<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 March 31, 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 May 11, 1999
----- ---------------------------
Common Stock, $5 stated value 2,416,031 Shares
Transitional Small Business Disclosure Format:
Yes No X
----- -----
<PAGE> 2
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART I
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Community Central Bank Corporation (the Corporation)
include the consolidation of its subsidiary; Community Central Bank (the Bank).
Following are the Corporation's Consolidated Balance Sheet as of March 31, 1999
and 1998, and December 31, 1998, and Consolidated Statements of Operations,
Comprehensive Income, and Cash Flow for the three month periods ended March 31,
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 and footnotes contained in the Corporation's Annual Report
on Form 10-KSB for the fiscal 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 are not necessarily indicative of the results to be expected for the
full year.
2
<PAGE> 3
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
Assets 1999 1998 1998
--------- --------- ---------
(in thousands, except fair value data)
<S> <C> <C> <C>
Cash and due from banks $4,575 $6,162 $4,304
Federal funds sold 16,350 19,300 10,550
--------- --------- ---------
Cash and Cash Equivalents 20,925 25,462 14,854
--------- --------- ---------
Securities available for sale, at fair value 10,711 9,766 5,378
Investment securities, at amortized cost 6,670 9,276 13,189
(Fair value of $6.7 million at 3-31-1999,
$9.4 million at 12-31-1998, and
$13.2 million at 3-31-1998)
Loans
Residential mortgage loans 32,397 33,867 29,284
Commercial loans 71,643 64,098 37,101
Installment loans 4,519 4,439 3,212
--------- --------- ---------
Total Loans 108,559 102,404 69,597
Allowance for credit losses (1,393) (1,330) (960)
--------- --------- ---------
Net Loans 107,166 101,074 68,637
--------- --------- ---------
Net property and equipment 1,700 1,739 1,723
Accrued interest receivable 734 655 579
Other assets 753 963 205
--------- --------- ---------
Total Assets $148,659 $148,935 $104,565
========= ========= =========
</TABLE>
(continued)
3
<PAGE> 4
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
Liabilities 1999 1998 1998
--------- --------- ---------
(in thousands, except share data)
<S> <C> <C> <C>
Deposits
Noninterest bearing demand deposits $13,828 $13,124 $10,192
NOW and money market accounts 16,979 18,644 9,201
Savings deposits 5,324 2,971 2,046
Time deposits 91,995 92,413 72,473
--------- --------- ---------
Total deposits 128,126 127,152 93,912
--------- --------- ---------
Short term borrowings 2,072 3,491 1,561
Accrued interest payable 345 280 247
Other liabilities 163 227 116
Capitalized lease obligation 1,034 1,036 1,036
--------- --------- ---------
Total Liabilities 131,740 132,186 96,872
--------- --------- ---------
Stockholders' Equity
Common stock -- $5 stated value; 9,000,000 shares
authorized; 2,416,100 shares issued and
outstanding at 3-31-1999, 2,196,455 shares
outstanding at 12-31-1998, and 1,391,455 shares
outstanding at 3-31-1998 12,080 10,982 6,957
Additional paid-in capital 6,214 7,312 3,563
Accumulated deficit (1,403) (1,608) (2,855)
Accumulated other comprehensive income 28 63 28
--------- --------- ---------
Total Stockholders' Equity 16,919 16,749 7,693
--------- --------- ---------
Total Liabilities and Stockholders' Equity $148,659 $148,935 $104,565
========= ========= =========
</TABLE>
4
<PAGE> 5
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
------- -------
(in thousands, except per share data)
<S> <C> <C>
Interest Income
Loans (including fees) $2,261 $1,414
Securities 266 310
Federal funds sold 207 80
------- -------
Total Interest Income 2,734 1,804
------- -------
Interest Expense
Deposits 1,354 984
Short term borrowings 22 15
Capitalized lease obligation 35 35
------- -------
Total Interest Expense 1,411 1,034
------- -------
Net Interest Income 1,323 770
Provision for credit losses 70 160
------- -------
