<PAGE> 1
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission File No. 333-04113
-----------------
COMMUNITY CENTRAL BANK CORPORATION
----------------------------------
(Name of small business issuer in its charter)
<TABLE>
<S> <C>
Michigan 38-3291744
-------- ----------
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
100 N. Main Street, Mount Clemens, Michigan 48043-5605
------------------------------------------------------
(Address of principal executive offices)
(810) 783-4500
--------------
(Issuer's telephone number)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the issuer (1) has 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
--- ---
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]
Issuer's revenue for its most recent fiscal year was $9,423,000
As of March 19, 1999, 2,196,455 shares of Common Stock of the issuer were
outstanding. The aggregate market value of voting stock of the registrant held
by nonaffiliates was approximately $17.5 million as of March 19, 1999; based on
the average of the bid and asked prices ($9.94) on that date. (For purposes of
this calculation, 432,000 shares owned by the members of the Corporation's Board
of Directors have been excluded.)
DOCUMENTS INCORPORATED BY REFERENCE:
Part II Part of Stockholder Report of the issuer for the
year ended December 31, 1998.
Part III Part of the Proxy Statement of the issuer dated
March 18, 1999.
Transitional Small Business Disclosure Format Yes No X
---- ----
<PAGE> 2
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
PART I
ITEM 1. DESCRIPTION OF BUSINESS
THE CORPORATION
Community Central Bank Corporation (the Corporation) is a bank holding
company under the Bank Holding Company Act of 1956, as amended (the Bank Holding
Company Act). As a bank holding company, the Corporation is subject to
regulation by the Federal Reserve Board. The Corporation was organized on April
26, 1996, under the laws of the State of Michigan, and formed Community Central
Bank (the Bank) effective September 16, 1996. The Corporation exists primarily
for the purpose of holding all the stock of the Bank, and of such other
subsidiaries as it may acquire or establish.
The expenses of the Corporation have generally been paid using the
proceeds of its two public stock offerings. The Corporation's principal source
of future operating funds is expected to be dividends from the Bank.
THE BANK
The Bank is a state banking corporation which operates under the laws
of the United States of America, pursuant to a charter issued by the State of
Michigan. The Bank's deposits are insured to the maximum extent allowed by the
Federal Deposit Insurance Corporation.
The Bank, through its office at 100 North Main Street, Mount Clemens,
Michigan, provides a wide variety of commercial banking services to individuals,
businesses, governmental units, and other institutions. Its services include
accepting time, demand and savings deposits, including regular checking
accounts, NOW and money market accounts, and certificates of deposit. In
addition, the Bank makes secured and unsecured commercial, construction,
mortgage, and consumer loans, and provides safe deposit facilities. The Bank has
three automated teller machines (ATM) which participate in the Magic Line
system, a regional network, as well as other ATM networks throughout the
country. In addition to the foregoing services, the Bank provides its customers
with extended banking hours and a system to perform certain transactions by
telephone or personal computer.
EFFECT OF GOVERNMENT MONETARY POLICIES
The earnings of the Corporation are affected by domestic economic
conditions and the monetary and fiscal policies of the United States Government,
its agencies, and the Federal Reserve Board. The Federal Reserve Board's
monetary policies have had, and will likely continue to have, an important
impact on the operating results of commercial banks through its power to
implement national monetary policy. Monetary policy is used to, among other
things, attempt to curb inflation or combat a recession. The policies of the
Federal Reserve Board have a major effect upon the levels of bank loans,
investments and deposits through its open market operations in United States
Government securities, and through its regulation of, among other things, the
discount rate on borrowings of member banks and the reserve requirements against
member bank deposits. It is not possible to predict the nature and impact of
future changes in monetary and fiscal policies.
2
<PAGE> 3
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
REGULATION AND SUPERVISION
The Corporation, as a bank holding company under the Bank Holding
Company Act, is required to file an annual report with the Federal Reserve
Board. It may be required to file additional information as the Federal Reserve
Board may require, pursuant to the Bank Holding Company Act, and is subject to
examination by the Federal Reserve Board.
The Bank Holding Company Act limits the activities which may be engaged
in by the Corporation (and its subsidiary) to those of banking and the
management of banking organizations, and to certain non-banking activities,
including those activities which the Federal Reserve Board may find, by order or
regulation, to be closely related to banking or managing or controlling banks.
The Federal Reserve Board is empowered to differentiate between activities by a
bank holding company, or a subsidiary thereof, and activities commenced by
acquisition of a going concern.
With respect to non-banking activities, the Federal Reserve Board has,
by regulation, determined that certain non-banking activities are closely
related to banking within the meaning of the Bank Holding Company Act. These
activities include, among other things, operating a mortgage company, finance
company, credit card company or factoring company, performing certain data
processing operations, providing certain investment and financial advice, acting
as an insurance agent for certain types of credit related insurance, leasing
property on a full-payout, nonoperating basis; and, subject to certain
limitations, providing discount securities brokerage services for customers. The
Corporation has no current plans to engage in non-banking activities.
The Bank is subject to certain restrictions imposed by federal law on
any extension of credit to the Corporation for investments in stock or other
securities, and on the taking of such stock or securities as collateral for
loans to any borrower. Federal law prevents the Corporation from borrowing from
the Bank unless the loans are secured in designated amounts.
With respect to the acquisition of banking organizations, the
Corporation is required to obtain the prior approval of the Federal Reserve
Board before it can acquire all or substantially all of the assets of any bank,
or acquire ownership or control of any voting shares of any bank, if, after such
acquisition, it will own or control more than 5% of the voting shares of such
bank. Acquisitions across state lines are subject to certain state and Federal
Reserve Board restrictions.
EMPLOYEES
As of December 31, 1998, the Corporation and the Bank employed 35
persons (full time equivalent).
COMPETITION
All phases of the business of the Bank are highly competitive. The Bank
competes with numerous financial institutions, including other commercial banks,
in the Macomb County and metropolitan Detroit area. The Bank, along with other
commercial banks, competes with respect to its lending activities, and competes
in attracting demand deposits with savings banks, savings and loan associations,
insurance companies, small loan companies, credit unions and with the issuers of
commercial paper and other securities, such as various mutual funds. Many of
these institutions are substantially larger and have greater financial resources
than the Bank.
The competitive factors among financial institutions can be classified
into two categories; competitive rates and competitive services. Interest rates
are widely advertised and thus competitive, especially in the area of time
deposits. From a service standpoint, financial institutions compete against each
other in types and quality of services. The Bank is generally competitive with
other financial institutions in its area with respect to interest rates paid on
time and savings deposits, fees charged on deposit accounts, and interest rates
charged on loans. With respect to services, the Bank offers a customer service
oriented atmosphere which management believes is better suited to its customers'
needs than that which is offered by other institutions in the local market.
3
<PAGE> 4
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
LEGAL LENDING LIMIT
Pursuant to state regulations, the Bank is limited in the amount that
it may lend to a single borrower. As of December 31, 1998, the legal lending
limit was approximately $2.0 million; however, that limit can be expanded (for
individual loans) to approximately $3.3 million with approval of the Board of
Directors.
RETURN ON EQUITY AND ASSETS
The following table contains selected ratios:
<TABLE>
<CAPTION>
Year ended December 31,
1998 1997
----- -----
<S> <C> <C>
Return on average total assets 0.96% (3.55%)
Return on average equity 10.40% (22.20%)
Dividend payout ratio NA NA
Average equity to average assets 9.22% 16.00%
</TABLE>
ADDITIONAL STATISTICAL DATA
Additional consolidated statistical information is shown under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" on pages 25 to 31 of the Stockholder Report of the Corporation,
for the year ended December 31, 1998, (exhibit 13) and is incorporated by
reference herein.
ITEM 2. DESCRIPTION OF PROPERTY
The Bank leases a renovated office in the downtown business district of
Mount Clemens. The executive offices of the Corporation are located in the same
building. The building lease runs through 2011.
ITEM 3. LEGAL PROCEEDINGS
As a depository of funds, the Bank could occasionally be named as a
defendant in lawsuits (such as garnishment proceedings) involving claims to the
ownership of funds in particular accounts. All such litigation is incidental to
the Bank's business.
The Corporation's management believes that no litigation is threatened
or pending in which the Corporation, or its subsidiary, 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
4
<PAGE> 5
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information shown under the caption "Stock Information" on page 32
of the Stockholder Report of the Corporation, for the year ended December 31,
1998, (exhibit 13) is incorporated by reference herein.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information shown under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 25 to 31 of
the Stockholder Report of the Corporation, for the year ended December 31, 1998,
(exhibit 13) is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS
The information presented under the captions "Consolidated Balance
Sheet," "Consolidated Statement of Operations," "Consolidated Statement of
Comprehensive Income," "Consolidated Statement of Changes in Stockholders'
Equity," "Consolidated Statement of Cash Flow," and "Notes to Consolidated
Financial Statements," on pages 1 through 24 of the Stockholder Report of the
Corporation, for the year ended December 31, 1998, as well as the Independent
Auditor's Report of Plante & Moran, LLP, dated January 26, 1999, (both exhibit
13) is incorporated by reference herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
5
<PAGE> 6
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The information listed under the caption "Information about Directors
and Nominees as Directors" on page 4 of the Proxy Statement of the Corporation
dated March 18, 1999, (exhibit 20) is incorporated by reference herein.
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Corporation,
together with their ages and their positions at December 31, 1998. Executive
officers of the Corporation are elected annually by the Corporation's Board of
Directors to serve for the ensuing year and until their successors are elected
and qualified.
<TABLE>
<CAPTION>
Name and Position Position Held Since Age
----------------- ------------------- ---
<S> <C> <C>
Harold W. Allmacher
Chairman of the Board and
Chief Executive Officer 1996 - present 59
Richard J. Miller
President and Chief Operating Officer 1996 - 1999 40
Peter J. Przybocki
Corporate Treasurer 1996 - present 35
Andrew Tassopoulos
Executive Vice President 1996 - present 38
</TABLE>
Mr. Allmacher held a similar position with Old Kent Bank - Macomb for
substantially all of the two year period prior to the inception of the
Corporation. Messrs. Miller, Tassopoulos, and Przybocki held various officer
positions with Old Kent Bank - Macomb for substantially all of the two year
period prior to joining the Corporation, except that Mr. Przybocki held a
financial reporting position with Republic Bancorp Inc. of Owosso, Michigan,
during parts of 1995 and 1996.
Effective February 19, 1999, Mr. Miller resigned from his positions
with the Corporation and the Bank. On March 2, 1999, Mr. Tassopoulos was named
President of the Corporation and the Bank. At the same time, Mr. Przybocki was
named Executive Vice President and Chief Financial Officer.
ITEM 10. EXECUTIVE COMPENSATION
The information detailed in the last two paragraphs under the captions
"Board of Directors Meetings and Committees" on page 5, "Report of the
Compensation Committee," on pages 6 and 7, "Summary Compensation Table" on page
7, and "Options Granted in 1998" and "Aggregated Stock Option Exercises in 1998
and Year End Option Values" on page 8 of the Proxy Statement of the Corporation
dated March 18, 1999, (exhibit 20) is incorporated by reference herein.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information summarized under the caption "Stock Ownership of
Certain Beneficial Owners and Management" on page 3 of the Proxy Statement of
the Corporation dated March 18, 1999, (exhibit 20) is incorporated by reference
herein.
6
<PAGE> 7
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information listed under the caption "Certain Transactions" on page
9 of the Proxy Statement of the Corporation dated March 18, 1999, (exhibit 20)
is incorporated by reference herein.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
A list of exhibits included as part of this Form 10-KSB is shown in the
Exhibit Index, which immediately precedes such exhibits, and is incorporated by
reference herein.
