<PAGE> 1
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
--------------
Commission File No. 333-04113
COMMUNITY CENTRAL BANK CORPORATION
----------------------------------
(Exact name of small business issuer as specified in its charter)
Michigan 38-3291744
-------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 North Main Street, PO Box 7, Mount Clemens, MI 48046-0007
-------------------------------------------------------------
(Address of principal executive offices)
(810) 783-4500
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at May 8, 1998
----- --------------------------
Common Stock, $5 stated value 1,391,455 Shares
Transitional Small Business Disclosure Format:
Yes No X
--- ---
<PAGE> 2
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART I
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Community Central Bank Corporation (the Corporation)
include the consolidation of its subsidiary; Community Central Bank (the Bank).
Following are the Corporation's Consolidated Balance Sheet as of March 31, 1998
and 1997, and December 31, 1997, and Consolidated Statements of Operations,
Comprehensive Income, and Cash Flow for the three month periods ended March 31,
1998 and 1997. These unaudited financial statements are for interim periods, and
do not include all disclosures normally provided with annual financial
statements. The interim statements should be read in conjunction with the
financial statements and footnotes contained in the Corporation's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997.
In the opinion of management, the interim statements referred to above contain
all adjustments (consisting of normal, recurring items) necessary for a fair
presentation of the financial statements. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year.
2
<PAGE> 3
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
Assets 1998 1997 1997
- ------ --------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Cash and due from banks $ 4,304 $ 2,279 $ 1,829
Federal funds sold 10,550 1,250 13,450
--------- --------- ---------
Cash and Cash Equivalents 14,854 3,529 15,279
--------- --------- ---------
Securities available for sale, at fair value 5,378 5,392 --
Investment securities, at amortized cost 13,189 15,115 8,347
Loans
Residential mortgage loans 29,284 21,314 9,283
Commercial loans 37,101 29,165 6,977
Installment loans 3,212 2,656 1,003
--------- --------- ---------
Total Loans 69,597 53,135 17,263
Allowance for credit losses (960) (800) (260)
--------- --------- ---------
Net Loans 68,637 52,335 17,003
--------- --------- ---------
Net property and equipment 1,723 1,814 1,801
Accrued interest receivable 579 499 162
Other assets 205 221 220
--------- --------- ---------
Total Assets $ 104,565 $ 78,905 $ 42,812
========= ========= =========
</TABLE>
(continued)
3
<PAGE> 4
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
Liabilities and Stockholders' Equity 1998 1997 1997
- ------------------------------------ --------- ------------ ---------
(in thousands, except share data)
<S> <C> <C> <C>
Deposits
Noninterest bearing demand deposits $ 10,192 $ 7,323 $ 4,384
NOW and money market accounts 9,201 9,834 5,959
Savings deposits 2,046 2,057 739
Time deposits 72,473 49,141 21,462
--------- --------- ---------
Total deposits 93,912 68,355 32,544
--------- --------- ---------
Short term borrowings 1,561 1,403 --
Accrued interest payable 247 191 65
Other liabilities 116 84 46
Capitalized lease obligation 1,036 1,035 1,024
--------- --------- ---------
Total Liabilities 96,872 71,068 33,679
--------- --------- ---------
Stockholders' Equity
Common stock -- $5 stated value; 9,000,000
shares authorized; 1,391,483
shares issued and outstanding at 3-31-1998;
1,265,000 shares
outstanding at 12-31-1997 and 3-31-1997 6,957 6,325 6,325
Additional paid-in capital 3,563 4,195 4,195
Accumulated deficit (2,855) (2,712) (1,387)
Unrealized gain on securities available
for sale, net of tax 28 29 --
--------- --------- ---------
Total Stockholders' Equity 7,693 7,837 9,133
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 104,565 $ 78,905 $ 42,812
========= ========= =========
</TABLE>
4
<PAGE> 5
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
--------- ---------
