<PAGE> 1
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
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 November 9, 2000
----- -------------------------------
Common Stock, $5 stated value 2,661,922 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 September 30,
2000 and 1999, and December 31, 1999, and Consolidated Statements of Operations,
Comprehensive Income, and Cash Flow for the quarter and nine month periods ended
September 30, 2000 and 1999. 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, 1999.
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>
September 30, December 31, September 30,
2000 1999 1999
------------- ------------ -------------
Assets (in thousands, except fair value data)
<S> <C> <C> <C>
Cash and due from banks $ 5,730 $ 5,692 $ 4,424
Federal funds sold 24,300 20,700 21,650
--------- --------- ---------
Cash and Cash Equivalents 30,030 26,392 26,074
--------- --------- ---------
Securities available for sale, at fair value 12,669 9,546 10,879
Investment securities, at amortized cost 4,223 4,638 4,862
(Fair value of $4.2 million at 9-30-2000,
$4.6 million at 12-31-1999, and
$4.8 million at 9-30-1999)
Loans
Residential mortgage loans 28,964 29,920 30,555
Commercial loans 124,328 105,574 95,751
Installment loans 6,015 5,818 5,623
--------- --------- ---------
Total Loans 159,307 141,312 131,929
Allowance for credit losses (2,338) (1,927) (1,583)
--------- --------- ---------
Net Loans 156,969 139,385 130,346
--------- --------- ---------
Net property and equipment 1,789 1,893 1,819
Accrued interest receivable 1,113 843 899
Other assets 1,200 1,027 856
--------- --------- ---------
Total Assets $ 207,993 $ 183,724 $ 175,735
========= ========= =========
</TABLE>
(continued)
3
<PAGE> 4
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
2000 1999 1999
------------- ------------ -------------
Liabilities (in thousands, except share data)
<S> <C> <C> <C>
Deposits
Noninterest bearing demand deposits $ 20,270 $ 16,540 $ 17,081
NOW and money market accounts 18,563 21,366 19,372
Savings deposits 7,782 8,803 6,521
Time deposits 135,588 116,137 111,242
--------- --------- ---------
Total deposits 182,203 162,846 154,216
--------- --------- ---------
Short term borrowings 5,086 1,605 2,518
Accrued interest payable 685 442 454
Other liabilities 238 306 109
Capitalized lease obligation 1,016 1,025 1,028
ESOP note payable 433 471 483
--------- --------- ---------
Total Liabilities 189,661 166,695 158,808
--------- --------- ---------
Stockholders' Equity
Common stock -- $5 stated value; 9,000,000 shares authorized; 2,661,922
shares issued and outstanding at 9-30-2000, 2,420,024 shares
outstanding at 12-31-1999 and 9-30-1999 13,310 12,100 12,100
Additional paid-in capital 5,016 6,226 6,226
Accumulated surplus 527 (683) (820)
Unearned employee benefit (433) (470) (483)
Accumulated other comprehensive income (88) (144) (96)
--------- --------- ---------
Total Stockholders' Equity 18,332 17,029 16,927
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 207,993 $ 183,724 $ 175,735
========= ========= =========
</TABLE>
4
<PAGE> 5
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----- ----- ----- -----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest Income
Loans (including fees) $ 3,750 $ 2,749 $10,688 $ 7,468
Securities 248 248 693 780
Federal funds sold 402 271 822 711
------- ------- ------- -------
Total Interest Income 4,400 3,268 12,203 8,959
------- ------- ------- -------
Interest Expense
Deposits 2,308 1,583 6,144 4,357
Short term borrowings 43 28 88 82
Capitalized lease obligation 45 48 135 117
------- ------- ------- -------
Total Interest Expense 2,396 1,659 6,367 4,556
------- ------- ------- -------
Net Interest Income 2,004 1,609 5,836 4,403
Provision for credit losses 195 171 495 351
------- ------- ------- -------
Net Interest Income after Provision 1,809 1,438 5,341 4,052
------- ------- ------- -------
Noninterest Income
Deposit service charges 61 73 188 196
Net realized security gain -- -- -- 11
Other income 98 83 232 217
------- ------- ------- -------
Total Noninterest Income 159 156 420 424
------- ------- ------- -------
Noninterest Expense
Salaries, benefits, and payroll taxes 497 439 1,536 1,300
Premises and fixed asset expense 164 141 504 422
Other operating expense 640 554 1,847 1,430
------- ------- ------- -------
Total Noninterest Expense 1,301 1,134 3,887 3,152
------- ------- ------- -------
Income Before Taxes and Cumulative
Effect of Change in Accounting Principle 667 460 1,874 1,324
Provision for income taxes 235 170 664 478