(b) Reports on Form 8-K
The Corporation has not filed any reports on Form 8-K during the last
quarter of the period covered by this Report.
7
<PAGE> 8
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on March 22, 1999:
COMMUNITY CENTRAL BANK CORPORATION
/S/ HAROLD W. ALLMACHER
--------------------------------
Harold W. Allmacher; Chief Executive Officer
(Principal Executive Officer)
/S/ ANDREW TASSOPOULOS
--------------------------------
Andrew Tassopoulos; President
/S/ PETER J. PRZYBOCKI
--------------------------------
Peter J. Przybocki, CPA; Chief Financial Officer
(Principal Financial and Accounting officer)
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant, and in the capacities
indicated on March 22, 1999:
/S/ HAROLD W. ALLMACHER /S/ BOBBY L. HILL
- ------------------------------------------ --------------------------------
Harold W. Allmacher; Chairman of the Board Bobby L. Hill; Director
/S/ GEBRAN S. ANTON /S/ JOSEPH F. JEANNETTE
- ------------------------------------------ --------------------------------
Gebran S. Anton; Director Joseph F. Jeannette; Director
/S/ JOSEPH CATENACCI /S/ DEAN S. PETITPREN
- ------------------------------------------ --------------------------------
Joseph Catenacci; Director Dean S. Petitpren; Director
/S/ RAYMOND M. CONTESTI /S/ CAROLE L. SCHWARTZ
- ------------------------------------------ --------------------------------
Raymond M. Contesti; Director Carole L. Schwartz; Director
/S/ SALVATORE COTTONE /S/ ANTHONY R. TERSIGNI
- ------------------------------------------ --------------------------------
Salvatore Cottone; Director Anthony R. Tersigni; Director
/S/ CELESTINA GILES
- ------------------------------------------
Celestina Giles; Director
8
<PAGE> 9
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT DESCRIPTION
----------- -------------------
<S> <C>
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 No. 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 No. 333-04113)
which became effective September 23, 1996
10.1 1996 Employee Stock Option Plan is incorporated by reference to exhibit 10.1 of the
Corporation's Registration Statement on Form SB-2 (Commission File No. 333-04113)
which became effective September 23, 1996
10.2 1996 Stock Option Plan for Nonemployee Directors, is incorporated by reference to
exhibit 10.2 of the Corporation's Registration Statement on Form SB-2 (Commission
File No. 333-04113) which became effective September 23, 1996
10.3 Lease Agreement between the Corporation and T.A.P. Properties, LLC, dated May 16,
1996, is incorporated by reference to exhibit 10.3 of the Corporation's Registration
Statement on Form SB-2 (Commission File No. 333-04113) which became effective
September 23, 1996
10.4 Vicant Office Building Lease Agreement dated April 1, 1997, between Gebran S. Anton,
Jr. and the Bank is incorporated by reference to exhibit 10.5 of the Corporation's
Registration Statement on Form SB-2 (Commission File No. 333-58475) which became
effective August 25, 1998.
11 Computation of Per Share Earnings
13 Independent Auditor's Report dated January 26, 1999, and Stockholder Report of the
Corporation for the year ended December 31, 1998. Except for the portions of the
Stockholder Report that are expressly incorporated by reference in this 10-KSB, the
Stockholder Report shall not be deemed filed as a part hereof.
20 Proxy Statement of the Corporation dated March 18, 1999. Except for the portions of
the Proxy Statement that are expressly incorporated by reference in this 10-KSB, the
Proxy Statement shall not be deemed filed as a part hereof.
21 Subsidiaries of the Issuer
23 Consent of Independent Auditor
27 Financial Data Schedule
</TABLE>
9
<PAGE> 1
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-KSB (continued)
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
----- -----
(in thousands, except per share data)
<S> <C> <C>
BASIC
Net Income (Loss) $1,104 ($1,932)
/ Weighted Average Shares 1,668 1,391
- --------------------------- ------ -------
Basic Earnings (Loss)
Per Share $0.66 ($1.39)
=========================== ====== =======
DILUTED
Net Income (Loss) $1,104 ($1,932)
/ Weighted Average Shares 1,679 1,391
- --------------------------- ------ -------
Diluted Earnings (Loss)
Per Share $0.66 ($1.39)
=========================== ====== =======
</TABLE>
Notes:
- Weighted average shares outstanding have been adjusted to reflect the 10%
stock dividends in 1998 and 1997.
- Where applicable, diluted share computations include the effects of
outstanding stock options.
10
<PAGE> 1
COMMUNITY CENTRAL BANK
CORPORATION
Independent Auditor's Report
and
Stockholder Report
December 31, 1998
<PAGE> 2
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Community Central Bank Corporation
Mount Clemens, Michigan
We have audited the accompanying consolidated balance sheet of Community Central
Bank Corporation as of December 31, 1998 and 1997, and the related consolidated
statements of operations, comprehensive income, changes in stockholders' equity,
and cash flow for the years ended December 31, 1998 and 1997. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Community Central
Bank Corporation as of December 31, 1998, and 1997, and the results of its
operations and cash flow for the years ended December 31, 1998 and 1997, in
conformity with generally accepted accounting principles.
/S/ PLANTE & MORAN, LLP
January 26, 1999
Troy, Michigan
2
<PAGE> 3
COMMUNITY CENTRAL BANK CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
1998 1997
Assets ------------ ------------
(in thousands)
<S> <C> <C>
Cash and Cash Equivalents
Cash and due from banks (Note 2) $ 6,162 $ 2,279
Federal funds sold 19,300 1,250
------------ ------------
Total Cash and Cash Equivalents 25,462 3,529
------------ ------------
Securities available for sale, at fair value (Note 3) 9,766 5,392
Investment securities, at amortized cost (Note 3)
(Fair value of $9.4 million at 12-31-1998,
$15.1 million at 12-31-1997) 9,276 15,115
Loans (Note 4)
Residential mortgage loans 33,867 21,314
Commercial loans 64,098 29,165
Installment loans 4,439 2,656
------------ ------------
Total Loans 102,404 53,135
Allowance for credit losses (Note 5) (1,330) (800)
------------ ------------
Net Loans 101,074 52,335
------------ ------------
Net property and equipment (Note 6) 1,739 1,814
Accrued interest receivable 655 499
Other assets 963 221
------------ ------------
Total Assets $ 148,935 $ 78,905
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
COMMUNITY CENTRAL BANK CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
1998 1997
Liabilities _________ _________
(in thousands, except share data)
Deposits
<S> <C> <C>
Noninterest bearing demand deposits $13,124 $7,323
NOW and money market accounts 18,644 9,834
Savings deposits 2,971 2,057
Time deposits (Note 7) 92,413 49,141
--------- ---------
Total deposits 127,152 68,355
--------- ---------
Short term borrowings (Note 8) 3,491 1,403
Accrued interest payable 280 191
Other liabilities 227 84
Capitalized lease obligation (Note 9) 1,036 1,035
--------- ---------
Total Liabilities 132,186 71,068
--------- ---------
Stockholders' Equity (Note 10)
Common stock ($5 stated value; 9,000,000 shares authorized,
2,196,455 shares issued and outstanding at 12-31-1998,
1,264,985 shares issued and outstanding at 12-31-1997) 10,982 6,325
Additional paid-in capital 7,312 4,195
Accumulated deficit (1,608) (2,712)
Accumulated other comprehensive income 63 29
--------- ---------
Total Stockholders' Equity 16,749 7,837
--------- ---------
Total Liabilities and Stockholders' Equity $148,935 $78,905
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
COMMUNITY CENTRAL BANK CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
--------- ---------
(in thousands, except per share data)
<S> <C> <C>
Interest Income
Loans (including fees) $7,163 $2,708
Securities 1,333 707
Federal funds sold 486 534
--------- ---------
Total Interest Income 8,982 3,949
--------- ---------
Interest Expense
Deposits 4,818 2,095
Short term borrowings 82 29
Capitalized lease obligation 139 137
--------- ---------
Total Interest Expense 5,039 2,261
--------- ---------
Net Interest Income 3,943 1,688
Provision for credit losses (Note 5) 530 710
--------- ---------
Net Interest Income after Provision 3,413 978
--------- ---------
Noninterest Income
Deposit service charges 173 66
Net gain (loss) on calls of securities 22 (1)
Mortgage banking income 87 66
Other income 159 53
--------- ---------
Total Noninterest Income 441 184
--------- ---------
Noninterest Expense
Salaries, benefits and payroll taxes (Note 11) 1,665 1,389
Premises and fixed asset expense 545 617
Other operating expense (Note 12) 1,314 1,088
--------- ---------
Total Noninterest Expense 3,524 3,094
--------- ---------
Income (Loss) Before Taxes 330 (1,932)
Income tax benefit (Note 13) (774) ----
--------- ---------
Net Income (Loss) $1,104 ($1,932)
========= =========
Basic earnings (loss) per share $0.66 ($1.39)
========= =========
Diluted earnings (loss) per share $0.66 ($1.39)
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
COMMUNITY CENTRAL BANK CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
--------- ---------
(in thousands)
<S> <C> <C>
Net Income (Loss) as Reported $1,104 ($1,932)
Other Comprehensive Income
Change in unrealized gain on securities
available for sale, net of tax of $32 in 1998,
and $0 in 1997 51 29
Reclassification of previously reported gain (loss)
included in current year net income (17) ---
------ -------
Comprehensive Income (Loss) $1,138 ($1,903)
====== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
COMMUNITY CENTRAL BANK CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Accumulated Comprehensive Total
Stock Capital Deficit Income Equity
-------- --------- ---------- ------------- ------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance January 1, 1997 $5,750 $4,770 ($780) $ --- $9,740
Stock dividend 575 (575) --- --- ----
Net loss for 1997 --- --- (1,932) --- (1,932)
Other comprehensive income --- --- ---- 29 29
-------- -------- --------- ------------ ---------
Balance December 31, 1997 6,325 4,195 (2,712) 29 7,837
Stock dividend 632 (633) --- --- (1)
Public stock offering 4,025 4,427 --- --- 8,452
Stock offering costs --- (677) --- --- (677)
Net income for 1998 --- --- 1,104 --- 1,104
Other comprehensive income --- --- --- 34 34
-------- -------- --------- ------------ ---------
Balance December 31, 1998 $10,982 $7,312 ($1,608) $63 $16,749
======== ======== ========= ============ =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
COMMUNITY CENTRAL BANK CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
------ ------
(in thousands)
<S> <C> <C>
Operating Activities
Net income (loss) $1,104 ($1,932)
Adjustments to reconcile net income (loss) to net
cash flow from operating activities:
Net accretion of security discount (10) (25)
Net (gain) loss on calls of securities (22) 1
Net gain on sale of mortgage loans (61) (60)
Provision for credit losses 530 710
Depreciation expense 354 466
Net gain on sales of property and equipment (4) ---
Deferred income tax (774) ---
Increase in accrued interest receivable (156) (482)
Decrease in other assets 32 5
Increase in accrued interest payable 89 159
Increase in other liabilities 250 109
------- ------
Net Cash Provided by (Used in) Operating Activities 1,332 (1,049)
------- ------
Investing Activities
Maturities, calls, and prepayments of securities available for sale 3,337 6
Purchases of securities available for sale (7,135) (5,368)
Maturities, calls, and prepayments of investment securities 5,643 3,892
Purchases of investment securities (282) (18,984)
Sales of residential mortgage loans 9,232 5,999
Net increase in loans (58,440) (53,496)
Sales of property and equipment 15 ---
Purchases of property and equipment (290) (584)
------- -------
Net Cash Used in Investing Activities (47,920) (68,535)
------- -------
Financing Activities
Net increase in demand and savings deposits 15,525 14,595
Net increase in time deposits 43,272 41,579
Net increase in short term borrowings 2,088 1,403
Repayment of capitalized lease obligation (138) (122)
Public stock offering 7,775 ---
Fractional shares paid on stock dividend (1) ---
------- -------
Net Cash Provided by Financing Activities 68,521 57,455
------- -------
Increase (Decrease) in Cash and Cash Equivalents 21,933 (12,129)
Cash and Cash Equivalents at the Beginning
of the Period 3,529 15,658
------- -------
Cash and Cash Equivalents at the End of the Period $25,462 $3,529
======== =======
Supplemental Disclosure of Cash Flow Information
Interest paid $4,811 $1,965
======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Community Central Bank Corporation (the
Corporation) conform to generally accepted accounting principles. Management is
required to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes.
