<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
-------------
Commission File No. 333-04113
COMMUNITY CENTRAL BANK CORPORATION
(Exact name of small business issuer as specified in its charter)
Michigan 38-3291744
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
100 North Main Street, PO Box 7, Mount Clemens, MI 48046-0007
-------------------------------------------------------------
(Address of principal executive offices)
(810) 783-4500
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at July 27, 1999
----------------------------- ----------------------------
Common Stock, $5 stated value 2,420,024 Shares
Transitional Small Business Disclosure Format:
Yes No X
----- -----
<PAGE> 2
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART I
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Community Central Bank Corporation (the Corporation)
include the consolidation of its subsidiary; Community Central Bank (the Bank).
Following are the Corporation's Consolidated Balance Sheet as of June 30, 1999
and 1998, and December 31, 1998, Consolidated Statements of Operations and
Comprehensive Income for the three and six month periods ended June 30, 1999 and
1998, and Consolidated Statement of Cash Flow for the six months ended June 30,
1999 and 1998. These unaudited financial statements are for interim periods, and
do not include all disclosures normally provided with annual financial
statements. The interim statements should be read in conjunction with the
financial statements contained in the Corporation's Annual Report on Form 10-KSB
for the year ended December 31, 1998.
In the opinion of management, the interim statements referred to above contain
all adjustments (consisting of normal, recurring items) necessary for a fair
presentation of the financial statements. The results of operations for interim
periods may not necessarily be indicative of the results to be expected for the
full year.
Certain reclassifications have been made to the 1998 financial statements to
conform with the classifications used in 1999.
2
<PAGE> 3
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
Assets 1999 1998 1998
- ------------------------------------ ---------- ------------ ----------
(in thousands, except fair value data)
<S> <C> <C> <C>
Cash and due from banks $ 5,326 $ 6,162 $ 2,972
Federal funds sold 22,500 19,300 7,050
- ------------------------------------ --------- --------- ---------
Cash and Cash Equivalents 27,826 25,462 10,022
- ------------------------------------ --------- --------- ---------
Securities available for sale, at fair value 10,432 9,766 11,944
Investment securities, at amortized cost 5,356 9,276 11,780
(Fair value of $5.4 million at 6-30-1999,
$9.4 million at 12-31-1998, and
$11.8 million at 6-30-1998)
Loans
Residential mortgage loans 31,254 33,867 33,423
Commercial loans 80,378 64,098 43,362
Installment loans 5,035 4,439 3,861
- ------------------------------------ --------- --------- ---------
Total Loans 116,667 102,404 80,646
Allowance for credit losses (1,414) (1,330) (1,045)
- ------------------------------------ --------- --------- ---------
Net Loans 115,253 101,074 79,601
- ------------------------------------ --------- --------- ---------
Net property and equipment 1,760 1,739 1,654
Accrued interest receivable 714 655 639
Other assets 645 963 215
- ------------------------------------ --------- --------- ---------
Total Assets $ 161,986 $ 148,935 $ 115,855
==================================== ========= ========= =========
</TABLE>
(continued)
3
<PAGE> 4
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
Liabilities and Stockholders' Equity 1999 1998 1998
- ---------------------------------- --------- ------------ ---------
(in thousands, except share data)
<S> <C> <C> <C>
Deposits
Noninterest bearing demand deposits $ 15,301 $ 13,124 $ 12,996
NOW and money market accounts 24,168 18,644 10,726
Savings deposits 5,222 2,971 2,667
Time deposits 95,750 92,413 77,911
- ----------------------------------------------------- --------- --------- ---------
Total deposits 140,441 127,152 104,300
- ----------------------------------------------------- --------- --------- ---------
Short term borrowings 2,839 3,491 2,330
Accrued interest payable 380 280 259
Other liabilities 144 227 136
Long term debt 1,527 1,036 1,037
- ----------------------------------------------------- --------- --------- ---------
Total Liabilities 145,331 132,186 108,062