Net Interest Income after Provision 1,253 610
------- -------
Noninterest Income
Deposit service charges 57 28
Net realized security gain 11 6
Other income 58 36
------- -------
Total Noninterest Income 126 70
------- -------
Noninterest Expense
Salaries, benefits, and payroll taxes 435 392
Premises and fixed asset expense 129 140
Other operating expense 411 291
------- -------
Total Noninterest Expense 975 823
------- -------
Income (Loss) Before Taxes and Cumulative
Effect of Change in Accounting Principle 404 (143)
Provision for income taxes 142 ----
------- -------
Income Before Cumulative Effect of Change
in Accounting Principle 262 (143)
Cumulative effect of change in accounting
principle (57) ----
------- -------
Net Income (Loss) $205 ($143)
======= =======
</TABLE>
(continued)
5
<PAGE> 6
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<S> <C> <C>
Per share data:
Basic earnings (loss) before cumulative effect of
change in accounting principle $0.11 ($0.09)
Basic earnings (loss) $0.09 ($0.09)
Diluted earnings (loss) before cumulative effect of
change in accounting principle $0.11 ($0.09)
Diluted earnings (loss) $0.09 ($0.09)
========= =========
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 March 31,
1999 1998
---------- ---------
(in thousands)
<S> <C> <C>
Net Income (Loss) as Reported $205 ($143)
Other Comprehensive Income, Net of Tax
Change in unrealized gain on securities
available for sale (28) 2
Reclassification of previously reported gain
included in current year income (7) (3)
----------- ----------
Comprehensive Income (Loss) $170 ($144)
=========== ==========
</TABLE>
7
<PAGE> 8
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
---------- ---------
(in thousands)
<S> <C> <C>
Operating Activities
Net income (loss) $205 ($143)
Adjustments to reconcile net income (loss) to net cash flow
from operating activities:
Net amortization (accretion) of security premium/discount 7 (4)
Net gain on calls of securities (11) (6)
Provision for credit losses 70 160
Depreciation expense 76 91
Deferred income tax 113 ----
Increase in accrued interest receivable (79) (80)
Decrease in other assets 97 16
Increase in accrued interest payable 65 56
Increase (decrease) in other liabilities (11) 53
---------- ---------
Net Cash Provided by Operating Activities 532 143
Investing Activities
Purchases of securities available for sale (1,992) ----
Maturities, calls, and prepayments of securities available for sale 985 529
Purchases of investment securities ---- (202)
Maturities, calls, and prepayments of investment securities 2,619 1,636
Increase in loans (6,162) (16,462)
Purchases of property and equipment (37) ----
---------- ---------
Net Cash Used in Investing Activities (4,587) (14,499)
Financing Activities
Increase in demand and savings deposits 1,392 2,225
Increase (decrease) in time deposits (418) 23,332
Increase (decrease) in short term borrowings (1,419) 158
Repayment of capitalized lease obligation (37) (34)
---------- ---------
Net Cash Provided by (Used in) Financing Activities (482) 25,681
---------- ---------
Increase (Decrease) in Cash and Cash Equivalents (4,537) 11,325
Cash and Cash Equivalents at the Beginning
of the Year 25,462 3,529
---------- ---------
Cash and Cash Equivalents at the End
of the Period $20,925 $14,854
========== =========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $1,311 $943
========== =========
</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 March 31, 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 decreased by $200,000, to $148.7 million at
March 31, 1999, compared with $148.9 million at December 31, 1998.
During the three months ended March 31, 1999, total deposits rose by $1.0
million, while total loans increased by $6.2 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 (i.e., those which the Corporation has the ability
and intent to hold to maturity) are stated at cost, adjusted for amortization of
premium or accretion of discount. Securities available for sale are shown on the
balance sheet at estimated fair value.