Actual results could differ from those estimates and assumptions.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of the Corporation and its wholly-owned subsidiary, Community Central
Bank (the Bank). All significant intercompany transactions are eliminated in
consolidation.
NATURE OF OPERATIONS: The Bank conducts full-service commercial and consumer
banking and provides other financial products and services to communities
located primarily in Macomb County, Michigan, through one office.
SECURITIES: On the balance sheet, investment securities (i.e., those which the
Corporation has the ability and positive intent to hold to maturity) are stated
at cost, adjusted for amortization of premium and accretion of discount.
Securities classified as available for sale are those that may be sold in the
future to meet investment objectives of quality, liquidity, and yield, and to
avoid significant market deterioration. Securities available for sale are
reported at estimated fair value. Unrealized gain or loss on securities
available for sale is recorded (net of tax) as a component of other
comprehensive income, in the equity section of the balance sheet. Gain or loss
on sales or calls of securities is computed based on the amortized cost of the
specific security.
LOANS: Loans are generally reported at the principal amount outstanding, net of
unearned income. Non-refundable loan origination fees and certain direct loan
origination costs are deferred and included in interest income over the term of
the related loan as a yield adjustment. Interest on loans is accrued and
credited to income based upon the principal amount outstanding. The accrual of
interest on loans is discontinued when, in the opinion of management, there is
an indication that the borrower may be unable to meet payments as they become
due. Upon such discontinuance, all unpaid interest accrued is reversed. Interest
accruals are generally resumed when all delinquent principal and/or interest has
been brought current or the loan becomes both well secured and in the process of
collection.
ALLOWANCE FOR CREDIT LOSSES: The allowance for credit losses is maintained at a
level considered by management to be adequate to absorb losses inherent in
existing loans and loan commitments. The adequacy of the allowance is based on
evaluations that take into consideration such factors as prior loss experience,
changes in the nature and volume of the portfolio, overall portfolio quality,
loan concentrations, specific impaired or problem loans and commitments, and
current and anticipated economic conditions that may affect the borrower's
ability to pay.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost, less
accumulated depreciation and amortization. Depreciation, generally computed
using a declining balance method, is charged to operations over the estimated
useful lives of the assets. Leasehold improvements are amortized over the terms
of their respective leases or the estimated useful lives of the improvements,
whichever is shorter.
EARNINGS PER SHARE: Basic earnings per share are based on the weighted average
number of shares outstanding during the period. Diluted earnings per share are
adjusted for the dilutive effects of stock options, where applicable.
Outstanding shares are retroactively adjusted for stock dividends.
9
<PAGE> 10
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
STOCK OPTIONS: Options granted under the Corporation's plans are accounted for
using the intrinsic value method. Using this method, compensation expense is
recorded at the amount by which the market price of the underlying stock exceeds
the option's exercise price at the grant date. Under the Corporation's plans,
the exercise price of options granted equals the fair value of the stock at the
grant date. Accordingly, no compensation expense is recognized as a result of
stock option awards. The Corporation has adopted the pro forma disclosure-only
provisions of Statement of Financial Accounting Standards (SFAS) 123,
"Accounting for Stock-Based Compensation."
COMPREHENSIVE INCOME: The Corporation adopted SFAS 130, "Reporting Comprehensive
Income," as of January 1, 1998. Accounting principles generally require that
recognized revenue, expense, gain, and loss be included in net income. Certain
changes in assets and liabilities, such as unrealized gain or loss on securities
available for sale, are reported as a separate component of equity. Such items,
along with net income, are components of comprehensive income. The adoption of
SFAS 130 had no effect on the Corporation's net income or stockholders' equity.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1997
financial statements to conform with the classifications used in 1998.
(2) CASH AND DUE FROM BANKS
The Bank is required to maintain cash on hand or noninterest bearing deposits
with the Federal Reserve Bank, based on a percentage of the Bank's deposits. The
requirement is met using a combination of vault cash and deposits made using a
pass-through relationship with a correspondent bank. The required reserve was
$374,000 as of December 31, 1998.
10
<PAGE> 11
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(3) SECURITIES
The following table shows the amortized cost and estimated fair value of the
Corporation's security portfolios as of dates indicated:
<TABLE>
<CAPTION>
December 31, 1998
----------------------------------------------------
Amortized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Securities Available for Sale
United States Government agencies $5,402 $66 ($2) $5,466
Mortgage backed securities 3,171 33 ---- 3,204
Collateralized mortgage obligations 1,098 1 (3) 1,096
------------ ------------ ---------- ---------
Total Securities Available for Sale 9,671 100 (5) 9,766
------------ ------------ ---------- ---------
Investment Securities
United States Government agencies 4,369 55 ---- 4,424
Mortgage backed securities 2,208 27 ---- 2,235
Collateralized mortgage obligations 2,417 16 (2) 2,431
Other securities 282 ---- ---- 282
------------ ------------ ---------- ---------
Total Investment Securities 9,276 98 (2) 9,372
------------ ------------ ---------- ---------
Total Securities $18,947 $198 ($7) $19,138
=========== =========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
----------------------------------------------------
Amortized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ---------- ---------
(in thousands)
<S> <C> <C> <C> <C>
Securities Available for Sale
United States Government agencies $3,875 $31 $ ---- $3,906
Mortgage backed securities 1,085 ---- (1) 1,084
Collateralized mortgage obligations 403 ---- (1) 402
------------ ------------ ---------- ---------
Total Securities Available for Sale 5,363 31 (2) 5,392
------------ ------------ ---------- ---------
Investment Securities
United States Treasury 1,990 3 ---- 1,993
United States Government agencies 6,613 20 (1) 6,632
Mortgage backed securities 2,839 9 (7) 2,841
Collateralized mortgage obligations 3,673 18 (8) 3,683
------------ ------------ ---------- ---------
Total Investment Securities 15,115 50 (16) 15,149
------------ ------------ ---------- ---------
Total Securities $20,478 $81 ($18) $20,541
=========== =========== ========= =========
</TABLE>
11
<PAGE> 12
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amortized cost and estimated fair value of securities, generally by
contractual maturity at December 31, 1998, are as follows:
<TABLE>
<CAPTION>
-------------------------- --------------------------
Securities Available Investment
for Sale Securities
-------------------------- --------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C>
Within one year $2,092 $2,099 $3,131 $3,141
After one year but within five years 5,848 5,914 5,518 5,604
After five years but within ten years 1,731 1,753 346 346
After ten years --- --- 281 281
--------- --------- --------- ---------
$9,671 $9,766 $9,276 $9,372
========= ========= ========= =========
</TABLE>
The preceding table shows securities generally by contractual maturity. Actual
maturities may differ from contractual maturities because issuers (or underlying
borrowers) may have the right to call or prepay obligations. Securities which
are not due at a single maturity date, such as mortgage backed securities, have
been allocated to maturity groupings based on average expected life. Average
expected life is based on the best available prepayment estimates as of year
end.
Investment securities of $1,491,000 were pledged to secure short term borrowings
at December 31, 1998.
12
<PAGE> 13
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) LOANS
Certain Directors and Executive Officers of the Corporation and their associates
are loan customers of the Bank. Such loans were made in the ordinary course of
business and do not involve more than a normal risk of collectibility. The
outstanding loan balance for these persons amounted to $986,000 and $1,497,000
at December 31, 1998 and 1997, respectively. The total unused commitments
related to these loans were $2,157,000 at December 31, 1998. During 1998, new
loans and advances were $117,000, while repayments totalled $628,000.
The Corporation grants loans to customers who reside primarily in Macomb County.
Although the Corporation has a diversified loan portfolio, a substantial portion
of the local economy has traditionally been dependent upon the automotive
industry. Additionally, the Corporation had approximately $19,557,000 in
outstanding loans at December 31, 1998, to commercial borrowers in the real
estate rental and property management industry.
(5) ALLOWANCE FOR CREDIT LOSSES
A summary of the activity in the allowance for credit losses is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
Balance, beginning of the period $800 $90
Provision 530 710
Charge-offs --- ---
Recoveries --- ---
----------- -----------
Balance, end of year $1,330 $800
============ ===========
As a percentage of total loans 1.30% 1.51%
============ ===========
</TABLE>
The Corporation considers a loan impaired when it is probable that all interest
and principal will not be collected in accordance with the contractual terms of
the loan agreement. Consistent with this definition, all nonaccrual and
reduced-rate loans (with the exception of residential mortgages and consumer
loans) are considered impaired. The Corporation had no loans classified as
impaired during the years ended December 31, 1998, and 1997.
13
<PAGE> 14
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(6) PROPERTY AND EQUIPMENT
A summary of property and equipment as of December 31 is as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
Buildings (under capitalized lease) $1,000 $1,000
Leasehold improvements 899 717
Furniture and equipment 705 620
Vehicles 19 19
----------- ----------
2,623 2,356
Less accumulated depreciation and amortization 884 542
----------- ----------
Net property and equipment $1,739 $1,814
=========== ==========
</TABLE>
(7) TIME DEPOSITS
The total amount of jumbo certificates of deposit ($100,000 and over) as of
December 31, 1998, was $47,868,000.
As of December 31, 1998, scheduled maturities of all time deposits are as
follows:
<TABLE>
<CAPTION>
Year ending December 31, (in thousands)
<S> <C>
1999 $80,654
2000 11,064
2001 280
2002 197
2003 218
Subsequent years ---
----------
Total time deposits $92,413
===========
</TABLE>
14
<PAGE> 15
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(8) SHORT TERM BORROWINGS
Short term borrowings at December 31, 1998, consist of securities sold with an
agreement to repurchase, and advances from the Federal Home Loan Bank of
Indianapolis (FHLB). Repurchase agreements generally mature within one day,
while the FHLB advance has a term of seven days. Following are details of short
term borrowings for the dates or periods indicated:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
(in thousands)
<S> <C> <C>
Amount outstanding at end of year $3,491 $1,403
Weighted average interest rate on ending balance 5.09% 5.20%
Average amount outstanding during the year 1,728 557
Weighted average interest rate during the year 4.75% 5.26%
Maximum amount outstanding at any month end
during the year 3,491 1,403
</TABLE>
(9) LEASES
In 1996, the Corporation entered into a 15 year lease commitment for its office
with an entity owned by two Directors. The lease has been treated as a
capitalized lease obligation, and was recorded at the net present value of the
future minimum lease payments of $1,000,000, at an interest rate of
approximately 13%. Future minimum lease payments as of December 31, 1998,
consist of the following:
<TABLE>
<CAPTION>
Year ending December 31, (in thousands)
<S> <C>
1999 $150
2000 150
2001 154
2002 173
2003 173
Subsequent years 1,481
---------
Total minimum lease payments 2,281
Amount representing interest 1,245
---------
Present value of minimum lease payments $1,036
=========
</TABLE>
Operating expense includes rentals on a leased facility and certain equipment in
the amount of $35,000 and $28,000 for 1998 and 1997, respectively. Following is
a schedule of future minimum rental payments required under operating leases
that have remaining lease terms in excess of one year as of December 31, 1998:
<TABLE>
<CAPTION>
Year ending December 31, (in thousands)
<S> <C>
1999 $42
2000 39
2001 28
2002 9
---------
Total minimum rental payments $118
=========
</TABLE>
15
<PAGE> 16
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) STOCKHOLDERS' EQUITY
The Corporation and the Bank are subject to various regulatory capital
requirements administered by Federal banking agencies. Failure to meet these
requirements can initiate certain mandatory (and possible additional
discretionary) actions by regulators. These actions, if undertaken, could have a
material effect on the Corporation's financial position. Under capital adequacy
guidelines, the Corporation and the Bank must meet specific capital requirements
that involve quantitative measures of assets, liabilities, and certain
off-balance sheet items. Capital amounts are also subject to qualitative
judgments by the regulators about individual components, risk-weightings, and
other factors.