- ----------------------------------------------------- --------- --------- ---------
Stockholders' Equity
Common stock ($5 stated value; 9,000,000 shares authorized; 2,420,024 shares
issued and outstanding at 6-30-1999; 2,196,455 shares outstanding at
12-31-1998 and 1,391,455 shares
outstanding at 6-30-1998) 12,100 10,982 6,957
Additional paid-in capital 6,226 7,312 3,562
Accumulated deficit (1,606) (1,608) (2,748)
Accumulated other comprehensive income (65) 63 22
- ----------------------------------------------------- --------- --------- ---------
Total Stockholders' Equity 16,655 16,749 7,793
- ----------------------------------------------------- --------- --------- ---------
Total Liabilities and Stockholders' Equity $ 161,986 $ 148,935 $ 115,855
===================================================== ========= ========= =========
</TABLE>
4
<PAGE> 5
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest Income
Loans (including fees) $ 2,458 $ 1,725 $ 4,719 $ 3,139
Securities 266 339 532 649
Federal funds sold 233 134 440 214
------- ------- ------- -------
Total Interest Income 2,957 2,198 5,691 4,002
------- ------- ------- -------
Interest Expense
Deposits 1,420 1,228 2,774 2,212
Short term borrowings 32 18 54 33
Long term debt 34 34 69 69
------- ------- ------- -------
Total Interest Expense 1,486 1,280 2,897 2,314
------- ------- ------- -------
Net Interest Income 1,471 918 2,794 1,688
Provision for credit losses 110 85 180 245
------- ------- ------- -------
Net Interest Income after Provision 1,361 833 2,614 1,443
------- ------- ------- -------
Noninterest Income
Deposit service charges 66 43 123 71
Net realized security gain -- -- 11 6
Other income 76 95 134 131
------- ------- ------- -------
Total Noninterest Income 142 138 268 208
------- ------- ------- -------
Noninterest Expense
Salaries, benefits, and payroll taxes 426 433 861 825
Premises and fixed asset expense 152 131 281 271
Other operating expense 465 300 876 591
------- ------- ------- -------
Total Noninterest Expense 1,043 864 2,018 1,687
------- ------- ------- -------
Income (Loss) Before Taxes and Cumulative
Effect of Change in Accounting Principle 460 107 864 (36)
Provision for income taxes 166 -- 308 --
------- ------- ------- -------
Income Before Cumulative Effect of Change
in Accounting Principle 294 107 556 (36)
Cumulative effect of change in accounting
principle -- -- (57) --
------- ------- ------- -------
Net Income (Loss) $ 294 $ 107 $ 499 ($ 36)
======= ======= ======= =======
</TABLE>
(continued)
5
<PAGE> 6
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------ ------ ------ ------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Per share data:
Basic earnings (loss) before cumulative effect of
change in accounting principle $ 0.12 $ 0.07 $ 0.23 ($0.02)
Basic earnings (loss) $ 0.12 $ 0.07 $ 0.21 ($0.02)
Diluted earnings (loss) before cumulative effect of
change in accounting principle $ 0.12 $ 0.07 $ 0.23 ($0.02)
Diluted earnings (loss) $ 0.12 $ 0.07 $ 0.21 ($0.02)
====== ====== ====== ======
Cash Dividends $ -- $ -- $ -- $ --
====== ====== ====== ======
</TABLE>
6
<PAGE> 7
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
----- ------ ----- -----
(in thousands)
<S> <C> <C> <C> <C>
Net Income (Loss) as Reported $ 294 $ 107 $ 499 ($36)
Other Comprehensive Income, net of tax
Change in unrealized gain on securities
available for sale (93) (6) (121) (7)
Reclassification of previously reported gain
included in current year income -- -- (7) (3)
----- ------ ----- -----
Comprehensive Income (Loss) $ 201 $ 101 $ 371 ($46)
===== ====== ===== =====
</TABLE>
7
<PAGE> 8
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Operating Activities
Net income (loss) $ 499 ($36)
Adjustments to reconcile net income (loss) to net cash flow
from operating activities:
Net amortization (accretion) of security premium or discount 9 (9)
Net realized security gain (11) (6)
Provision for credit losses 180 245
Net gain on sales of property and equipment -- (5)
Depreciation expense 156 183
Deferred income tax 277 --
Increase in accrued interest receivable (59) (140)
Decrease in other assets 75 6
Increase in accrued interest payable 100 68
Increase in other liabilities 18 110
-------- --------
Net Cash Provided by Operating Activities 1,244 416
Investing Activities
Maturities, calls, and prepayments of securities available for sale 2,132 1,087
Purchases of securities available for sale (3,006) (7,135)