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998 MARCH 31, 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 $5,895 $5,935 $5,402 $5,466 $3,381 $3,420
Mortgage backed securities 3,935 3,938 3,171 3,204 1,054 1,056
Collateralized mortgage obligations 839 838 1,098 1,096 901 902
------- ------- ------- ------- ------- -------
Total Securities Available for Sale 10,669 10,711 9,671 9,766 5,336 5,378
------- ------- ------- ------- ------- -------
Investment Securities
United States Treasury --- --- --- --- 1,495 1,497
United States Government agencies 2,878 2,901 4,369 4,424 5,615 5,644
Mortgage backed securities 2,078 2,098 2,208 2,235 2,753 2,764
Collateralized mortgage obligations 1,432 1,443 2,417 2,431 3,124 3,140
Other Securities 282 282 282 282 202 202
------- ------- ------- ------- ------- -------
Total Investment Securities 6,670 6,724 9,276 9,372 13,189 13,247
------- ------- ------- ------- ------- -------
Total Securities $17,339 $17,435 $18,947 $19,138 $18,525 $18,625
======= ======= ======= ======= ======= =======
</TABLE>
9
<PAGE> 10
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Total loans increased by $6.2 million during the three months ended March 31,
1999, as the Corporation continued building its loan base. Commercial loans grew
by $7.5 million, while residential mortgage loans decreased by $1.5 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 $22.4 million in
outstanding loans at March 31, 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. No
loans have been placed in nonaccrual status since the Corporation's inception.
At March 31, 1999, there were no material loans where known information about
possible credit problems of borrowers cause 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 material 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>
THREE MONTHS ENDED MARCH 31,
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Allowance for credit losses at
beginning of period $1,330 $800
Provision charged to expense 70 160
Loans charged off (7) ----
------- -------
Allowance for credit losses at end of period $1,393 $960
======= =======
Allowance for credit losses as a percentage
of loans at period end 1.28% 1.38%
</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 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
differ significantly from those experienced by institutions of similar size.
10
<PAGE> 11
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
LIABILITIES
During the three months ended March 31, 1999, total deposits increased by $1.0
million, to $128.1 million. Savings deposits increased by $2.4 million, while
interest bearing demand deposits fell by $1.7 million.
Short term borrowings at March 31 consist of securities sold with an agreement
to repurchase them the following day. Following are details of short term
borrowings for the dates indicated:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
(in thousands)
<S> <C> <C>
Amount outstanding at end of period $2,072 $1,561
Weighted average interest rate on ending balance 4.50% 4.96%
Maximum amount outstanding at any month end
during the period $2,072 $1,561
</TABLE>
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>
MARCH 31, DECEMBER 31, MARCH 31, MINIMUM
1999 1998 1998 REQUIREMENT
--------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Tier I capital to risk-weighted assets 16.18% 16.89% 12.08% 4%
Total capital to risk-weighted assets 17.43% 18.15% 13.33% 8%
Primary capital to assets 12.19% 11.99% 8.06% 5.5%
Total capital to assets 12.19% 11.99% 8.06% 6%
Tier I capital to quarterly average assets (leverage) 11.50% 12.15% 8.35% 4%
</TABLE>
11
<PAGE> 12
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NET INTEREST INCOME
The following table shows the dollar amount of changes in net interest income
for each major category of interest earning asset and interest bearing
liability, and the amount of change attributable to changes in average balances
(volume) or average rates for the periods shown. Variances that are jointly
attributable to BOTH volume and rate changes have been allocated to the volume
component.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1999 VS. 1998
-------------------------------------
INCREASE (DECREASE)
DUE TO CHANGES IN
---------------------------
TOTAL VOLUME RATE
AND BOTH
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Earning Assets - Interest Income
Federal funds sold $127 $139 ($12)
Securities (44) (31) (13)
Loans 847 943 (96)
--------- --------- ---------
Total 930 1,051 (121)
--------- --------- ---------
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts 79 81 (2)
Savings deposits 19 18 1
Time deposits 272 358 (86)
Short term borrowings 7 9 (2)
Capitalized lease obligation ---- ---- ----
--------- --------- ---------
Total 377 466 (89)
--------- --------- ---------
Net Interest Income $553 $585 ($32)
========= ========= =========
</TABLE>
For the quarter ended March 31, 1999, net interest income increased by 72%, or
$553,000 over the first quarter 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 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
Corporation's significant growth during 1998. The net interest margin improved
in the quarter to 3.75%, compared with 3.53% for the first quarter of 1998.