Quantitative measures established by regulation require the Corporation and the
Bank to maintain minimum amounts and ratios of Tier I capital and total capital
(as defined in the regulations) to risk-weighted assets. The Corporation and the
Bank are also subject to a minimum Tier I leverage ratio expressed as a
percentage of quarterly average assets (as defined). The Corporation is further
subject to leverage ratios consisting of primary capital and total capital as a
percentage of assets at period end. Management believes, as of December 31,
1998, that the Corporation and the Bank meet all capital adequacy requirements
to which they are subject. As of December 31, 1998, the most recent notification
from the Federal Deposit Insurance Corporation (FDIC) categorized the Bank as
"well capitalized." There have been no events or conditions since that
notification that management believes have changed the Bank's category.
The following table shows the Corporation's and the Bank's actual capital
amounts and ratios as of December 31, as well as certain minimum requirements:
<TABLE>
<CAPTION>
1998 1997 Minimum Ratio Ratio
---------------- ---------------- for Capital to be
Capital Ratio Capital Ratio Adequacy Purposes "Well Capitalized"
------- ----- ------- ----- ----------------- -------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Tier I capital to risk-weighted assets
Consolidated $16,686 16.89% $7,808 15.81% 4% NA
Bank only 13,300 13.49% 7,278 14.72% 4% 6%
Total capital to risk-weighted assets
Consolidated 17,922 18.15% 8,427 17.07% 8% NA
Bank only 14,534 14.74% 7,898 15.98% 8% 10%
Primary capital to assets
Consolidated 18,016 11.99% 8,608 10.80% 5.5% NA
Total capital to assets
Consolidated 18,016 11.99% 8,608 10.80% 6% NA
Tier I capital to quarterly average assets
Consolidated 16,686 12.15% 7,808 10.42% 4% NA
Bank only 13,300 9.69% 7,278 9.73% 4% 5%
</TABLE>
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.
16
<PAGE> 17
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(11) BENEFIT PLANS
DEFINED CONTRIBUTION PENSION PLAN - The Corporation has a 401(k) Plan which is a
defined contribution savings plan for employees. Employer contributions are
discretionary and are determined annually by the Board of Directors. Employer
contributions of $32,000 and $19,000 were paid or accrued for the periods ended
December 31, 1998, and 1997.
STOCK OPTION PLANS - The Corporation has two stock-based compensation plans.
Under the 1996 Employee Stock Option Plan (Employee Plan), the Corporation may
grant options to key employees for up to 48,400 shares of common stock. Under
the 1996 Stock Option Plan for Nonemployee Directors (Director Plan), the
Corporation may grant options for up to 48,400 shares of common stock. Under
both plans, only a portion of options granted are immediately exercisable. The
remainder become exercisable on specified dates in the future. Under both plans,
the exercise price of each option equals the market price of the Corporation's
common stock at the date of grant. Under the Employee Plan and Director Plan, an
option's maximum term is 10 and seven years, respectively. Options under both
plans vest based on the achievement of certain events.
The Corporation has estimated fair value of the options issued in 1998 and 1997
at $5.69 and $4.64 per share, respectively, using the Black-Scholes option
pricing model. If the Corporation had used the fair value method of accounting
and recognized compensation costs for the plans based on the fair value of
awards at the grant date, net income (loss) and earnings per share on a pro
forma basis would have been as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
--------------- ----------------
(in thousands, except per share data)
<S> <C> <C>
Net income (loss) As reported $1,104 ($1,932)
Pro forma $1,068 ($1,974)
======= =======
Basic earnings (loss) per share As reported $0.66 ($1.39)
Pro forma $0.64 ($1.42)
======= =======
Diluted earnings (loss) per share As reported $0.66 ($1.39)
Pro forma $0.64 ($1.42)
======= =======
</TABLE>
17
<PAGE> 18
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Following is a summary of the Corporation's two stock option plans for the
periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
-------------------------------- -------------------------------
Number of Weighted Average Number of Weighted Average
Shares Exercise Price Shares Exercise
Price
--------- --------------- --------- ---------------
<S> <C> <C> <C> <C>
Outstanding, beginning of period 62,920 $8.42 61,710 $8.26
Granted 7,260 11.04 6,050 9.92
Exercised ---- ---- ---- ----
Expired ---- ---- (4,840) 8.26
--------- -------------- --------- --------------
Outstanding, end of year 70,180 $8.69 62,920 $8.42
========= ============== ========= ==============
</TABLE>
The following table shows summary information about fixed stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
Stock Options Outstanding Stock Options Exercisable
- --------------------------------------------------------------------------- ---------------------------------
Weighted Average Weighted
Range of Number Remaining Weighted Average Number of Average Exercise
Exercise Prices of Shares Contractual Life Exercise Price Shares Price
- --------------------------------------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
$8.26 56,870 5.4 years $8.26 39,930 $8.26
9.92 6,050 7.4 years 9.92 2,420 9.92
11.00 - 11.25 7,260 9.2 years 11.04 2,420 11.13
-------------- ------ --------- ----- ------ -----
$8.26 - $11.25 70,180 5.9 years $8.69 44,770 $8.50
============== ====== ========= ===== ====== =====
</TABLE>
18
<PAGE> 19
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(12) OTHER OPERATING EXPENSE
The following is a summary of significant components of other operating expense
for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
------- -------
(in thousands)
<S> <C> <C>
Advertising and public relations $329 $306
Data processing 280 274
Professional and regulatory fees 204 154
Credit card processing 107 36
Printing and supplies 90 81
Telephone 59 48
Loan closing 55 47
Other insurance 45 35
Organizational cost 32 32
Deposit insurance 10 3
Other 103 72
------- -------
Total other operating expense $1,314 $1,088
======= =======
</TABLE>
19
<PAGE> 20
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(13) TAXES ON INCOME
The Corporation and the Bank file a consolidated federal income tax return.
Before 1998, no net deferred tax asset had been provided for the future benefit
of the net operating loss carryforward generated since inception, because the
Corporation did not have a history of earnings. A total tax benefit of $774,000
was recognized in 1998 when it became more likely than not that the credits
would be realized in the future. Net operating loss carryfowards available to
reduce future taxable income total approximately $638,000 through years ending
2012. As a result of the carryforward, the Corporation has no current tax
liability. Deferred income taxes are provided for the temporary differences
between the financial reporting bases and the tax bases of the Corporation's
assets and liabilities. The sources of such temporary differences and the
resulting net deferred tax expense are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
-------- --------
(in thousands)
<S> <C> <C>
Net operating loss carryfoward $361 ($358)
Provision for loan losses (195) (209)
Depreciation (51) (76)
Deferred loan fees 18 (52)
Original issue discount 5 52
Other (6) 1
Increase (decrease) in valuation allowance (906) 642
------- -------
Net deferred tax benefit ($774) $ ---
======= =======
</TABLE>
The temporary differences and carryforwards which comprise deferred tax assets
and liabilities at December 31, are as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
(in thousands)
<S> <C> <C>
Deferred tax assets
Net operating loss carryforward $217 $578
Provision for loan losses 430 235
Depreciation 144 93
Deferred loan fees 42 60
Other 31 19
-------- --------
864 985
Valuation allowance for deferred tax assets --- (906)
Deferred tax liabilities
Original issue discount (65) (60)
Unrealized gain on securities available for sale (32) ---
Other (25) (19)
-------- --------
Net deferred tax asset $742 $ ---
======== ========
</TABLE>
20
<PAGE> 21
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(14) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Estimates of fair value of financial instruments have been determined using
available market information and appropriate valuation methods, as outlined
below. Considerable judgment is inherently required to interpret market data to
develop the estimates of fair value. Accordingly, the estimates presented below
do not necessarily represent amounts that the Corporation could realize in a
current market exchange. The following methods and assumptions were used to
estimate the fair value of financial instruments:
CASH AND CASH EQUIVALENTS: For these short term instruments, the carrying amount
is a reasonable estimate of fair value.
SECURITIES: For marketable debt securities, estimated fair value is based on
quoted market prices or dealer quotes.
LOANS: For variable rate loans with no significant change in credit risk since
loan origination, the carrying amount is a reasonable estimate of fair value.
For all other loans, including fixed rate loans, the fair value is estimated
using a discounted cash flow analysis, using interest rates currently offered on
similar loans to borrowers with similar credit ratings and for the same
remaining maturities. The resulting value is reduced by an estimate of losses
inherent in the portfolio.
DEPOSITS: The estimated fair value of demand deposits, certain money market
deposits, and savings deposits is the amount payable on demand at the reporting
date. The fair value of fixed maturity time deposits is estimated using the
rates currently offered for deposits of similar remaining maturities.
SHORT TERM BORROWINGS: The estimated fair value of short term borrowings is the
carrying amount, since they mature the next day.
ACCRUED INTEREST: Accrued interest receivable and payable are short term in
nature; therefore, their carrying amount approximates fair value.
COMMITMENTS: Commitments to extend credit and standby letters of credit are not
recorded on the balance sheet. The fair value of commitments is estimated using
the fees currently charged to enter into similar arrangements, taking into
account the remaining terms of the agreements and the present creditworthiness
of the counterparties. The majority of commitments to extend credit and letters
of credit would result in loans with a market rate of interest if funded. The
fair value of these commitments are the fees that would be charged for similar
arrangements with comparable risk and maturity. The recorded book value of
deferred fee income approximates fair value.
The use of different market assumptions and/or estimation methods may have a
material effect on the estimated fair value amounts.
21
<PAGE> 22
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The recorded carrying amounts and estimated fair values of the Corporation's
financial instruments at December 31, are as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------------------------- ----------------------------
(in thousands)
<S> <C> <C> <C> <C>
Financial Assets
Cash and cash equivalents $25,462 $25,462 $3,529 $3,529
Securities 19,042 19,138 20,507 20,541
Loans, net of allowance 101,074 102,637 52,335 52,395
Accrued interest receivable 655 655 499 499
Financial Liabilities
Demand and savings deposits 34,739 34,739 19,214 19,214
Time deposits 92,413 92,709 49,141 49,282
Short term borrowings 3,491 3,491 1,403 1,403
Accrued interest payable 280 280 191 191
</TABLE>
22
<PAGE> 23
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(15) OFF-BALANCE SHEET RISK
The Corporation is party to financial instruments with off-balance sheet risk in
the normal course of business, to meet financing needs of its customers and to
reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit and financial guarantees. These
instruments involve, to varying degrees, elements of credit and interest rate
risk that are not recognized in the balance sheet.