Maturities, calls, and prepayments of investment securities 4,101 3,132
Purchases of investment securities (165) (282)
Net increase in loans (14,359) (27,511)
Sales of property and equipment -- 15
Purchases of property and equipment (177) (33)
-------- --------
Net Cash Used in Investing Activities (11,474) (30,727)
Financing Activities
Net increase in demand and savings deposits 9,952 7,175
Net increase in time deposits 3,337 28,770
Net increase (decrease) in short term borrowings (652) 927
Repayment of long term debt (75) (67)
Fractional shares paid on stock dividend (1) (1)
Stock option exercise 33 --
-------- --------
Net Cash Provided by Financing Activities 12,594 36,804
-------- --------
Increase in Cash and Cash Equivalents 2,364 6,493
Cash and Cash Equivalents at the Beginning of the Year 25,462 3,529
-------- --------
Cash and Cash Equivalents at the End of the Period $ 27,826 $ 10,022
======== ========
Supplemental Disclosure of Cash Flow Information:
Interest paid $ 2,728 $ 2,177
Federal taxes paid -- --
Supplemental Disclosure of Non-Cash Information:
ESOP loan guarantee recognized $ 500 --
</TABLE>
8
<PAGE> 9
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following analysis of the Corporation's financial condition and operating
results for the periods ended June 30, 1999 and 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. Any such 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 9%, or $13.1 million, to $162.0
million at June 30, 1999, compared with $148.9 million at December 31, 1998.
Assets have grown by $46.1 million since June 30, 1998.
During the six months ended June 30, 1999, total deposits rose by $13.3 million,
while total loans increased by $14.3 million.
The following table shows the amortized cost and estimated fair value of the
Corporation's security portfolio as of the dates indicated. On the balance
sheet, investment securities (those which the Corporation has the ability and
intent to hold to maturity) are stated at cost, adjusted for amortization of
premium and accretion of discount. Securities available for sale are shown on
the balance sheet at estimated fair value.
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998 June 30, 1998
---------------- ---------------- ----------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
------- ----- ------- ----- ------- -----
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Securities Available for Sale
United States Government agencies $ 6,405 $ 6,379 $ 5,402 $ 5,466 $ 6,888 $ 6,920
Mortgage backed securities 3,756 3,684 3,171 3,204 3,546 3,547
Collateralized mortgage obligations 370 369 1,098 1,096 1,477 1,477
------- ------- ------- ------- ------- -------
Total Securities Available for Sale 10,531 10,432 9,671 9,766 11,911 11,944
------- ------- ------- ------- ------- -------
Investment Securities
United States Treasury -- -- -- -- 498 498
United States Government agencies 2,127 2,139 4,369 4,424 5,367 5,393
Mortgage backed securities 1,868 1,855 2,208 2,235 2,604 2,618
Collateralized mortgage obligations 915 920 2,417 2,431 3,029 3,047
Other securities 446 446 282 282 282 282
------- ------- ------- ------- ------- -------
Total Investment Securities 5,356 5,360 9,276 9,372 11,780 11,838
------- ------- ------- ------- ------- -------
Total Securities $15,887 $15,792 $18,947 $19,138 $23,691 $23,782
======= ======= ======= ======= ======= =======
</TABLE>
9
<PAGE> 10
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Total loans increased by $14.3 million during the six months ended June 30,
1999, as the Corporation continued building its loan base. Commercial loans grew
by $16.3 million, while residential mortgage loans decreased by $2.6 million.
The Corporation makes loans to customers primarily in Macomb County, Michigan.
Although the Corporation has a diversified loan portfolio, a substantial portion
of the local economy has traditionally been dependent on the automotive
industry. Additionally, the Corporation had approximately $23.5 million in
outstanding loans at June 30, 1999, to commercial borrowers in the real estate
rental and property management industries.
Loans would be placed in nonaccrual status when, in the opinion of management,
uncertainty exists as to the ultimate collection of principal and interest.
There were no loans in nonaccrual status at June 30, 1999. Loans 90 or more days
past due but still accruing totaled $47,000 at June 30, 1999.