(in thousands, except per share data)
<S> <C> <C>
Interest Income
Loans (including fees) $ 1,414 $ 229
Securities 310 33
Federal funds sold 80 228
------- -------
Total Interest Income 1,804 490
------- -------
Interest Expense
Deposits 984 248
Short term borrowings 15 --
Capitalized lease obligation 35 34
------- -------
Total Interest Expense 1,034 282
------- -------
Net Interest Income 770 208
Provision for credit losses 160 170
------- -------
Net Interest Income after Provision 610 38
------- -------
Noninterest Income
Deposit service charges 28 11
Net realized security gains 6 --
Mortgage banking income 10 --
Other income 26 5
------- -------
Total Noninterest Income 70 16
------- -------
Noninterest Expense
Salaries, benefits, and payroll taxes 392 320
Premises and fixed asset expense 140 124
Other operating expense 291 217
------- -------
Total Noninterest Expense 823 661
------- -------
Loss Before Taxes (143) (607)
Provision for income taxes -- --
------- -------
Net Loss $ (143) $ (607)
======= =======
Per share data:
Basic Net Loss $ (0.10) $ (0.44)
======= =======
Cash Dividends $ -- $ --
======= =======
</TABLE>
5
<PAGE> 6
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
---------- ---------
(in thousands)
<S> <C> <C>
Net Loss as Reported $(143) $(607)
Other Comprehensive Income
Change in unrealized gain on securities
available for sale, net of tax 9 --
----- -----
Comprehensive Income (Loss) $(134) $(607)
===== =====
</TABLE>
6
<PAGE> 7
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
---------- ---------
(in thousands)
<S> <C> <C>
Operating Activities
Net loss $ (143) $ (607)
Adjustments to reconcile net loss to net cash flow
from operating activities:
Net accretion of security discount (4) (3)
Net realized security gains (6) --
Gain on sale of mortgage loans (7) --
Provision for credit losses 160 170
Depreciation expense 91 101
Increase in accrued interest receivable (80) (145)
Decrease in other assets 16 6
Increase in accrued interest payable 56 33
Increase (decrease) in other liabilities 53 (32)
-------- --------
Net Cash Provided by (Used in) Operating Activities 136 (477)
Investing Activities
Maturities, calls, and prepayments of securities available for sale 529 --
Purchases of investment securities (202) (8,344)
Maturities, calls, and prepayments of investment securities 1,636 --
Sales of residential mortgage loans 1,022 --
Net increase in loans (17,477) (11,685)
Purchases of property and equipment -- (206)
-------- --------
Net Cash Used in Investing Activities (14,492) (20,235)
Financing Activities
Net increase in demand and savings deposits 2,225 6,463
Net increase in time deposits 23,332 13,900
Net increase in short term borrowings 158 --
Repayments of capitalized lease obligation (34) (30)
-------- --------
Net Cash Provided by Financing Activities 25,681 20,333
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 11,325 (379)
Cash and Cash Equivalents at the Beginning
of the Year 3,529 15,658
-------- --------
Cash and Cash Equivalents at the End
of the Period $ 14,854 $ 15,279
======== ========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 943 $ 215
======== ========
</TABLE>
7
<PAGE> 8
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following analysis of the Corporation's operating results and financial
condition for the periods ended March 31, 1998 and 1997, should be read in
conjunction with the financial statements and statistical data presented
elsewhere. The discussion and analysis contains forward-looking statements that
are based on management's beliefs, assumptions, current expectations, and
projections. These statements are not guarantees of future performance, and
involve certain risks and uncertainties. Actual results may materially differ
from what may be expressed herein.
FINANCIAL CONDITION
The Corporation's total assets have increased by 33%, or $25.7 million, to
$104.6 million at March 31, 1998, compared with $78.9 million at December 31,
1997.
During the three months ended March 31, total deposits rose by $25.6 million,
while total loans increased by $16.5 million. The increased liquidity resulting
from the deposit growth is being held as federal funds sold, and is available to
finance continued loan growth.