Commitments to extend credit are agreements to lend to a customer as long as
there are no violations of any conditions established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Fees from issuing these commitments to extend
credit are recognized over the period to maturity. Since a portion of the
commitments is expected to expire without being drawn upon, the total
commitments do not necessarily represent future cash requirements. The
Corporation evaluates each customer's creditworthiness on a case by case basis.
The amount of collateral obtained upon extension of credit is based on
management's credit evaluation of customers. The Corporation also has legally
binding commitments to extend credit in the form of loans that have been
approved but not yet closed. These funds are normally disbursed during the next
quarter, unless the customer fails to comply with any significant terms of the
loan commitment.
Standby letters of credit are issued in connection with agreements between
customers and a third party. If the customer fails to comply with the agreement,
the counterparty may enforce the standby letter of credit as a remedy. Credit
risk arises from the possibility that the customer may not be able to repay the
Corporation after the letter of credit is enforced.
A summary of commitments not recorded on the balance sheet at December 31 is as
follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
(in thousands)
<S> <C> <C>
Unused home equity lines of credit $2,186 $1,121
Unused credit card lines 1,338 1,115
Unused portion of construction lines of credit 3,757 3,291
Unused portion of all other credit lines 13,343 6,679
Loans committed but not yet closed 8,587 5,942
Standby letters of credit 398 383
------- -------
Total outstanding commitments $29,609 $18,531
======= =======
</TABLE>
(16) RESTRICTIONS ON DIVIDENDS
Dividends paid by the Corporation would be provided primarily by dividends from
the Bank. However, certain restrictions exist regarding the ability of the Bank
to transfer funds to the Corporation in the form of cash dividends, loans, or
advances. The approval of the FDIC would be required in order for the Bank to
pay dividends in excess of regulatory limits.
23
<PAGE> 24
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(17) PARENT-ONLY FINANCIAL STATEMENTS
The following condensed financial information presents the financial condition
of the Parent Holding Company (the Parent) only, along with the results of its
operations and its cash flow. The Parent has recorded its investment in the Bank
at cost, less the undistributed loss of the Bank since it was formed. The Parent
recognizes undistributed income of the Bank as noninterest income, and
undistributed losses as noninterest expense. The Parent-only financial
information should be read in conjunction with the Corporation's consolidated
financial statements.
PARENT-ONLY BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
1998 1997
----- ----
Assets (in thousands)
<S> <C> <C>
Cash $3,225 $410
Investment in subsidiary 13,363 7,308
Other assets 168 119
------- -------
Total Assets $16,756 $7,837
======= =======
Liabilities and Stockholders' Equity
Due to subsidiary $7 $ ---
------ -------
Total Liabilities 7 ---
------ -------
Common stock 10,982 6,325
Additional paid-in capital 7,312 4,195
Accumulated deficit (1,545) (2,683)
------ -------
Total Stockholders' Equity 16,749 7,837
------ -------
Total Liabilities and Stockholders' Equity $16,756 $7,837
====== =======
</TABLE>
24
<PAGE> 25
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PARENT-ONLY STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
------ ------
(in thousands)
<S> <C> <C>
Operating Income
Interest income $57 $28
------- --------
Total Operating Income 57 28
------- --------
Operating Expense
Other expense 56 67
------- --------
Total Operating Expense 56 67
Income (Loss) Before Taxes
and Share in Undistributed
Income (Loss) of Subsidiary 1 (39)
Income tax benefit 82 ---
------- --------
Income (Loss) Before Share
in Undistributed Income (Loss) of Subsidiary 83 (39)
Share in undistributed income (loss) of
subsidiary 1,021 (1,893)
------- --------
Net Income (Loss) $1,104 ($1,932)
======= ========
</TABLE>
25
<PAGE> 26
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PARENT-ONLY STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
------ ------
(in thousands)
<S> <C> <C>
Operating Activities
Net income (loss) $1,104 ($1,932)
Adjustments to reconcile net income (loss) to
net cash flow from operating activities
Undistributed (income) loss of subsidiary (1,021) 1,893
Decrease (increase) in other assets (49) 32
Increase in other liabilities 7 ---
------ ------
Net Cash Provided by (Used in) Operating Activities 41 (7)
------ ------
Investing Activities
Capital contribution to subsidiary (5,000) (2,250)
------ ------
Net Cash Used in Investing Activities (5,000) (2,250)
------ ------
Financing Activities
Public stock offering 7,775 ---
Fractional shares paid on stock dividend (1) ---
------ ------
Net Cash Provided by Financing Activities 7,774 ---
------ ------
Increase (Decrease) in Cash 2,815 (2,257)
Cash at the Beginning of the Period 410 2,667
------ ------
Cash at the End of the Period $3,225 $410
====== ======
</TABLE>
26
<PAGE> 27
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following analysis of the Corporation's operating results and financial
condition for the periods ended December 31, 1998, 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.
ASSETS
The Corporation's total assets have increased by 89%, or $70.0 million, to
$148.9 million at December 31, 1998, compared with $78.9 million at December 31,
1997.
During the year ended December 31, 1998, total deposits rose by $58.8 million,
while total loans increased by $49.3 million. Increased liquidity was provided
by a common stock offering during the third quarter of 1998, some of the
proceeds of which is being held as federal funds sold, and is available to
finance continued loan growth.
Total loans increased by $49.3 million during the year ended December 31, 1998,
as the Corporation continued building its loan base. Commercial loans grew by
$34.9 million, while residential mortgage loans increased by $12.6 million.
During the year, the Corporation sold residential mortgage loans (with a book
value of $9.2 million) without recourse to the Federal National Mortgage
Association (FNMA). The net gain from these sales totaled $61,000.
Loans would be 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.
At December 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.
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. 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. The
Corporation has also begun to include an additional "year 2000" component in its
credit risk rating procedure. The results of these evaluations are reflected in
the allowance and periodic provision for credit losses. 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.
27
<PAGE> 28
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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.
LIABILITIES
During the year ended December 31, 1998, total deposits increased by 86%, or
$58.8 million, to $127.2 million. Short term borrowings increased by $2.1
million, to $3.5 million at December 31, 1998.
CAPITAL
The Corporation completed a secondary stock offering in September, 1998. As a
result, 805,000 new shares were issued at a price of $10.50 per share. The net
proceeds to the Corporation (after deducting offering costs) were approximately
$7.8 million.
28
<PAGE> 29
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NET INTEREST INCOME
The Corporation expects net interest income to be its principal source of future
income. During 1998 net interest income was $3.9 million. The Corporation's net
interest margin for the year was 3.57%. Net interest income can be expected to
increase in the future, as funds continue to be moved from short term
investments into higher yielding, longer term loans and securities. This will be
accomplished as the Corporation develops its deposit base and loan portfolio.
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>
Year Ended
December 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 ($48) ($23) ($25)
Securities 626 606 20
Loans 4,455 4,575 (120)
--------- --------- ---------
Total 5,033 5,158 (125)
--------- --------- ---------
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts 155 188 (33)
Savings deposits 39 38 1
Time deposits 2,529 2,545 (16)
Short term borrowings 53 56 (3)
Capitalized lease obligation 2 2 ---
--------- --------- ---------
Total 2,778 2,829 (51)
--------- --------- ---------
Net Interest Income $2,255 $2,329 ($74)
========= ========= =========
</TABLE>
For the year ended December 31, 1998, net interest income increased by 134%, or
$2.3 million over 1997. This was due to a significant rise in the volume of
interest earning assets, especially in loans. 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 for
the year to 3.57%, compared with 3.36% for 1997. The margin improvement was the
result of a higher current percentage of interest bearing assets in loans rather
than federal funds, compared with the prior year. Interest rates on individual
asset and liability categories were generally somewhat lower than in the
previous year.
29
<PAGE> 30
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
AVERAGE BALANCE SHEET
The following table shows the Corporation's consolidated average balances of
assets, liabilities, and equity. The table also details the amount of interest
income or interest expense and the average yield or rate for each category of
interest earning asset or interest bearing liability, and the net interest
margin for the periods indicated. The average balance of securities represents
amortized cost. Interest income on loans includes loan fees.
<TABLE>
<CAPTION>
Year Ended December 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 $9,400 $486 5.17% $9,846 $534 5.43%
Securities 21,341 1,333 6.25 11,646 707 6.08
Loans 79,670 7,163 8.99 28,781 2,708 9.41
--------- -------- ------- ------- ------- ------
Total Earning Assets/
Total Interest Income 110,411 8,982 8.14% 50,273 3,949 7.86%
-------- ------- ------- ------
Cash and due from banks 3,216 2,131
All other assets 1,577 1,998
--------- -------
Total Assets $115,204 $54,402
========= =======
Liabilities and Equity
NOW and money market accounts $12,284 410 3.34% $6,650 255 3.83%
Savings deposits 2,445 76 3.11 1,213 37 3.06
Time deposits 74,838 4,332 5.79 30,866 1,803 5.84
Short term borrowings 1,728 82 4.75 557 29 5.26
Capitalized lease obligation 1,027 139 13.53 1,019 137 13.50
--------- -------- ------- ------- ------- ------
Total Interest Bearing Liabilities/
Total Interest Expense 92,322 5,039 5.46% 40,305 2,261 5.61%
-------- ------- ------- ------
Noninterest bearing
demand deposits 11,914 5,238
All other liabilities 348 155
Stockholders' equity 10,620 8,704
---------- -------
Total Liabilities and Stockholders'
Equity $115,204 $54,402
========= =======
Net Interest Income $3,943 $1,688
======== =======
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.57% 3.36%
======= =======
</TABLE>
30
<PAGE> 31
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
NONINTEREST INCOME
Noninterest income increased by 140%, to $441,000 for 1998. The largest
components of the increase were overdraft income and fees from processing
merchant credit card deposits.
NONINTEREST EXPENSE
Noninterest expense increased over 1997 by 14%, to $3.5 million in 1998. This
was primarily the result of growth of the Corporation, and the accompanying rise
in payroll and other operating expense. Premises and fixed asset expense
declined in 1998, as deprecation fell in the absence of significant new
purchases.
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 risk 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,
loans and securities which mature within one year, and sales of residential
mortgage loans. Additional liquidity is provided by a $2.0 million secured
federal funds borrowing facility, and a $10.0 million secured line of credit
with the FHLB. The Corporation's large deposits 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, 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.
31
<PAGE> 32
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following table shows the maturity and repricing distribution of the
Corporation's interest earning assets and interest bearing liabilities as of
December 31, 1998, 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 the
cumulative interest rate sensitivity gap ratio. For the purposes of the
following table, an asset or liability is considered rate sensitive within a
period when it matures or could be repriced within such period, generally
according to its contractual terms.
<TABLE>
<CAPTION>
After Three After One
Within Months But Year But After
Three Within Within Five
Months One Year Five Years Years Total
------- --------- ---------- ------- -------
(in thousands)
<S> <C> <C> <C> <C> <C>
Interest earning assets
Federal funds sold $19,300 $ --- $ --- $ --- $19,300
Securities, at amortized cost 608 4,615 11,365 2,359 18,947
Loans 30,499 7,044 46,514 18,347 102,404
------- --------- ---------- ------- -------
Total 50,407 11,659 57,879 20,706 $140,651
=======
Interest bearing liabilities
NOW and money market accounts 18,644 --- --- --- $18,644
Savings deposits 2,971 --- --- --- 2,971
Jumbo time deposits 39,834 7,434 600 --- 47,868
Time deposits < $100,000 37,038 6,501 1,006 --- 44,545
Short term borrowings 3,491 --- --- --- 3,491
Capitalized lease obligation 2 9 122 903 1,036
------- --------- ---------- ------- -------
Total 101,980 13,944 1,728 903 $118,555
------- --------- ---------- ------- =======
Rate sensitivity gap ($51,573) (2,285) 56,151 19,803
Cumulative rate sensitivity gap ($53,858) $2,293 $22,096
Rate sensitivity gap ratio 0.49 0.84 33.49 22.93
Cumulative rate sensitivity gap ratio 0.54 1.02 1.19
</TABLE>
The table above indicates the time periods in which interest earning assets and
interest bearing liabilities will mature or may be repriced, generally in
accordance with their contractual terms. However, this table does not
necessarily indicate the impact of general interest rate movements on the
Corporation's net interest yield 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 at different
rate levels.