At June 30, 1999, there were no material loans where known information about
possible credit problems of borrowers causes management to have serious doubts
as to the ability of the borrower to comply with present loan repayment terms.
Furthermore, management is not aware of any potential problem loans which could
have a material effect on the Corporation's operating results, liquidity, or
capital resources.
The following table shows an analysis of the allowance for credit losses:
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Allowance for credit losses at beginning of period $ 1,330 $ 800
Provision charged to expense 180 245
Loans charged off (96) --
------- -------
Allowance for credit losses at end of period $ 1,414 $ 1,045
======= =======
Allowance for credit losses as a percentage
of loans at period end 1.21% 1.30%
</TABLE>
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 also includes a "year 2000" risk component in its allowance
analysis. 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.
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.
10
<PAGE> 11
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
LIABILITIES
During the six months ended June 30, 1999, total deposits increased by 10%, or
$13.3 million, to $140.4 million. Total demand deposits increased by $7.7
million, while savings and time deposits rose by a total of $5.6 million.
Short term borrowings at June 30 consisted of securities sold with an agreement
to repurchase them the following day. Following are additional details of short
term borrowings for the dates or periods indicated:
<TABLE>
<CAPTION>
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Weighted average interest rate on ending balance 4.19% 4.75%
Maximum amount outstanding at any month end
during the six month period $ 3,021 $ 2,330
</TABLE>
11
<PAGE> 12
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CAPITAL
The Corporation declared a 10% stock dividend on March 23, 1999. The dividend
was paid on April 21, 1999, to stockholders of record on April 6, 1999. As a
result, approximately $1.1 million 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 1998.
The Corporation completed a secondary stock offering in September, 1998. The net
proceeds to the Corporation (after deducting offering costs) were approximately
$7.8 million.
Following are selected capital ratios for the Corporation as of the dates
indicated, along with the minimum regulatory requirement for each item. Capital
requirements for bank holding companies are set by the Federal Reserve Board. In
many cases, bank holding companies are expected to operate at capital levels
higher than the minimum requirement.
<TABLE>
<CAPTION>
June 30, December 31, June 30, Minimum
1999 1998 1998 Requirement
--------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Tier I capital to risk-weighted assets 14.60% 16.89% 10.65% 4.00%
Total capital to risk-weighted assets 15.84% 18.15% 11.90% 8.00%
Primary capital to assets 11.10% 11.99% 7.54% 5.50%
Total capital to assets 11.10% 11.99% 7.54% 6.00%
Tier I capital to quarterly average assets 10.69% 12.15% 6.92% 4.00%
</TABLE>
During the second quarter of 1999, the Corporation established an employee stock
ownership plan (ESOP). The ESOP subsequently borrowed $500,000 from an unrelated
bank to finance the future purchase of the Corporation's stock. The ESOP loan
has been recorded as if it was long term debt of the Corporation, with a
corresponding reduction to equity. Repayment of the loan will be made solely
from contributions by the Corporation, which has guaranteed the loan.
The following table shows the changes in stockholders' equity for the six months
ended June 30, 1999:
<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, 1999 $ 10,982 $ 7,312 ($1,608) $ 63 $ 16,749
Stock dividend 1,098 (1,099) -- -- (1)
Stock option exercise 20 13 -- -- 33
Net income -- -- 499 -- 499
Change in ESOP loan guarantee -- -- (497) -- (497)
Other comprehensive income -- -- -- (128) (128)
-------- ---------- -------- ------- --------
Balance June 30, 1999 $ 12,100 $ 6,226 ($1,606) ($ 65) $ 16,655
======== ========== ======== ======= ========
</TABLE>
12
<PAGE> 13
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NET INTEREST INCOME
The following table shows the dollar amount of changes in net interest income
for each major category of interest earning asset and interest bearing
liability, and the amount of change attributable to changes in average balances
(volume) or average rates for the periods shown. Variances that are jointly
attributable to BOTH volume and rate changes have been allocated to the volume
component.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1999 vs. 1998 June 30, 1999 vs. 1998
--------------------------------- ---------------------------------
Increase (Decrease) Increase (Decrease)
Due to Changes In Due to Changes In
--------------------- ---------------------
Total Volume Rate Total Volume Rate
and Both and Both
------- --------- ------- ------- --------- -------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Earning Assets - Interest Income
Federal funds sold $ 99 $ 115 ($16) $ 226 $ 254 ($28)
Securities (73) (63) (10) (117) (94) (23)
Loans 733 799 (66) 1,580 1,742 (162)
------- ------- ------- ------- ------- -------
Total 759 851 (92) 1,689 1,902 (213)
------- ------- ------- ------- ------- -------
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts 63 72 (9) 142 153 (11)
Savings deposits 17 19 (2) 36 37 (1)
Time deposits 112 240 (128) 384 595 (211)
Short term borrowings 14 15 (1) 21 24 (3)
Long term debt -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total 206 346 (140) 583 809 (226)
------- ------- ------- ------- ------- -------
Net Interest Income $ 553 $ 505 $ 48 $ 1,106 $ 1,093 $ 13
======= ======= ======= ======= ======= =======
</TABLE>
For the quarter ended June 30, 1999, net interest income increased by 60%, or
$553,000 over the second quarter of 1998. Net interest income for the six month
period increased by $1.1 million, or 66% over the first six months of 1998. 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 significantly as the Corporation continued to build a deposit base.