The following table shows the amortized cost and estimated fair value of the
Corporation's security portfolio as of the dates indicated. On the balance
sheet, investment securities (i.e., those which the Corporation has the ability
and intent to hold to maturity) are stated at cost, adjusted for amortization of
premium and accretion of discount. Securities available for sale are shown on
the balance sheet at estimated fair value.
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997 March 31, 1997
------------------- ------------------- ------------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
--------- ----- --------- ----- --------- -----
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Securities Available for Sale
United States Government agencies $ 3,381 $ 3,420 $ 3,875 $ 3,906 $ -- $ --
Mortgage backed securities 1,054 1,056 1,085 1,084 -- --
Collateralized mortgage obligations 901 902 403 402 -- --
------- ------- ------- ------- ------- -------
Total Securities Available for Sale 5,336 5,378 5,363 5,392 -- --
------- ------- ------- ------- ------- -------
Investment Securities
United States Treasury 1,495 1,497 1,990 1,993 4,224 4,183
United States Government agencies 5,615 5,644 6,613 6,632 4,123 4,091
Mortgage backed securities 2,753 2,764 2,839 2,841 -- --
Collateralized mortgage obligations 3,124 3,140 3,673 3,683 -- --
Other Securities 202 202 -- -- -- --
------- ------- ------- ------- ------- -------
Total Investment Securities 13,189 13,247 15,115 15,149 8,347 8,274
------- ------- ------- ------- ------- -------
Total Securities $18,525 $18,625 $20,478 $20,541 $ 8,347 $ 8,274
======= ======= ======= ======= ======= =======
</TABLE>
8
<PAGE> 9
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Total loans increased by $16.5 million during the three months ended March 31,
1998, as the Corporation continued building its loan base. Commercial loans grew
by $7.9 million, while residential mortgage loans increased by $8.0 million.
During the quarter, the Corporation sold residential mortgage loans (with a book
value of $1.0 million) without recourse to the Federal National Mortgage
Association (FNMA). The net gain from these sales totaled $7,000.
Loans are placed in nonaccrual status when, in the opinion of management,
uncertainty exists as to the ultimate collection of principal and interest. No
loans have been placed in nonaccrual status since the Corporation's inception.
In each accounting period management evaluates the problems and potential losses
in the loan portfolio. Consideration is also given to off-balance sheet items
that may involve credit risk, such as commitments to extend credit and financial
guarantees. The results of this evaluation are reflected in the allowance and
periodic provision for credit losses.
At March 31, 1998, there were no significant loans where known information about
possible credit problems of borrowers causes management to have serious doubts
as to the ability of the borrower to comply with present loan repayment terms.
Furthermore, management is not aware of any potential problem loans which could
have a material effect on the Corporation's operating results, liquidity, or
capital resources.
The Corporation makes loans to customers primarily in Macomb County, Michigan.
Although the Corporation has a diversified loan portfolio, a substantial portion
of the local economy has traditionally been dependent on the automotive
industry. Additionally, the Corporation had approximately $11.0 million in
outstanding loans at March 31, 1998, to commercial borrowers in the real estate
rental and property management industry.
During the three months ended March 31, 1998, total deposits increased by 37%,
or $25.6 million, to $93.9 million.
Short term borrowings at March 31, 1998, represent securities sold with an
agreement to repurchase them the following day. The maximum amount outstanding
at any month end during 1998 was $1.6 million. The average rate on the ending
balance of short term borrowings at March 31, 1998, was 4.96%.
The Corporation declared a 10% stock dividend on April 7, 1998. The dividend was
paid on May 6, 1998, to stockholders of record on April 21, 1998. As a result,
approximately $632,000 was transferred from additional paid-in capital to common
stock. The effects of the stock dividend have been retroactively applied to
applicable figures in this report. The Corporation also declared and paid a 10%
stock dividend in the second quarter of 1997.