Based on the table above, the Corporation is considered to be liability
sensitive in the one-year maturity range at December 31, 1998. In a rising rate
environment, the Corporation might not be able to increase prices on interest
earning assets faster than the increase in rates on interest bearing
liabilities.
32
<PAGE> 33
COMMUNITY CENTRAL BANK CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Corporation is also developing a computer model to simulate the effects of
possible interest rate changes. As a general rule, estimated negative exposure
to changing interest rates would be limited to 5% of net interest income. 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 Asset/Liability Committee to
assist in the interest rate risk management process.
YEAR 2000 READINESS DISCLOSURE
The Corporation is in the process of finalizing plans to address 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. This or any
similar error could lead to system malfunction or complete failure. The banking
industry is highly dependent on computer systems due to significant transaction
volumes, and date sensitive calculations for interest accruals on financial
instruments such as loans and deposits.
The Corporation began to prepare for the year 2000 project in 1997. The plan
began with an internal evaluation of equipment, software applications, and
vendor supplied products. Because the Corporation was founded during 1996, much
of its equipment and computer technology is new, and in many cases, 2000 ready
from the outset. The Corporation's main data processing vendor has represented
that it is fully 2000 ready as of the end of 1998, and provides regular updates
on its progress to the Corporation. Additional testing by this vendor is being
done in the first quarter of 1999. The Corporation has a written plan which is
regularly updated and reported to the Board of Directors. Testing on systems and
equipment is substantially complete, and no material concerns have been
encountered. To date, approximately $7,000 has been spent on the year 2000
project. While it is expected that the remainder of the project will involve
additional costs, the total amount is not currently expected to exceed $35,000.
Such costs are expensed as incurred. If any unusual and unforeseen problems
arise during 1999, this amount could be significantly higher. Additionally, if
the Corporation (or its customers or vendors) are unable to remedy any potential
year 2000 problems in a timely manner, there could be a material adverse effect
on the Corporation's business. Based on information that is currently available,
the Corporation does not anticipate that the cost of achieving year 2000
readiness will have a material effect on its capital resources, results of
operations, or liquidity as presented herein.
FUTURE ACCOUNTING CHANGES
The American Institute of Certified Public Accountants has issued Statement of
Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," effective
for fiscal years beginning after December 31, 1998. SOP 98-5 mandates that the
costs of start-up activities and organization costs be expensed as incurred.
Previously, organization costs had been amortized over five years. As a result,
the Corporation will recognize its remaining unamortized organization costs in
the first quarter of 1999. This will result in an after tax charge of
approximately $57,000 If SOP 98-5 had not been issued, these costs would have
been amortized ratably through the third quarter of 2001.
33
<PAGE> 34
COMMUNITY CENTRAL BANK CORPORATION
STOCKHOLDER INFORMATION
SEC FORM 10-KSB
Copies of the Corporation's annual report on Form 10-KSB, as filed with the
Securities and Exchange Commission are available to stockholders without charge,
upon written request. Please mail your request to Peter J. Przybocki, CPA;
Corporate Treasurer, Community Central Bank Corporation, 100 North Main Street,
PO Box 7, Mount Clemens, MI 48046-0007.
STOCK INFORMATION
The common stock of Community Central Bank Corporation is quoted on the OTC
Bulletin Board (OTCBB) under the ticker symbol "CCBD." At December 31, 1998,
there were approximately 300 record holders of the Corporation's common stock.
The following table shows the high and low bid prices by quarter during the past
two years. The quotations reflect bid prices as reported by the OTCBB, and do
not include retail mark-up, mark-down or dealer commission.
<TABLE>
<CAPTION>
1998 Bid Prices
---------------
Cash
Dividends
Quarter High Low Declared
--------------------------------------------------
<S> <C> <C> <C>
Fourth $10.75 $10.00 $ ---
Third 12.00 10.00 ---
Second 15.50 12.00 ---
First 13.41 12.73 ---
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1997 Bid Prices
---------------
Cash
Dividends
Quarter High Low Declared
-------------------------------------------------
<S> <C> <C> <C>
Fourth $12.73 $10.45 $ ---
Third 12.25 (1) 11.50 (1) ---
Second 9.92 9.61 ---
First 9.71 8.68 ---
-------------------------------------------------
</TABLE>
(1) No bid information was available from the OTCBB. This data was provided by a
market maker, and reflects the high and low closing prices for the period
indicated.
Price data has been retroactively adjusted for the 10% stock dividends in 1998
and 1997.
34
<PAGE> 35
COMMUNITY CENTRAL BANK CORPORATION
STOCKHOLDER INFORMATION
MARKET MAKERS
At December 31, 1998, the following firms were registered with the OTCBB as
market makers in Community Central Bank Corporation common stock:
Roney Capital Markets First of Michigan Corporation
One Griswold 100 Renaissance Center, 26th Floor
Detroit, MI 48226 Detroit, MI 48243
Ryan, Beck & Co. Monroe Securities, Inc.
80 Main Street 47 State Street
West Orange, NJ 07052 Rochester, NY 14614
STOCK REGISTRAR AND TRANSFER AGENT
State Street Bank & Trust Company
c/o Boston EquiServe
PO Box 8200
Boston, MA 02266-8200
INDEPENDENT AUDITOR
Plante & Moran, LLP
1450 West Long Lake Road, Suite 100
Troy, MI 48098-6330
LEGAL COUNSEL
Dickinson Wright PLLC
500 Woodward Avenue, Suite 4000
Detroit, MI 48226-3425
INFORMATION
News media representatives and those seeking additional information about the
Corporation should contact Peter J. Przybocki, CPA; Corporate Treasurer, at
(810) 783-4500, or by writing him at 100 North Main Street, PO Box 7, Mount
Clemens, MI 48046-0007.
ANNUAL MEETING
This year's Annual Meeting will be held at 10:00 A.M., on Tuesday, April 20,
1999, at Moravian Hills Country Club, 56 South Groesbeck Highway, Clinton
Township, MI 48036.
35
<PAGE> 36
CCBCM - AR - 1999
36
<PAGE> 1
COMMUNITY CENTRAL BANK CORPORATION
100 NORTH MAIN STREET
PO BOX 7
MOUNT CLEMENS, MI 48046-0007
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 20, 1999
TO THE HOLDERS OF SHARES OF COMMON STOCK OF
COMMUNITY CENTRAL BANK CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
COMMUNITY CENTRAL BANK CORPORATION will be held at the Moravian Hills Country
Club, 56 South Groesbeck Highway, Clinton Township, Michigan, on Tuesday,
April 20, 1999, at 10:00 A.M., for the purpose of considering and voting upon
the following matters.
1. ELECTION OF DIRECTORS. To elect four Class III directors for a three
year terms, as detailed in the accompanying Proxy Statement.
2. APPROVAL OF 1999 STOCK OPTION PLAN FOR DIRECTORS. To approve the
1999 Stock Option Plan for Directors, as detailed in the accompanying Proxy
Statement.
3. OTHER BUSINESS. To transact such other business as may properly be
brought before the meeting, or any adjournment or adjournments thereof.
We urge you to sign and return the enclosed proxy ballot as promptly
as possible, whether or not you plan to attend the meeting in person. We would
appreciate receiving your proxy ballot by Tuesday, April 13, 1999.
By Order of the Board of Directors,
Harold W. Allmacher Lisa Medlock
Chairman of the Board and Corporate Secretary
Chief Executive Officer
Dated: March 18, 1999
<PAGE> 2
COMMUNITY CENTRAL BANK CORPORATION
100 NORTH MAIN STREET
PO BOX 7
MOUNT CLEMENS, MI 48046-0007
March 18, 1999
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of Community Central
Bank Corporation (the Corporation) in connection with the solicitation of
proxies by the Board of Directors of the Corporation, for use at the Annual
Meeting of Stockholders of the Corporation to be held on Tuesday, April 20,
1999, at 10:00 A.M., at the Moravian Hills Country Club, 56 South Groesbeck
Highway, Clinton Township, Michigan, and at any and all adjournments thereof.
The proxy materials were mailed to stockholders on or about March 22, 1999.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its exercise. Unless the proxy is revoked,
the shares represented by it will be voted at the Annual Meeting or any
adjournment thereof.
The entire cost of soliciting proxies will be borne by the Corporation.
Proxies may be solicited by mail or telegraph, or by directors, officers, or
regular employees of the Corporation or its subsidiary, in person or by
telephone. The Corporation will reimburse brokerage houses and other custodians,
nominees and fiduciaries for their out-of-pocket expenses for forwarding
soliciting material to the beneficial owners of common stock of the Corporation.
The Board of Directors, in accordance with the By-Laws of the
Corporation, has fixed the close of business on March 15, 1999, as the record
date for determining the stockholders entitled to notice of and to vote at the
Annual Meeting and at any and all adjournments thereof.
At the close of business on the record date, the outstanding number of
voting securities of the Corporation was 2,196,455 shares of common stock, each
of which is entitled to one vote. A majority of the outstanding shares will
constitute a quorum at the meeting. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business.
ELECTION OF DIRECTORS
The Corporation's Certificate of Incorporation and By-Laws provide that
the number of directors, as determined from time to time by the Board of
Directors, shall be no less than six and no more than 15. The Board of Directors
has presently fixed the number of directors at 11. The Certificate of
Incorporation and By-Laws further provide that the directors shall be divided
into three classes, Class I, Class II and Class III, with each class serving a
staggered three year term and with the number of directors in each class being
as nearly equal as possible.
2
<PAGE> 3
The Board of Directors has nominated Harold W. Allmacher, Gebran S.
Anton, Joseph F. Jeannette, and Carole L. Schwartz, as Class III directors for
three year terms expiring at the 2002 Annual Meeting, and upon election and
qualification of their successors. Each of the nominees is presently a Class III
director of the Corporation whose term expires at the April 20, 1999, Annual
Meeting of Stockholders. The other members of the Board, who are Class I and
Class II directors, will continue in office in accordance with their previous
elections until the expiration of their terms at the 2000 or 2001 Annual
Meeting, as the case may be.
It is the intention of the persons named in the enclosed proxy to vote
such proxy for the election of the four nominees listed herein. The proposed
nominees for election as directors are willing to be elected and serve; but in
the event that any nominee at the time of election is unable to serve or is
otherwise unavailable for election, the Board of Directors may select a
substitute nominee, and in that event the persons named in the enclosed proxy
intend to vote such proxy for the person so selected. If a substitute nominee is
not selected, such proxy will be voted for the election of the remaining
nominees. The affirmative vote of a plurality of the votes cast is required for
the nominees to be elected. Votes withheld and broker non-votes are not counted
toward a nominee's total.