The net interest margin improved in the quarter to 3.93%, compared with 3.41%
for the second quarter of 1998. For the six month period, the net interest
margin improved to 3.84%, up from 3.46% in 1998. The margin improvements were
the result of the Corporation's continued growth. Interest rates on individual
asset and liability categories were somewhat lower than in the prior year
quarter; however, volume increases in most categories more than offset the
effects of reduced rates.
13
<PAGE> 14
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
AVERAGE BALANCE SHEET
The following tables show the Corporation's consolidated average balances of
assets, liabilities, and stockholders' equity; the amount of interest income or
interest expense and the average yield or rate for each major category of
interest earning asset and interest bearing liability, and the net interest
margin, for the three and six month periods ended June 30, 1999 and 1998.
Average loans are presented net of unearned income, gross of the allowance for
credit losses. Interest on loans includes loan fees. Average securities are
based on amortized cost.
<TABLE>
<CAPTION>
Three Months Ended June 30,
-----------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
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 $ 19,519 $ 233 4.77% $ 9,849 $ 134 5.44%
Securities 17,462 266 6.09 21,583 339 6.28
Loans 112,916 2,458 8.71 76,234 1,725 9.05
-------- -------- -------- -------- --------- ---------
Total Earning Assets/
Total Interest Income 149,897 2,957 7.89% 107,666 2,198 8.17%
-------- -------- --------- ---------
Cash and due from banks 4,680 3,062
All other assets 1,850 1,528
-------- --------
Total Assets $156,427 $112,256
======== ========
Liabilities and Equity
NOW and money market accounts $ 19,385 149 3.07% $ 9,960 86 3.45%
Savings deposits 4,943 37 2.99 2,453 20 3.26
Time deposits 95,590 1,234 5.16 76,990 1,122 5.83
Short term borrowings 2,919 32 4.39 1,518 18 4.74
Long term debt 1,022 34 13.31 1,026 34 13.45
-------- -------- -------- -------- -------- ---------
Total Interest Bearing Liabilities/
Total Interest Expense 123,859 1,486 4.80% 91,947 1,280 5.57%
-------- -------- -------- ---------
Noninterest bearing demand deposits 14,935 12,179
All other liabilities 652 351
Stockholders' equity 16,981 7,779
-------- --------
Total Liabilities and Equity $156,427 $112,256
======== ========
Net Interest Income $ 1,471 $ 918
======== ========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.93% 3.41%
======== =========
</TABLE>
14
<PAGE> 15
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------------------------------------------------
1999 1998
------------------------------------- -----------------------------------
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 $ 18,647 $440 4.72% $7,865 $ 214 5.44%
Securities 17,545 532 6.06 20,647 649 6.29
Loans 109,319 4,719 8.63 68,968 3,139 9.10
--------- --------- --------- --------- --------- ---------
Total Earning Assets/
Total Interest Income 145,511 5,691 7.82% 97,480 4,002 8.21%
--------- --------- --------- ---------
Cash and due from banks 4,280 3,033
All other assets 1,911 1,593
--------- ---------
Total Assets $ 151,702 $ 102,106
========= =========
Liabilities and Equity
NOW and money market accounts $ 19,224 303 3.15% $ 9,503 161 3.39%
Savings deposits 4,601 71 3.09 2,211 35 3.17
Time deposits 91,864 2,400 5.23 69,073 2,016 5.84
Short term borrowings 2,454 54 4.40 1,351 33 4.89
Long term debt 1,023 69 13.49 1,026 69 13.45