Following are selected capital ratios for the Corporation as of the dates
indicated, along with the minimum regulatory requirement for each item:
<TABLE>
<CAPTION>
March 31, December 31, March 31, Minimum
1998 1997 1997 Requirement
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Tier I capital to risk-weighted assets 12.08% 15.81% 48.17% 4.00%
Total capital to risk-weighted assets 13.33% 17.07% 49.42% 8.00%
Tier I capital to quarterly average assets (leverage) 8.35% 10.42% 27.97% 4.00%
</TABLE>
Additionally, as a condition of its initial application for deposit insurance,
the Bank (unconsolidated) is required to maintain a ratio of capital to
unadjusted assets of 8.0%, through October 27, 1999. As of March 31, 1998, the
Bank did not meet this requirement. Management has submitted a capital plan to
the Federal Deposit Insurance Corporation (FDIC), and is in the process of
formulating a strategy to remedy the situation. The Bank does not anticipate
that this will have any adverse impact on its operations.
9
<PAGE> 10
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NET INTEREST INCOME
The following table shows the dollar amount of changes in net interest income
for each major category of interest earning asset and interest bearing
liability, and the amount of change attributable to changes in average balances
(volume) or average rates for the periods shown. Variances that are jointly
attributable to BOTH volume and rate changes have been allocated to the volume
component.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998 vs. 1997
---------------------------------------------------
Increase (Decrease)
Due to Changes In
---------------------------------
Total Volume Rate
and Both
---------- ---------- ---------
(in thousands)
<S> <C> <C> <C>
Earning Assets - Interest Income
Federal funds sold $ (148) $ (162) $ 14
Securities 277 277 --
Loans 1,185 1,190 (5)
------- ------- -------
Total 1,314 1,305 9
------- ------- -------
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts 40 44 (4)
Savings deposits 12 11 1
Time deposits 684 673 11
Short term borrowings 15 15 --
Capitalized lease obligation 1 1 --
------- ------- -------
Total 752 744 8
------- ------- -------
Net Interest Income $ 562 $ 561 $ 1
======= ======= =======
</TABLE>
For the quarter ended March 31, 1998, net interest income increased by 270%, or
$562,000 over the first quarter of 1997. This was due to a significant rise in
the volume of interest earning assets, especially in loans and securities. On
the liability side, interest bearing liability volumes increased sharply as the
Corporation continued to build a deposit base. The large percentage increase in
both interest earning assets and interest bearing liabilities was a function of
the small average balances in the prior year. This was the result of the Bank's
having commenced operations in the fourth quarter of 1996. The net interest
margin improved in the quarter to 3.53%, compared with 2.81% for the first
quarter of 1997. The margin improvement was the result of a higher current
percentage of interest bearing assets in loans rather than securities and
federal funds, compared with the prior year. Interest rates on individual asset
and liability categories were fairly consistent with the prior year quarter.
10
<PAGE> 11
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
AVERAGE BALANCE SHEET
The following table shows the Corporation's consolidated average balances of
assets, liabilities, and stockholders' equity; the amount of interest income or
interest expense and the average yield or rate for each major category of
interest earning asset and interest bearing liability, and the net interest
margin, for the three month periods ended March 31, 1998 and 1997. Average loans
are presented net of unearned income, gross of the allowance for credit losses.