------- ------- ------- -------
Income Before Cumulative Effect of Change
in Accounting Principle 432 290 1,210 846
Cumulative effect of change in accounting
principle -- -- -- (57)
------- ------- ------- -------
Net Income $ 432 $ 290 $ 1,210 $ 789
======= ======= ======= =======
</TABLE>
(continued)
5
<PAGE> 6
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Per share data:
Basic earnings before cumulative effect of
change in accounting principle $ 0.17 $ 0.11 $ 0.46 $ 0.32
Basic earnings $ 0.17 $ 0.11 $ 0.46 $ 0.30
Diluted earnings before cumulative effect of
change in accounting principle $ 0.17 $ 0.11 $ 0.46 $ 0.32
Diluted earnings $ 0.17 $ 0.11 $ 0.46 $ 0.30
======== ======== ======== ========
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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C>
Net Income as Reported $ 432 $ 290 $1,210 $ 789
Other Comprehensive Income, Net of Tax
Change in unrealized gain on securities
available for sale 44 (31) 56 (152)
Reclassification of previously reported gain
included in current year income -- -- -- (7)
------ ------ ------ ------
Comprehensive Income $ 476 $ 259 $1,266 $ 630
====== ====== ====== ======
</TABLE>
7
<PAGE> 8
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
(Unaudited) Nine Months Ended September 30,
2000 1999
-------- --------
(in thousands)
<S> <C> <C>
Operating Activities
Net income $ 1,210 $ 789
Adjustments to reconcile net income to net cash flow
from operating activities:
Net accretion of security discount (6) 6
Net gain on calls of securities -- (11)
Provision for credit losses 495 351
Depreciation expense 245 238
Deferred income tax (137) 102
ESOP compensation expense 37 --
Increase in accrued interest receivable (270) (244)
Increase (Decrease) in other assets (67) 55
Increase in accrued interest payable 243 174
Increase in other liabilities 36 16
-------- --------
Net Cash Provided by Operating Activities 1,786 1,476
Investing Activities
Purchases of securities available for sale (4,942) (3,984)
Maturities, calls, and prepayments of securities available for sale 1,909 2,618
Maturities, calls, and prepayments of investment securities -- 4,597
Purchases of investment securites 418 (165)
Increase in loans (18,079) (29,623)
Purchases of property and equipment (141) (318)
-------- --------
Net Cash Used in Investing Activities (20,835) (26,875)
Financing Activities
Increase in demand and savings deposits (94) 8,235
Increase in time deposits 19,451 18,829
Increase (Decrease) in short term borrowings 3,481 (973)
Repayment of capitalized lease obligation (113) (112)
Payment of ESOP debt (37) --
Fractional shares paid on stock dividend (1) (1)
Stock option exercise -- 33
-------- --------
Net Cash Provided by Financing Activities 22,687 26,011
-------- --------
Increase in Cash and Cash Equivalents 3,638 612
Cash and Cash Equivalents at the Beginning
of the Year 26,392 25,462
-------- --------
Cash and Cash Equivalents at the End
of the Period $ 30,030 $ 26,074
======== ========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 6,020 $ 4,278
Federal Taxes Paid 801 345
======== ========
</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 discussion compares the financial condition of the Corporation and
its wholly owned subsidiary, Community Central Bank, at September 30, 2000,
December 31, 1999, and September 30, 1999 and the results of operations for the
quarter and nine months ended September 30, 2000 and 1999. This discussion
should be read in conjunction with the financial statements and statistical data
presented elsewhere in this report. This report contains forward-looking
statements that are based on management's beliefs, assumptions, current
expectations, estimates and projections about the financial services industry,
the economy, and about the Corporation and the Bank. Words such as
"anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is
likely," "plans," "projects," variations of such words and similar expressions
are intended to identify such forward-looking statements. These forward-looking
statements are intended to be covered by the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions ("Future Factors") that are difficult to predict with regard to
timing, extent, likelihood and degree of occurrence. Actual results and outcomes
may materially differ from what may be expressed or forecasted in the
forward-looking statements. The Corporation undertakes no obligation to update,
amend, or clarify forward looking statements, whether as a result of new
information, future events (whether anticipated or unanticipated), or otherwise.