--------- --------- --------- --------- --------- ---------
Total Interest Bearing Liabilities/
Total Interest Expense 119,166 2,897 4.86% 83,164 2,314 5.56%
--------- --------- --------- ---------
Noninterest bearing demand deposits 15,032 10,833
All other liabilities 561 318
Stockholders' equity 16,943 7,791
--------- ---------
Total Liabilities and Equity $ 151,702 $ 102,106
========= =========
Net Interest Income $ 2,794 $ 1,688
========= =========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.84% 3.46%
========= =========
</TABLE>
15
<PAGE> 16
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NONINTEREST INCOME
Noninterest income increased by 29%, to $268,000 for the first six months of
1999. The largest components of the increase were overdraft income and fees from
processing merchant credit card deposits. Mortgage banking income decreased
significantly as the Corporation discontinued the operation of its residential
mortgage department in 1998.
NONINTEREST EXPENSE
Noninterest expense increased over the first six months of 1998 by 20%, to $2.0
million in 1999. This was primarily the result of growth of the Corporation, and
the accompanying rise in payroll and other operating expense. The largest
components of the increase were in advertising, promotional, and other business
development related costs.
PROVISION FOR INCOME TAXES
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. Beginning in 1999, the Corporation is
recognizing a federal tax provision based on "book taxable" income. Net
operating loss carryforwards available to reduce taxable income total
approximately $638,000 through years ending 2012. As a result of the
carryforward, the Corporation has no current tax liability.
CHANGE IN ACCOUNTING PRINCIPLE
The American Institute of Certified Public Accountants 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 recognized its remaining unamortized organization costs in the
first quarter of 1999. This resulted in an after tax charge of $57,000. If SOP
98-5 had not been issued, these costs would have been amortized ratably through
the third quarter of 2001.
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, and
loans and securities which mature within one year. Additional liquidity is
provided by a $2.0 million secured federal funds facility, and a $10.0 million
secured borrowing facility with the Federal Home Loan Bank of Indianapolis
(FHLB). The Corporation's large deposit balances which might fluctuate in
response to interest rate changes are closely monitored. These deposits consist
mainly of jumbo time certificates of deposit.
Managing rates on earning assets and interest bearing liabilities focuses on
maintaining stability in the net interest margin, which is an important factor
in earnings growth and stability. Emphasis is placed on maintaining a controlled
rate sensitivity position, to avoid wide swings in margins and to manage risk
due to changes in interest rates.
16
<PAGE> 17
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows the maturity and repricing distribution of the
Corporation's interest earning assets and interest bearing liabilities as of
June 30, 1999. This table displays the interest rate sensitivity gap (i.e.,
interest rate sensitive assets less interest rate sensitive liabilities),
cumulative interest rate sensitivity gap, the interest rate sensitivity gap
ratio (i.e., interest rate sensitive assets divided by interest rate sensitive
liabilities), and cumulative interest rate sensitivity gap ratio.