Interest on loans includes loan fees. Average securities are based on amortized
cost.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------------------------------
1998 1997
----------------------------------- -----------------------------------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Federal funds sold $5,860 $80 5.46% $17,763 $228 5.13%
Securities 19,701 310 6.29 2,071 33 6.33
Loans 61,618 1,414 9.18 9,754 229 9.39
--------- --------- -------- -------- ------- ------
Total Earning Assets/
Total Interest Income 87,179 1,804 8.28% 29,588 490 6.62%
--------- -------- ------- ------
Cash and due from banks 3,004 1,154
All other assets 1,657 1,910
--------- --------
Total Assets $91,840 $32,652
========= ========
Liabilities and Equity
NOW and money market accounts $9,042 75 3.32% $3,739 35 3.69%
Savings deposits 1,966 15 3.05 520 3 2.56
Time deposits 61,068 894 5.86 15,088 210 5.57
Short term borrowings 1,182 15 5.08 -- -- --
Capitalized lease obligation 1,025 35 13.66 1,013 34 13.49
--------- --------- -------- -------- ------- ------
Total Interest Bearing Liabilities/
Total Interest Expense 74,283 1,034 5.57% 20,360 282 5.54%
--------- -------- ------- ------
Noninterest bearing demand deposits 9,469 2,713
All other liabilities 285 96
Stockholders' equity 7,803 9,483
--------- --------
Total Liabilities and Equity $91,840 $32,652
========= ========
Net Interest Income $770 $208
========= =======
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.53% 2.81%
======== ======
</TABLE>
11
<PAGE> 12
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NONINTEREST INCOME
Noninterest income increased by 338%, to $70,000 in the first quarter of 1998.
The largest components of the increase were overdraft income, gains on sales of
residential mortgages, and fees from processing merchant credit card deposits.
NONINTEREST EXPENSE
Noninterest expense increased over the first quarter of 1997 by 25%, to $823,000
in 1998. This was primarily the result of growth of the Corporation, and the
accompanying rise in payroll and other operating expenses.
PROVISION FOR INCOME TAXES
The Corporation currently has no recorded provision for income taxes. Net
operating loss carryforwards totaled $1.7 million through tax years ended
December 31, 1997. The Corporation has not recorded a corresponding asset for
any future benefit of these carryforwards, since it has not yet demonstrated a
history of earnings.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The liquidity of a bank allows it to provide funds to meet loan requests, to
accommodate possible outflows in deposits, and to take advantage of other
investment opportunities. Funding of loan requests, providing for liability
outflows, and managing interest rate margins require continuous analysis to
match the maturities of specific categories of loans and investments with
specific types of deposits and borrowings. Bank liquidity depends upon the mix
of the banking institution's potential sources and uses of funds. For the
Corporation, the major sources of liquidity have been deposit growth, federal
funds sold, and loans and securities which mature within one year. Additional
liquidity is provided by a $2.0 million secured federal funds line of credit,
and a $10.0 million secured line of credit with the Federal Home Loan Bank of
Indianapolis (FHLB). The Corporation's large deposit balances which might
fluctuate in response to interest rate changes are closely monitored. These
deposits consist mainly of jumbo time certificates of deposit.
Managing rates on earning assets and interest bearing liabilities focuses on
maintaining stability in the net interest margin, which is an important factor
in earnings growth and stability. Emphasis is placed on maintaining a controlled
rate sensitivity position, to avoid wide swings in margins and to manage risk
due to changes in interest rates.
12
<PAGE> 13
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows the maturity and repricing distribution of the
Corporation's interest earning assets and interest bearing liabilities as of
March 31, 1998. This table displays the interest rate sensitivity gap (i.e.,
interest rate sensitive assets less interest rate sensitive liabilities),
cumulative interest rate sensitivity gap, the interest rate sensitivity gap
ratio (i.e., interest rate sensitive assets divided by interest rate sensitive
liabilities), and cumulative interest rate sensitivity gap ratio.