3
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the beneficial
ownership of the Corporation's common stock as of February 1, 1999, by each of
the directors (and nominees for election) of the Corporation whose terms of
office will continue after the Annual Meeting, each of the executive officers
named in the summary compensation table, and all directors and executive
officers of the Corporation as a group.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Amount Percent of Class
Beneficially Beneficially Owned
Name of Beneficial Owner Owned (1) (6)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harold W. Allmacher............................................ 67,941 (2) 3.09%
Gebran S. Anton ............................................... 47,405 (2) 2.15%
Joseph Catenacci............................................... 52,480 (2) 2.39%
Raymond M. Contesti............................................ 27,840 (2) 1.27%
Salvatore Cottone.............................................. 43,405 (2) 1.97%
Celestina Giles................................................ 19,758 (2) 0.90%
Bobby L. Hill.................................................. 17,130 (2) 0.78%
Joseph F. Jeannette............................................ 62,455 (2) 2.84%
Richard J. Miller.............................................. 17,230 (2) 0.78%
Dean S. Petitpren.............................................. 70,259 (2) 3.19%
Carole L. Schwartz............................................. 38,705 (2) 1.76%
Andrew Tassopoulos............................................. 9,608 (3) 0.44%
Anthony R. Tersigni............................................ 8,345 (4) 0.38%
All directors and executive officers of the
Corporation as a group (14 persons)......................... 484,555 (5) 21.62%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Some or all of the common stock listed may be held jointly with, or for the
benefit of, spouses or relatives of, or various trusts established by, the
person indicated.
(2) Includes options to purchase 3,630 shares exercisable within 60 days of
February 1, 1999.
(3) Includes options to purchase 2,420 shares exercisable within 60 days of
February 1, 1999.
(4) Includes options to purchase 1,210 shares exercisable within 60 days of
February 1, 1999.
(5) Includes options to purchase 44,770 shares exercisable within 60 days of
February 1, 1999.
(6) The percentages shown are based on 2,196,455 shares of the Corporation's
common stock outstanding, plus the number of shares that the named person or
group has the right to acquire within 60 days.
The table below shows the beneficial ownership of the Corporation's
common stock by each person who was known by the Corporation to own beneficially
more than 5% of the Corporation's common stock as of February 1, 1999. The
information is based on filings that have been made by such persons with the
Securities and Exchange Commission and other information that has been provided
to the Corporation by such person. To the best of the Corporation's knowledge,
no other person owns more than 5% of the Corporation's outstanding common stock.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Name and Address Shares Percent of
of Beneficial Owner Beneficially Common
Owned Stock
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Estate of Willard G. Pierce 242,000 11.02%
820 West Clinton Street
Hastings, MI 49058
</TABLE>
4
<PAGE> 5
INFORMATION ABOUT DIRECTORS AND NOMINEES AS DIRECTORS
The following table shows certain information about the directors of
the Corporation. The directors listed are those whose term of office will
continue after the Annual Meeting, as well as those persons who have been
nominated for election as a director. All of the directors listed are also
directors of the Corporation's subsidiary, Community Central Bank (the Bank).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Has Served Year When Term
as a Director or Proposed Term
Name, Age, Principal Occupation Since of Office Expires
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Harold W. Allmacher, 59 ............................................. 1996 2002
Chairman of the Board and Chief Executive Officer
of the Corporation and the Bank
Gebran S. Anton, 66.................................................. 1996 2002
Co-owner; Anton, Zorn & Associates (Commercial & Industrial
Real Estate Brokerage)
President; Gebran Anton Development Co. (Real Estate Development)
Joseph Catenacci, 63................................................. 1996 2000
Executive Vice President; John Carlo, Inc. (Highway and Heavy
Construction)
Raymond M. Contesti, 63.............................................. 1996 2000
Superintendent; Clintondale Community Schools
Salvatore Cottone, 58................................................ 1996 2001
President; Resco, Inc. (Real Estate Development)
Celestina Giles, 51.................................................. 1996 2000
Officer of the Bank
Bobby L. Hill, 67.................................................... 1996 2001
County Commissioner; Macomb County Board of Commissioners
Joseph F. Jeannette, 54............................................. 1996 2002
Assistant Director; Utica Community Schools
Dean S. Petitpren, 56............................................... 1996 2001
President; Petitpren, Inc. (Beer Distribution)
Carole L. Schwartz, 61.............................................. 1996 2002
Commissioner; Zoning Board of Appeals
Anthony R. Tersigni, 49............................................. 1998 2000
President and Chief Executive Officer; St. John Health System
</TABLE>
In addition Harold W. Allmacher and Celestina Giles held similar
positions with Old Kent Bank - Macomb (formerly First National Bank in Macomb
County) for substantially all of the two year period prior to the inception of
the Corporation and the Bank.
There are no family relationships among any of the Corporation's
directors or executive officers.
5
<PAGE> 6
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Corporation has standing Audit and Compensation Committees of the
Board of Directors.
The members of the Audit Committee consist of Salvatore Cottone
(Chairman), Bobby L. Hill, Joseph F. Jeannette, and Carole L. Schwartz. The
Audit Committee's responsibilities include recommending to the Board of
Directors the selection of an independent auditing firm, approving the scope of
audit and non-audit services performed by the independent accountant, reviewing
the results of their audit, reviewing the Corporation's internal auditing
activities and financial statements, and reviewing the Corporation's system of
accounting controls and recordkeeping.
The members of the Compensation Committee consist of Raymond M.
Contesti (Chairman), Joseph F. Jeannette and Carole L. Schwartz. The
Compensation Committee's responsibilities include considering and recommending
to the Board of Directors any changes in compensation and benefits for officers
of the Corporation. At present, all officers of the Corporation are also
officers of the Bank, and although they receive compensation from the Bank in
their capacity as officers of the Bank, they presently receive no separate cash
compensation from the Corporation. The Compensation Committee is also
responsible for awarding stock options to executive management of the
Corporation and the Bank.
The Board of Directors is responsible for reviewing and making
recommendations as to the size and composition of the Board of Directors,
nominating candidates for election as directors at the annual meetings, and
filling any vacancies that may occur between annual meetings. The Board of
Directors will consider as potential nominees persons recommended by
stockholders. Recommendations should be submitted to the Board of Directors in
care of Harold W. Allmacher, Chairman of the Board and Chief Executive Officer
(CEO) of the Corporation. Each recommendation should include a personal
biography of the suggested nominee, an indication of the background or
experience that qualifies such person for consideration, and a statement that
such person has agreed to serve if nominated and elected. Stockholders who
themselves wish to effectively nominate a person for election to the Board of
Directors, as contrasted with recommending a potential nominee to the Board for
its consideration, are required to comply with the advance notice and other
requirements detailed in the Corporation's Articles of Incorporation.
During the year ended December 31, 1998, there were a total of twelve
meetings of the Board of Directors of the Corporation. Each director attended at
least 75% of the total number of meetings of the Board of Directors held during
the period that the director served. There was one meeting of the Audit
Committee and two meetings of the Compensation Committee during 1998.
During 1998, no compensation was paid to any directors of the
Corporation for their services in such capacities. For 1999, each director will
be paid $500 per month.
6
<PAGE> 7
Members of the Corporation's Board of Directors who are not employees
of the Corporation or any of its affiliates (nonemployee directors) each
received an option to purchase 4,840 shares of common stock of the Corporation
at a price of $8.26 per share, pursuant to the Corporation's 1996 Stock Option
Plan for Nonemployee Directors, which was approved on June 1, 1996. Under this
Plan, each option was immediately exercisable for 1,210 shares when granted.
Thereafter, as of the date of each annual meeting, each option became
exercisable for an additional 1,210 shares until the 1999 Annual Meeting, at
which time it becomes exercisable in full. Each option expires not later than
seven years after its date of grant. Nonemployee directors who were appointed or
elected after June 1, 1996, and at or before the 1999 Annual Meeting, received
an option for a lesser number of shares, the number of which depended on which
annual meeting was the first annual meeting occurring concurrently with, or
after he or she became a nonemployee director.
On March 2, 1999, the Board of Directors of the Corporation approved
the 1999 Stock Option Plan for Directors, subject to the approval of the
stockholders of the Corporation. This Plan is described under the section titled
"Proposal to Approve 1999 Stock Option Plan for Directors" in this Proxy
Statement. If the Plan is approved at the Annual Meeting, each of the
nonemployee directors and the Chairman of the Board of the Corporation will be
granted an option under the Plan for 4,000 shares of common stock of the
Corporation, becoming exercisable over four years.
REPORT OF THE COMPENSATION COMMITTEE
The Securities and Exchange Commission (SEC) has set rules for the
presentation of certain statistical information regarding salaries and certain
benefits paid to each corporation's chief executive officer, and the four most
highly compensated individuals earning over $100,000. This information, along
with the Report of the Compensation Committee is presented below. The
Corporation's and the Board's policies and general practices pertaining to
executive officer compensation have been in practice since inception. All
employees of the Corporation are also employees of the Bank. All employees
salaries as such are paid by the Bank.
The Bank's Compensation Committee, which is made up of the same
directors as the Corporation's Compensation Committee, is responsible for
setting the salary levels of all officers of the Bank, including its executive
officers. Following review and approval by the Bank's Compensation Committee,
all issues pertaining to officer and executive salaries are submitted to the
full Board of Directors of the Bank for approval.
In setting the salary level of and awarding bonuses to the named
executives in the Summary Compensation Table and other executive officers, the
compensation amounts are set based upon the Compensation Committee's perception
of the performance of such persons. The Compensation Committee looks at many
factors which may include, but are not limited to:
- Overall performance of the Bank and Corporation compared to
strategic goals o Performance of the Bank and Corporation compared
to peers
- Length of service to the Bank and Corporation
- Comparisons of salary levels to similar executives within the
industry
- The performance of the Corporation's common stock
- The executive's leadership of the Bank and its employees
- The executive's stature in the community and his or her value as a
representative of the Bank and the Corporation
7
<PAGE> 8
Under the Corporation's 1996 Employee Stock Option Plan, stock options
are granted to the Bank's senior management and other key employees. The
Compensation Committee of the Corporation is responsible for awarding the stock
options. These options are awarded to give senior management and other key
employees an additional interest in the success, profitability, and future
growth of the Bank and the Corporation. In making grants, the Compensation
Committee may consider the position and responsibilities of the employee, the
value of his or her services and accomplishments, and such other factors as they
deem relevant. Only a portion of the options are exercisable when granted. The
remainder become exercisable on specified annual dates in the future. The
exercise price of each option equals the market price of the Corporation's
common stock on the grant date. The Plan permits a maximum option term of 10
years.
SUMMARY COMPENSATION TABLE
The following table details the compensation awarded, earned, or paid
to the named executive officers for the period from April 26, 1996 (inception)
to December 31, 1996, and the two years ended December 31, 1998:
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Name and
Principal All Other
Position Year Salary Bonus Options Compensation (1)
-------- ---- ----- ----- ------------ -------------
<S> <C> <C> <C> <C> <C>
Harold W. Allmacher, 1998 $90,600 $16,400 None None
Chairman of the Board and CEO 1997 $67,500 None None None
1996 $31,200 None 6,050 None
Andrew Tassopoulos, 1998 $90,600 $16,400 None $2,700
President (2) 1997 $73,100 None 6,050 $2,200
1996 $28,600 None None $900
Richard J. Miller (2) 1998 $90,600 $16,400 None $2,500
1997 $75,700 $10,000 None $2,600
1996 $31,200 None 6,050 $900
</TABLE>
(1) Includes employer matching contributions for the Bank's 401(k) plan.
(2) Mr. Miller served as a director, and as President and Chief Operating
Officer of the Corporation and the Bank from their inception through his
resignation, which became effective February 19, 1999. Mr. Tassopoulos was
named President of the Corporation and the Bank on March 2, 1999.