<TABLE>
<CAPTION>
After Three After One
Within Months But Year But After
Three Within One Within Five
Months Year Five Years Years Total
--------- ------------ ---------- ------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
Interest earning assets
Federal funds sold $ 22,500 $ -- $ -- $ -- $ 22,500
Securities 301 2,406 10,944 2,236 15,887
Loans 36,843 8,721 55,008 16,095 116,667
----------- ------------ ---------- ------- ---------
Total 59,644 11,127 65,952 18,331 $ 155,054
----------- ------------ ---------- ------- =========
Interest bearing liabilities
NOW and money market
accounts 24,168 -- -- -- $ 24,168
Savings deposits 5,222 -- -- -- 5,222
Jumbo time deposits 34,769 11,506 -- -- 46,275
Time deposits $100,000 28,172 20,513 790 -- 49,475
Short term borrowings 2,839 -- -- -- 2,839
Long term debt 13 35 313 1,166 1,527
----------- ------------ ---------- ------- ---------
Total 95,183 32,054 1,103 1,166 $ 129,506
----------- ------------ ---------- ------- =========
Interest rate sensitivity gap ($35,539) (20,927) 64,849 17,165
Cumulative interest rate
sensitivity gap ($56,466) $ 8,383 $25,548
Interest rate sensitivity gap
ratio 0.63 0.35 59.79 15.72
Cumulative interest rate
sensitivity gap ratio 0.56 1.07 1.20
</TABLE>
The table above indicates the time periods in which interest earning assets and
interest bearing liabilities will mature or may be repriced, generally according
to their contractual terms. However, this table does not necessarily indicate
the impact that general interest rate movements would have on the Corporation's
net interest margin, because the repricing of various categories of assets and
liabilities is discretionary, and is subject to competitive and other pressures.
As a result, various assets and liabilities indicated as repricing within the
same period may, in fact, reprice at different times and by different
increments. At June 30, 1999, the Corporation is considered "liability
sensitive" according to the preceding table. In a rising rate environment, the
Corporation might not be able to increase rates on earning assets faster than
the increase in rates on interest bearing liabilities.
The Corporation is also working with a vendor to develop a personal
computer-based model to simulate the effects of possible interest rate changes.
The Corporation intends to limit estimated negative exposure to changing rates
within a one year period. The exposure estimate will be based on a variety of
assumptions built into the model, and assumed interest rate changes of plus or
minus 200 basis points. The results of this analysis will be reported to the
Asset/Liability Committee, to assist in the interest rate risk management
process.
17
<PAGE> 18
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
YEAR 2000 READINESS DISCLOSURE
The Corporation is 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 are new; and, in many cases, were 2000
ready from the outset. The Corporation's main data processing vendor has
represented that it is fully 2000 ready, and provides regular updates to the
Corporation. Final testing by this vendor was substantially completed during 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 complete, and no material concerns have been encountered. To date,
approximately $19,000 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.
EXHIBITS
Exhibits filed in accordance with Part I of this Form 10-QSB are shown in the
Exhibit Index, which immediately precedes such exhibits, and is incorporated by
reference herein.
18
<PAGE> 19
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART II
ITEM 1. LEGAL PROCEEDINGS
As a depository of funds, the Bank is occasionally named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. Such litigation is incidental to the Bank's
business. Management is not aware of any threatened or pending litigation in
which the Corporation or the Bank is likely to experience loss or exposure which
would materially affect the Corporation's capital resources, results of
operations, or liquidity as presented herein.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At its Annual Meeting held April 20, 1999, the Corporation's stockholders voted
on the election of four directors. Results of the election were as follows:
<TABLE>
<CAPTION>
Abstentions
Nominee Votes For Votes Withheld and No Vote Total
------- --------- -------------- ----------- -----
<S> <C> <C> <C> <C>
Harold W. Allmacher 1,989,546 -- 206,909 2,196,455
Gebran S. Anton 1,897,467 -- 298,988 2,196,455
Joseph F. Jeannette 1,965,371 -- 231,084 2,196,455
Carole L. Schwartz 2,002,528 -- 193,927 2,196,455
</TABLE>
As a result, each of the four directors was elected to a three year term. The
terms of office of the following directors (who were not up for election)
continued after the Annual Meeting: Joseph Catenacci, Raymond M. Contesti,
Salvatore Cottone, Celestina Giles, Bobby L. Hill, Dean S. Petitpren, Anthony
Tersigni, and Andrew Tassopoulos.
The Corporation's stockholders also voted at the Annual Meeting on a proposal to
adopt the 1999 Stock Option Plan for Directors (the Plan). Results of the voting
were as follows:
<TABLE>
<S> <C>
Votes For 1,879,611
Votes Against 81,545
Abstentions 49,925
No Vote 185,374
</TABLE>
As a result, the Plan was adopted effective April 20, 1999.
ITEM 5. OTHER INFORMATION
Not applicable.
19
<PAGE> 20
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of exhibits included as part of this Form 10-QSB is shown in the
Exhibit Index, which immediately precedes such exhibits, and is incorporated by
reference herein.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
20
<PAGE> 21
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on July 27, 1999.