<TABLE>
<CAPTION>
After Three After One
Within Months But Year But After
Three Within One Within Five
Months Year Five Years Years Total
--------- ------------ ------------ ---------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Interest earning assets:
Federal funds sold $10,550 $ -- $ -- $ -- $10,550
Securities 998 2,241 13,072 2,214 18,525
Loans 24,549 3,359 27,158 14,531 69,597
-------- -------- ------- ------- ---------
Total 36,097 5,600 40,230 16,745 $98,672
-------- -------- ------- ------- =========
Interest bearing liabilities:
NOW and money market
accounts 9,201 -- -- -- $9,201
Savings deposits 2,046 -- -- -- 2,046
Jumbo time deposits 12,933 19,906 -- -- 32,839
Time deposits < $100,000 4,953 34,255 426 -- 39,634
Short term borrowings 1,561 -- -- -- 1,561
Capitalized lease
obligation -- 3 97 936 1,036
-------- -------- ------- ------- ---------
Total 30,694 54,164 523 936 $86,317
-------- -------- ------- ------- =========
Interest rate sensitivity gap $5,403 (48,564) 39,707 15,809
Cumulative interest rate
sensitivity gap $(43,161) $(3,454) $12,355
Interest rate sensitivity gap
ratio 1.18 0.10 76.92 17.89
Cumulative interest rate
sensitivity gap ratio 0.49 0.96 1.14
</TABLE>
The preceding table indicates the time periods in which interest earning assets
and interest bearing liabilities will mature or may be repriced, generally
according to their contractual terms. However, this table does not necessarily
indicate the impact that general interest rate movements would have on the
Corporation's net interest margin, because the repricing of various categories
of assets and liabilities is discretionary, and is subject to competitive and
other pressures. As a result, various assets and liabilities indicated as
repricing within the same period may, in fact, reprice at different times and by
different increments. At March 31, 1998, the Corporation is considered
"liability sensitive" according to the preceding table. In a rising rate
environment, the Corporation might not be able to increase rates on earning
assets faster than the increase in rates on interest bearing liabilities.
The Corporation is also working with a vendor to develop a personal
computer-based model to simulate the effects of possible interest rate changes.
The Corporation intends to limit estimated negative exposure to changing rates
within a one year period. The exposure estimate will be based on a variety of
assumptions built into the model, and assumed interest rate changes of plus or
minus 200 basis points. The results of this analysis will be reported to the
Board of Directors, to assist in the interest rate risk management process.
13
<PAGE> 14
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ALLOWANCE FOR CREDIT LOSSES
The following table shows changes in the allowance for credit losses arising
from additions to the allowance that were charged to expense, and a selected
ratio:
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------
1998 1997
------- -------
(in thousands)
<S> <C> <C>
Allowance for credit losses at
beginning of period $800 $90
Provision charged to expense 160 170
-------- -------
Allowance for credit losses at end of period $960 $260
======== =======
Allowance for credit losses as a percentage
of loans at period end 1.38% 1.51%
</TABLE>
In each accounting period, the allowance for credit losses is adjusted by
management, taking a variety of factors into account. Management attempts to
allocate specific portions of the allowance for credit losses based on
specifically identifiable problem loans and off-balance sheet items.
Management's evaluation of the allowance is further based on consideration of
actual loss experience, the present and prospective financial condition of
borrowers, adequacy of collateral, industry concentrations within the portfolio,
and general economic conditions. Management believes that the present allowance
is adequate, based on the broad range of considerations listed above.
The primary risk element considered by management regarding each installment and
residential real estate loan is lack of timely payment. Management has a
reporting system that monitors past due loans and has adopted policies to pursue
its creditor's rights in order to preserve the Bank's position. The primary risk
elements concerning commercial loans are the financial condition of the
borrower, the sufficiency of collateral, and lack of timely payment. Management
has a policy of requesting and reviewing annual financial statements from its
commercial loan customers, and periodically reviews existence of collateral and
its value.
Although management believes that the allowance for credit losses is adequate to
absorb losses as they arise, there can be no assurance that the Bank will not
sustain losses in any given period that could be substantial in relation to the
size of the allowance for credit losses.
Management is not aware of any factors that would cause future net loan
charge-offs, in total or by loan category, to significantly differ from those
experienced by institutions of similar size.