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.
12
<PAGE> 13
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
AVERAGE BALANCE SHEET
The following table shows the Corporation's consolidated average balances of
assets, liabilities, and stockholders' equity; the amount of interest income or
interest expense and the average yield or rate for each major category of
interest earning asset and interest bearing liability, and the net interest
margin, for the three month periods ended March 31, 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 MARCH 31,
----------------------------------- -----------------------------------
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 $17,765 $207 4.66% $5,860 $80 5.46%
Securities 17,629 266 6.04 19,701 310 6.29
Loans 105,683 2,261 8.56 61,618 1,414 9.18
---------- ---------- --------- --------- --------- ---------
Total Earning Assets/
Total Interest Income 141,077 2,734 7.75% 87,179 1,804 8.28%
---------- ---------- --------- --------- --------- ---------
Cash and due from banks 3,876 3,004
All other assets 1,971 1,657
---------- ---------
Total Assets $146,924 $91,840
========== =========
Liabilities and Equity
NOW and money market accounts $19,062 154 3.23% $9,042 75 3.32%
Savings deposits 4,255 34 3.20 1,966 15 3.05
Time deposits 88,096 1,166 5.29 61,068 894 5.86
Short term borrowings 1,984 22 4.44 1,182 15 5.08
Capitalized lease obligation 1,025 35 13.66 1,025 35 13.66
---------- ---------- --------- --------- --------- ---------
Total Interest Bearing Liabilities/
Total Interest Expense 114,422 1,411 4.93% 74,283 1,034 5.57%
---------- --------- --------- ---------
Noninterest bearing demand deposits 15,130 9,469
All other liabilities 468 285
Stockholders' equity 16,904 7,803
---------- ---------
Total Liabilities and Equity $146,924 $91,840
========== =========
Net Interest Income $1,323 $770
======== ========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.75% 3.53%
========= =========
</TABLE>
13
<PAGE> 14
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NONINTEREST INCOME
Noninterest income increased by 80%, to $126,000 in the first quarter of 1999.
The largest components of the increase were overdraft income and fees from
processing merchant credit card deposits.
NONINTEREST EXPENSE
Noninterest expense increased over the first quarter of 1998 by 18%, to $975,000
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 and other marketing costs. Premises and
fixed asset expense declined in 1999, as depreciation fell in the absence of
significant new purchases.
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 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.
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 margins require continuous analysis to
match the maturities of specific categories of loans and investments with
specific types of deposits and borrowings. Bank liquidity depends upon the mix
of the banking institution's potential sources and uses of funds. For the
Corporation, the major sources of liquidity have been deposit growth, federal
funds sold, 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 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.
14
<PAGE> 15
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows the maturity and repricing distribution of the
Corporation's interest earning assets and interest bearing liabilities as of
March 31, 1999. This table displays the interest rate sensitivity gap (interest
rate sensitive assets less interest rate sensitive liabilities), cumulative
interest rate sensitivity gap, the interest rate sensitivity gap ratio (interest
rate sensitive assets divided by interest rate sensitive liabilities), and
cumulative interest rate sensitivity gap ratio. Loans are presented net of
unearned income, gross of the allowance, while securities are shown at amortized
cost.
