259,000, an increase of $7,144,000 or 1.7% over the amount as of
December 31, 2008. Management believes that the Company's liquidity sources are
adequate to meet its operating needs.
Capital Resources
The Company's capital base increased by $860,000 since December 31,
2008 as the result of net income of $414,000 for the first three months of 2009,
minus a $40,000 change in unrealized gains and losses on available-for-sale
securities, net of deferred income tax effects, and $486,000 from the exercise
of employee stock options.
The Company and its banking subsidiary (the "Bank") are subject to
regulatory risk-based capital adequacy standards. Under these standards, bank
holding companies and banks are required to maintain certain minimum ratios of
capital to risk-weighted assets and average total assets. Under the provisions
of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA),
federal bank regulatory authorities are required to implement prescribed "prompt
corrective actions" upon the deterioration of the capital position of a bank. If
the capital position of an affected institution were to fall below certain
levels, increasingly stringent regulatory corrective actions are mandated.
The March 31, 2009 risk based capital ratios for the Company and the
Bank are presented in the following table, compared with the "well capitalized"
(Bank only) and minimum ratios under the regulatory definitions and guidelines:
Total
Tier 1 Capital Leverage
------ ------- --------
Community First Bancorporation ........... 13.0% 14.3% 8.3%
Community First Bank ..................... 12.2% 13.5% 7.8%
Minimum "well-capitalized" requirement ... 6.0% 10.0% 6.0%
Minimum requirement ...................... 4.0% 8.0% 5.0%
Off-Balance-Sheet Arrangements
In the normal course of business, the Bank is a party to financial instruments
with off-balance-sheet risk including commitments to extend credit and standby
letters of credit. Such instruments have elements of credit risk in excess of
the amount recognized in the balance sheet. The exposure to credit loss in the
event of nonperformance by the other parties to the financial instruments for
commitments to extend credit and standby letters of credit is represented by the
contractual notional amount of those instruments. Generally, the same credit
policies used for on-balance-sheet instruments, such as loans, are used in
extending loan commitments and standby letters of credit.
Following are the off-balance-sheet financial instruments whose contract amounts
represent credit risk:
17
March 31, 2009
--------------
(Dollars in
thousands)
Loan commitments .............................. $ 28,750
Standby letters of credit ..................... 915
Loan commitments involve agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and some involve
payment of a fee. Many of the commitments are expected to expire without being
fully drawn; therefore, the total amount of loan commitments does not
necessarily represent future cash requirements. Each customer's creditworthiness
is evaluated on a case-by-case basis. The amount of collateral obtained, if any,
upon extension of credit is based on management's credit evaluation of the
borrower. Collateral held varies but may include commercial and residential real
properties, accounts receivable, inventory and equipment.
Standby letters of credit are conditional commitments to guarantee the
performance of a customer to a third party. The credit risk involved in issuing
standby letters of credit is the same as that involved in making loan
commitments to customers. Many letters of credit will expire without being drawn
upon and do not necessarily represent future cash requirements. The Bank
receives fees for loan commitments and standby letters of credit. The amount of
such fees was not material for the three months ended March 31, 2009.
As described under "Liquidity," management believes that its various sources of
liquidity provide the resources necessary for the Bank to fund the loan
commitments and to perform under standby letters of credit, if the need arises.
Neither the Company nor the Bank is involved in other off-balance sheet
contractual relationships or transactions that could result in liquidity needs
or other commitments or significantly impact earnings.
Item 3. - Quantitative and Qualitative Disclosures About Market Risk
The Company's exposure to market risk is primarily related to the risk of loss
from adverse changes in market prices and rates. This risk arises principally
from interest rate risk inherent in the Company's lending, deposit gathering and
borrowing activities. Management actively monitors and manages its interest rate
risk exposure. Although the Company manages other risks, such as credit quality
and liquidity risk in the normal course of business, management considers
interest rate risk to be its most significant market risk and this risk could
potentially have the largest material effect on the Company's financial
condition and results of operations. Other types of market risk, such as
commodity price risk and foreign currency exchange risk, do not arise in the
normal course of the Company's community banking operations.
The Company uses a simulation model to assist in achieving consistent growth in
net interest income while managing interest rate risk. As of March 31, 2009, the
model indicates that net interest income would decrease $109,000 and net income
would decrease $70,000 in the next twelve months if interest rates rose by 100
basis points. Conversely, net interest income would increase $208,000 and net
income would increase $133,000 in the next twelve months if interest rates
declined by 100 basis points. In the current interest rate environment, it
appears unlikely that there will be any large changes in interest rates in the
immediate future. The prospective effects of hypothetical interest rate changes
are based on a number of assumptions, including the relative levels of market
interest rates and prepayment assumptions affecting loans, and should not be
relied on as indicative of actual future results. The prospective effects also
do not contemplate potential actions that the Company, its customers and the
issuers of its investment securities could undertake in response to changes in
interest rates.
As of March 31, 2009, there was no significant change from the interest rate
sensitivity analysis for the various changes in interest rates calculated as of
December 31, 2008. The foregoing disclosures related to the Company's market
risk should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the 2008 Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
18
Item 4T. - Controls and Procedures
Based on the evaluation required by 17 C.F.R. Section 240.13a-15(b) or
240.15d-15(b) of the issuer's disclosure controls and procedures (as defined in
17 C.F.R. Sections 240.13a-15(e) and 240.15d-15(e)), the issuer's chief
executive officer and chief financial officer concluded such controls and
procedures, as of the end of the period covered by this report, were effective.
There has been no change in the Company's internal control over financial
reporting during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On January 27, 2009, the Company held a special meeting of shareholders for the
purpose of voting on an amendment to the Company's Articles of Incorporation to
authorize the issuance of 10 million shares of preferred stock with such
preferences, limitations and relative rights, within legal limits, of the class,
or one or more series within the class, as are set by the Board of Directors.
The requisite number of shares were voted in favor of the amendment. The results
of the voting were as follows:
Number of Shares Voted FOR Number of Shares Voted AGAINST Abstentions Broker Non-Votes
-------------------------- ------------------------------ ----------- ----------------
2,555,468 21,020 0 548,936
Item 6. - Exhibits
Exhibits 3.1 Articles of Incorporation, as amended
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Certifications Pursuant to 18 U.S.C. Section 1350
19
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.
COMMUNITY FIRST BANCORPORATION
May 14, 2009 /s/ Frederick D. Shepherd, Jr.
----------------- ----------------------------------------------
Date Frederick D. Shepherd, Jr., Chief Executive
Officer and Chief Financial Officer
20
EXHIBIT INDEX
3.1 Articles of Incorporation, as amended
31. Rule 13a-14(a)/15d-14(a) Certifications
32. Certifications Pursuant to 18 U.S.C. Section 1350
21