OTHER MATTERS
The Corporation is in the process of assessing the impact of the arrival of 2000
on its computerized information systems and other electronic equipment. The
"year 2000 problem" is the result of abbreviating an applicable year with two
digits rather than four. As a result, computer programs and other devices may
interpret a date field of "00" as 1900 rather than 2000. Such a miscalculation
could lead to system malfunction or complete failure. The Corporation's main
data processing vendor is undertaking a significant effort to have all systems
renovated or replaced before 2000, and has been providing frequent updates on
progress and testing. In addition, the Corporation has begun an internal
evaluation of equipment and vendor supplied products. While this effort will
involve additional costs, the amount is not expected to have a material adverse
impact on the Corporation's capital resources, results of operations, or
liquidity in future periods. However, if the Corporation (or its customers or
vendors) are unable to remedy any potential problems in a timely manner, it
could result in a material financial risk.
14
<PAGE> 15
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART II
ITEM 1. LEGAL PROCEEDINGS
As a depository of funds, the Bank is occasionally named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. Such litigation is incidental to the Bank's
business. Management is not aware of any threatened or pending litigation in
which the Corporation or the Bank is likely to experience loss or exposure which
would materially affect the Corporation's capital resources, results of
operations, or liquidity as presented herein.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
A list of exhibits included as part of this Form 10-QSB is shown in the
Exhibit Index, which immediately precedes such exhibits, and is
incorporated by reference herein.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
15
<PAGE> 16
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on May 8, 1998.
COMMUNITY CENTRAL BANK CORPORATION
By: S/ HAROLD W. ALLMACHER
---------------------------------------
Harold W. Allmacher;
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By: S/ RICHARD J. MILLER
---------------------------------------
Richard J. Miller;
President and Chief Operating Officer
By: S/ PETER J. PRZYBOCKI
---------------------------------------
Peter J. Przybocki, CPA;
Corporate Treasurer
(Principal Financial and Accounting Officer)
16
<PAGE> 17
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
3.1 Articles of Incorporation are
incorporated by reference to exhibit 3.1
of the Corporation's Registration
Statement on Form SB-2 (Commission File
Number 333-04113) which became effective
September 23, 1996
3.2 Bylaws of the Corporation are
incorporated by reference to exhibit 3.2
of the Corporation's Registration
Statement on Form SB-2 (Commission File
Number 333-04113) which became effective
September 23, 1996
11 Computation of Per Share Earnings
27 Financial Data Schedule
17
<PAGE> 18
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
BASIC: (in thousands, except per share data)
NET LOSS $(143) $(607)
/ WEIGHTED AVERAGE SHARES 1,391 1,391
----- -----
BASIC NET LOSS PER SHARE ($0.10) ($0.44)
===== =====
DILUTED:
NET LOSS $(143) $(607)
/ WEIGHTED AVERAGE SHARES 1,391 1,391
----- -----
DILUTED NET LOSS
PER SHARE ($0.10) ($0.44)
===== =====
Notes:
- Weighted average shares outstanding have been adjusted to reflect the 10%
stock dividends in 1998 and 1997.
18
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM COMMUNITY CENTRAL BANK
CORPORATION'S CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998, AND THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,304
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 10,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,378
<INVESTMENTS-CARRYING> 13,189
<INVESTMENTS-MARKET> 13,247
<LOANS> 69,597
<ALLOWANCE> 960
<TOTAL-ASSETS> 104,565
<DEPOSITS> 93,912
<SHORT-TERM> 1,561
<LIABILITIES-OTHER> 363
<LONG-TERM> 1,036
0
0
<COMMON> 6,957
<OTHER-SE> 736
<TOTAL-LIABILITIES-AND-EQUITY> 104,565
<INTEREST-LOAN> 1,414
<INTEREST-INVEST> 310
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<INTEREST-TOTAL> 1,804
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<LOAN-LOSSES> 160
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<EXPENSE-OTHER> 823
<INCOME-PRETAX> (143)
<INCOME-PRE-EXTRAORDINARY> (143)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (143)
<EPS-PRIMARY> (0.10)
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<YIELD-ACTUAL> 3.53
<LOANS-NON> 0
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</TABLE>