8
<PAGE> 9
OPTIONS GRANTED IN 1998
The following table provides information on options granted to the
named executive officers during the year ended December 31, 1998:
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted in 1998 Per Share Date
- ----------------- --------- --------- ---------- --------
<S> <C> <C> <C> <C>
Harold W. Allmacher None N/A N/A N/A
Andrew Tassopoulos None N/A N/A N/A
Richard J. Miller None N/A N/A N/A
</TABLE>
AGGREGATED STOCK OPTION EXERCISES IN 1998 AND YEAR END OPTION VALUES
The following table provides information on the exercise of stock
options during the year ended December 31, 1998, by the named executive
officers, and the value of unexercised options at December 31, 1998:
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised "In-the-Money"
Shares Options at Options at
Acquired on Value 12-31-1998 12-31-1998 (1)
Name Exercise Realized Exercisable / Unexercisable Exercisable / Unexercisable
- ----------------- --------- --------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Harold W. Allmacher None N/A 3,630 / 2,420 $9,492 / $6,328
Andrew Tassopoulos None N/A 2,420 / 3,630 $2,311 / $3,467
Richard J. Miller None N/A 3,630 / 2,420 $9,492 / $6,328
</TABLE>
(1) Values are calculated by subtracting the exercise price of the option from
the fair market value of the underlying common stock. For purposes of this
table, fair market value is deemed to be $10.875 per share, the average of
the closing low bid and high asked prices reported by the OTC Bulletin Board
as of December 31, 1998.
9
<PAGE> 10
CERTAIN TRANSACTIONS
The Bank has had, and expects to have in the future, loan and other
financial transactions in the ordinary course of business with the Corporation's
directors, executive officers, and principal stockholders and their associates.
All such transactions (i) were made in the ordinary course of business, (ii)
were made on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the time for comparable transactions
with other persons, and (iii) in the opinion of management, did not involve more
than the normal risk of collectibility, or present other unfavourable features.
The main office building of the Corporation and the Bank is being
leased from T.A.P. Properties, LLC, a company owned by two directors; Gebran S.
Anton and Dean S. Petitpren. The lease commenced in 1996 and has a term of 15
years. The Bank also leases an office suite in a building that is owned by Mr.
Anton. The lease has a term of five years, and commenced in 1997. The terms of
these leases and rent payments thereunder are similar to those prevailing at the
time they were signed, for comparable leases in the local market.
10
<PAGE> 11
PROPOSAL TO APPROVE
1999 STOCK OPTION PLAN FOR DIRECTORS
In order to increase the proprietary interest of directors of the
Corporation, and to enhance the Corporation's ability to retain and attract
experienced and knowledgeable directors, the Board of Directors of the
Corporation, on March 2, 1999, approved the 1999 Stock Option Plan for Directors
(the Director Plan), subject to the approval of the stockholders.
SUMMARY OF PLAN
The following description of the Director Plan is intended to be a
summary of its principal features.
GRANT OF OPTIONS AND ADMINISTRATION. On April 21, 1999, the Corporation
will automatically grant each "Participating Director" an option to purchase
4,000 shares of common stock of the Corporation at the fair market value of the
shares on that date. A Participating Director is defined as each person who is
then a director of the Corporation and is either (i) not an employee of the
Corporation or any affiliate or (ii) the Chairman of the Board of the
Corporation whether or not an employee. Participating Directors who are
appointed or elected after April 21, 1999, will receive an option for a number
of shares, the number of which will depend on which annual meeting is the first
annual meeting occurring concurrently with, or after he or she first becomes a
Participating Director, as shown in the following table:
<TABLE>
<CAPTION>
The Director's
If the Director's First Option will be for the
Annual Meeting is the: Following Number of Shares:
---------------------- ---------------------------
<S> <C>
2000 Annual Meeting 4,000
2001 Annual Meeting 3,000
2002 Annual Meeting 2,000
2003 Annual Meeting 1,000
</TABLE>
The Director Plan will be administered by the Board of Directors of the
Corporation.
SHARES. The total number of shares of the Corporation's common stock
which may be issued under the Director Plan will not exceed 60,000 shares
(subject to adjustment for certain events as described below). The shares will
be authorized but unissued shares.
OPTION AGREEMENT. Each option granted under the Director Plan will be
evidenced by an agreement in such form as the Board of Directors shall from time
to time approve. Such agreement must comply with, and be subject to, certain
conditions detailed in the Director Plan.
11
<PAGE> 12
SCHEDULE FOR BECOMING FULLY EXERCISABLE. Each Option granted under the
Director Plan on or before the date of the 2000 Annual Meeting shall be
exercisable for 1,000 shares of Stock as of the date of the 2000 Annual Meeting.
Each such Option shall become exercisable for an additional 1,000 shares of
stock as of the date of each successive annual meeting, until it is exercisable
in full. Each Option granted under the Director Plan after the date of the 2000
Annual Meeting shall be immediately exercisable for 1,000 shares of stock,
unless it is granted within 60 days prior to an annual meeting, and shall be
exercisable for an additional 1,000 shares of Stock as of the date of each
successive Annual Meeting, until it is exercisable in full. In the event of a
"change in control" of the Corporation, as defined in the Director Plan, each
outstanding option shall become immediately exercisable in full, immediately
prior to such change in control.
OPTION PRICE. The exercise price for options granted under the Director
Plan will be the fair market value per share on the date the option is granted.
For purposes of the Director Plan, fair market value per share means the average
between the closing high bid and low asked prices of the common stock on the OTC
Bulletin Board, or if the common stock has become listed on The NASDAQ Stock
Market (NASDAQ), then on NASDAQ instead. If the common stock is not quoted on
either the OTC Bulletin Board or NASDAQ, a value determined by any fair and
reasonable means prescribed by the Board of Directors of the Corporation will be
used. As of March 10, 1999, the fair market value of the common stock of the
Corporation, based on the average of the closing high bid and low asked prices
on the OTC Bulletin Board was $10.125 per share.
EXERCISE AND TRANSFERABILITY. To the extent exercisable, each option
may be exercised from time to time, in full or in part, in minimum installment
of 500 shares, during the term of the option. Payment in full of the option
exercise price for the shares being purchased is required at the time of
exercise. Payment of the option exercise price may be made in cash or shares of
common stock already owned by the person exercising the option, valued at the
fair market value per share of common stock on the date of exercise, or a
combination of cash and common stock. The options are not transferable except by
will, the laws of descent and distribution, or pursuant to a qualified domestic
relations order.
DURATION OF OPTIONS. The unexercised portion of each option
automatically expires, and is no longer exercisable, on the earliest of the
following: (i) seven years after the option is granted, (ii) three months after
the person who was granted the option ceases to be a director, other than due to
permanent disability, death, or for cause, (iii) one year following the death or
permanent disability of the director, and (iv) termination of the director's
service as such, for cause.
ADJUSTMENTS. In the event that there is any change in the number of
shares of common stock through the declaration of stock dividends or stock
splits, or through recapitalization, merger, consolidation, combination of
shares, or otherwise, the Board of Directors will make such adjustments, if any,
as it may deem appropriate, in the number of shares of common stock subject to
outstanding options, the option price, and any other terms it deems appropriate.
TERMINATION OF PLAN AND AMENDMENT. The Board of Directors of the
Corporation may, from time to time, terminate or suspend the Director Plan, in
whole or in part, or amend the Director Plan, without approval of the
stockholders of the Corporation. No such action shall be taken by the Board that
(i) materially increases the benefits accruing to the participants, materially
increases the number of securities that may be issued (except adjustments
permitted under the paragraph above), or materially modifies the eligibility
requirements for participation, (ii) causes the Director Plan not to satisfy the
applicable requirements of Rule 16b-3 under the Securities Exchange Act of 1934,
or (iii) impairs the rights of any option holder granted under the Director
Plan, without such option holder's consent.
12
<PAGE> 13
FEDERAL INCOME TAX CONSEQUENCES. Under current federal income tax law,
options granted under the Director Plan will be non-qualified stock options
which do not qualify as incentive stock options under Section 422 of the
Internal Revenue Code. Granting a non-qualified option has no federal tax
consequences for the optionee or the Corporation on the grant date. Upon the
exercise of a non-qualified option, the optionee is deemed to realize taxable
income to the extent that the fair market value of the shares of common stock
exceeds the option price. The Corporation is entitled to a tax deduction for
such amounts at the date of exercise. If any stock received upon the exercise of
a non-qualified option is later sold, any excess of the sale price over the fair
market value of the stock at the date of exercise is taxable to the optionee.
REQUIRED VOTE
The affirmative vote of a majority of the common stock of the
Corporation present in person or by proxy at the meeting and voting on the
proposal will be necessary to approve the Plan. For purposes of counting votes
on this proposal, abstentions and broker non-votes will not be counted as shares
voted on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE 1999 STOCK OPTION PLAN FOR DIRECTORS.
SELECTION OF INDEPENDENT AUDITOR
The Board of Directors has selected Plante & Moran, LLP as the
Corporation's principal independent auditor for the year ending December 31,
1999. Representatives of Plante & Moran plan to attend the Annual Meeting of
Stockholders, will have the opportunity to make a statement if they desire to do
so, and will respond to appropriate questions by stockholders.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
A proposal submitted by a stockholder for the 2000 Annual Meeting of
Stockholders should be sent to Lisa Medlock; Corporate Secretary, at 100 North
Main Street, PO Box 7, Mount Clemens, MI 48046-0007. Proposals must be received
by November 22, 1999, in order to be eligible to be included in the
Corporation's Proxy Statement for that meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters to be brought
before the Annual Meeting. If other matters are presented upon which a vote may
properly be taken, it is the intention of the persons named in the proxy to vote
the proxies in accordance with their best judgment.
13
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE ISSUER
<TABLE>
<CAPTION>
Name of State or Jurisdiction of
Subsidiary Incorporation or Organization Description
- ---------- ----------------------------- -----------
<S> <C> <C>
Community Central Bank State of Michigan A State Bank
</TABLE>
14
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITOR
We consent to the incorporation by reference in this Annual Report on Form
10-KSB of our audit report dated January 26, 1999, on the financial statements
of Community Central Bank Corporation for the period ended December 31, 1998,
included in the 1998 Stockholder Report of Community Central Bank Corporation.
/S/ PLANTE & MORAN, LLP
Troy, Michigan
March 19, 1999
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from Community Central Bank
Corporation's Consolidated Balance Sheet as of December 31, 1998, and the
Consolidated Statement of Operations for the year ended December 31, 1998, and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,150
<INT-BEARING-DEPOSITS> 2,012
<FED-FUNDS-SOLD> 19,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,766
<INVESTMENTS-CARRYING> 9,276
<INVESTMENTS-MARKET> 9,372
<LOANS> 102,404
<ALLOWANCE> 1,330
<TOTAL-ASSETS> 148,935
<DEPOSITS> 127,152
<SHORT-TERM> 3,491
<LIABILITIES-OTHER> 507
<LONG-TERM> 1,036
0
0
<COMMON> 10,982
<OTHER-SE> 5,767
<TOTAL-LIABILITIES-AND-EQUITY> 148,935
<INTEREST-LOAN> 7,163
<INTEREST-INVEST> 1,333
<INTEREST-OTHER> 486
<INTEREST-TOTAL> 8,982
<INTEREST-DEPOSIT> 4,818
<INTEREST-EXPENSE> 5,039
<INTEREST-INCOME-NET> 3,943
<LOAN-LOSSES> 530
<SECURITIES-GAINS> 22
<EXPENSE-OTHER> 3,524
<INCOME-PRETAX> 330
<INCOME-PRE-EXTRAORDINARY> 330
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,104
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
<YIELD-ACTUAL> 3.57
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 800
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,330
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,330
</TABLE>