COMMUNITY CENTRAL BANK CORPORATION
By: /s/ HAROLD W. ALLMACHER
--------------------------------------
Harold W. Allmacher;
Chairman of the Board and Chief Executive
Officer
(Principal Executive Officer)
By: /s/ ANDREW TASSOPOULOS
--------------------------------------
Andrew Tassopoulos;
President
By: /s/ PETER J. PRZYBOCKI
--------------------------------------
Peter J. Przybocki, CPA;
Executive Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
21
<PAGE> 22
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
PART I EXHIBITS
11 Computation of Per Share Earnings
27 Financial Data Schedule
PART II EXHIBITS
3.1 Articles of Incorporation are incorporated by
reference to exhibit 3.1 of the Corporation's
Registration Statement on Form SB-2
(Commission File Number 333-04113) which
became effective on September 23, 1996
3.2 Bylaws of the Corporation are incorporated by
reference to exhibit 3.2 of the Corporation's
Registration Statement on Form SB-2
(Commission File Number 333-04113) which
became effective on September 23, 1996
22
<PAGE> 1
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 1998 1999 1998
------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
BASIC
Income (Loss) Before Cumulative Effect
of Accounting Change $ 294 $ 107 $ 556 ($36)
/ Weighted Average Shares 2,418 1,530 2,417 1,530
------- ------- ------- -------
Per Share 0.12 0.07 0.23 (0.02)
Cumulative Effect of Accounting Change -- -- (57) --
/ Weighted Average Shares 2,418 1,530 2,417 1,530
------- ------- ------- -------
Per Share -- -- (0.02)
------- ------- ------- -------
Basic Earnings (Loss) Per Share $ 0.12 $ 0.07 $ 0.21 ($ 0.02)
======= ======= ======= =======
DILUTED
Income (Loss) Before Cumulative Effect
of Accounting Change $ 294 $ 107 $ 556 ($ 36)
/ Weighted Average Shares 2,424 1,559 2,424 1,530
------- ------- ------- -------
Per Share 0.12 0.07 0.23 (0.02)
Cumulative Effect of Accounting Change -- -- (57) --
/ Weighted Average Shares 2,424 1,559 2,424 1,530
------- ------- ------- -------
Per Share -- -- (0.02) --
------- ------- ------- -------
Diluted Earnings (Loss) Per Share $ 0.12 $ 0.07 $ 0.21 ($ 0.02)
======= ======= ======= =======
</TABLE>
Notes:
- Weighted average shares outstanding have been adjusted to reflect the 10%
stock dividends in 1999 and 1998.
- Where applicable, diluted share computations include the effects of
outstanding stock options.
23
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from Community Central Bank
Corporation's Consolidated Balance Sheet as of June 30, 1999, and the
Consolidated Statement of Operations for the six months ended June 30, 1999, and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,326
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 22,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,432
<INVESTMENTS-CARRYING> 5,356
<INVESTMENTS-MARKET> 5,360
<LOANS> 116,667
<ALLOWANCE> 1,414
<TOTAL-ASSETS> 161,986
<DEPOSITS> 140,441
<SHORT-TERM> 2,839
<LIABILITIES-OTHER> 1,020
<LONG-TERM> 1,031
0
0
<COMMON> 12,100
<OTHER-SE> 4,555
<TOTAL-LIABILITIES-AND-EQUITY> 161,986
<INTEREST-LOAN> 4,719
<INTEREST-INVEST> 532
<INTEREST-OTHER> 440
<INTEREST-TOTAL> 5,619
<INTEREST-DEPOSIT> 2,774
<INTEREST-EXPENSE> 2,897
<INTEREST-INCOME-NET> 2,794
<LOAN-LOSSES> 180
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 2,018
<INCOME-PRETAX> 864
<INCOME-PRE-EXTRAORDINARY> 556
<EXTRAORDINARY> 0
<CHANGES> (57)
<NET-INCOME> 499
<EPS-BASIC> 0.21
<EPS-DILUTED> 0.21
<YIELD-ACTUAL> 3.84
<LOANS-NON> 0
<LOANS-PAST> 47
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,330
<CHARGE-OFFS> 96
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,414
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,414
</TABLE>