<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 $16,350 $ ---- $ ---- $ ---- $16,350
Securities 888 3,011 10,254 3,186 17,339
Loans 34,169 8,007 48,451 17,932 108,559
--------- -------- -------- -------- ----------
Total 51,407 11,018 58,705 21,118 $142,248
--------- -------- -------- -------- ==========
Interest bearing liabilities:
NOW and money market
accounts 16,979 ---- ---- ---- $16,979
Savings deposits 5,324 ---- ---- ---- 5,324
Jumbo time deposits 39,107 10,079 ---- ---- 49,186
Time deposits < $100,000 26,322 15,710 777 ---- 42,809
Short term borrowings 2,072 ---- ---- ---- 2,072
Capitalized lease obligation 3 9 132 890 1,034
-------- ------- ------- ------- ---------
Total 89,807 25,798 909 890 $117,404
-------- ------- ------- ------- ========
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Interest rate sensitivity gap ($38,400) (14,780) 57,796 20,228
Cumulative interest rate
sensitivity gap ($53,180) $4,616 $24,844
Interest rate sensitivity gap
ratio 0.57 0.43 64.58 23.73
Cumulative interest rate
sensitivity gap ratio 0.54 1.04 1.21
</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 March 31, 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.
15
<PAGE> 16
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 as of the end of 1998, and provides
regular updates to the Corporation. Additional 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 substantially complete, and no material
concerns have been encountered. To date, approximately $14,000 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.
16
<PAGE> 17
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART II
ITEM 1. LEGAL PROCEEDINGS
As a depository of funds, the Bank is occasionally named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. Such litigation is incidental to the Bank's
business. Management is not aware of any threatened or pending litigation in
which the Corporation or the Bank is likely to experience loss or exposure which
would materially affect the Corporation's capital resources, results of
operations, or liquidity as presented herein.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
A list of exhibits included as part of this Form 10-QSB is shown in the
Exhibit Index, which immediately precedes such exhibits, and is incorporated by
reference herein.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
17
<PAGE> 18
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on May 11, 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)
18
<PAGE> 19
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<S> <C>
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
</TABLE>
19
<PAGE> 1
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1999 1998
---- ----
(in thousand, except per share data)
<S> <C> <C>
BASIC
Income (Loss) Before Cumulative Effect
of Accounting Change $262 ($143)
/ Weighted Average Shares 2,416 1,531
---- ----
Per Share 0.11 (0.09)
Cumulative Effect of Accounting Change (57) ----
/ Weighted Average Shares 2,416 1,531
---- ----
Per Share (0.02) ----
---- ----
Basic Earnings (Loss) Per Share $0.09 ($0.09)
===== =====
DILUTED
Income (Loss) Before Cumulative Effect
of Accounting Change $262 ($143)
/ Weighted Average Shares 2,424 1,531
---- ----
Per Share 0.11 (0.09)
Cumulative Effect of Accounting Change (57) ----
/ Weighted Average Shares 2,424 1,531
---- ----
Per Share (0.02) ----
---- ----
Diluted Earnings (Loss) Per Share $0.09 ($0.09)
==== ====
</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.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from Community Central Bank
Corporation's Consolidated Balance Sheet as of March 31, 1999, and the
Consolidated Statement of Operations for the three months ended March 31, 1999,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,575
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 16,350
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,711
<INVESTMENTS-CARRYING> 6,670
<INVESTMENTS-MARKET> 6,724
<LOANS> 108,559
<ALLOWANCE> 1,393
<TOTAL-ASSETS> 148,659
<DEPOSITS> 128,126
<SHORT-TERM> 2,072
<LIABILITIES-OTHER> 508
<LONG-TERM> 1,034
0
0
<COMMON> 12,080
<OTHER-SE> 4,839
<TOTAL-LIABILITIES-AND-EQUITY> 148,659
<INTEREST-LOAN> 2,261
<INTEREST-INVEST> 266
<INTEREST-OTHER> 207
<INTEREST-TOTAL> 2,734
<INTEREST-DEPOSIT> 1,354
<INTEREST-EXPENSE> 1,411
<INTEREST-INCOME-NET> 1,323
<LOAN-LOSSES> 70
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 975
<INCOME-PRETAX> 404
<INCOME-PRE-EXTRAORDINARY> 262
<EXTRAORDINARY> 0
<CHANGES> (57)
<NET-INCOME> 205
<EPS-PRIMARY> 0.09
<EPS-DILUTED> 0.09
<YIELD-ACTUAL> 3.75
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,330
<CHARGE-OFFS> 7
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,393
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,393
</TABLE>