Future Factors include changes in interest rate and interest rate relationships;
demand for products and services; the degree of competition by traditional and
non-traditional competitors; changes in banking regulation; changes in tax laws;
changes in prices, levies, and assessments; the impact of technological
advances; governmental and regulatory policy changes; the outcomes of
contingencies; trends in customer behavior as well as their ability to repay
loans; changes in the national and local economy; and other factors, including
risk factors, referred to from time to time in filings made by the Corporation
with the Securities and Exchange Commission. These are representative of the
Future Factors that could cause a difference between an ultimate actual outcome
and a preceding forward-looking statement.
9
<PAGE> 10
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ASSETS
The Corporation's total assets have increased by $24.3 million, to $208.0
million at September 30, 2000, compared with $183.7 million at December 31,
1999.
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>
September 30, 2000 December 31, 1999 September 30, 1999
------------------ ----------------- ------------------
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 $ 9,716 $ 9,660 $ 6,381 $ 6,280 $ 7,382 $ 7,326
Mortgage backed securities 2,978 2,902 3,383 3,265 3,576 3,487
Collateralized mortgage obligations -- -- 1 1 66 66
Tax-exempt municipals 106 107 -- -- -- --
------- ------- ------- ------- ------- -------
Total Securities Available for Sale 12,800 12,669 9,765 9,546 11,024 10,879
------- ------- ------- ------- ------- -------
Investment Securities
United States Treasury -- -- -- -- -- --
United States Government agencies 2,000 1,998 2,001 1,992 2,001 2,001
Mortgage backed securities 1,625 1,603 1,758 1,721 1,790 1,766
Collateralized mortgage obligations 152 151 433 431 625 626
Other Securities 446 446 446 446 446 446
------- ------- ------- ------- ------- -------
Total Investment Securities 4,223 4,198 4,638 4,590 4,862 4,839
------- ------- ------- ------- ------- -------
Total Securities $17,023 $16,867 $14,403 $14,136 $15,886 $15,718
======= ======= ======= ======= ======= =======
</TABLE>
10
<PAGE> 11
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Total loans increased by $18.0 million during the nine months ended September
30, 2000, as the Corporation continued building its loan base. Commercial loans
grew by $18.7 million, while installment loans increased $200,000, and
residential mortgage loans decreased $900,000.
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 $25.2 million in
outstanding loans at September 30, 2000, to commercial borrowers in the real
estate rental and property management industries.
The following table shows an analysis of the allowance for credit losses:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
2000 1999
------- -------
(in thousands)
<S> <C> <C>
Allowance for credit losses at
beginning of period $ 1,927 $ 1,330
Provision charged to expense 495 351
Loans charged off (net) (84) (98)
------- -------
Allowance for credit losses at end of period $ 2,338 $ 1,583
======= =======
Allowance for credit losses as a percentage
of loans at period end 1.47% 1.20%
</TABLE>
Loans are placed in nonaccrual status when, in the opinion of management,
uncertainty exists as to the ultimate collection of principal and interest. At
September 30, 2000, there was $600,000 of loans placed in nonaccrual status.
Commercial loans and lease financing receivables are to be reported as being in
nonaccrual status if: (a) they are maintained on a cash basis because of
deterioration in the financial position of the borrower, (b) payment in full of
interest or principal is not expected, or (c) principal or interest has been in
default for a period of 90 days or more. If it can be documented that the loan
obligation is both well secured and in the process of collection, the loan may
stay on accrual status. However, if the loan is not brought current before 120
days past due, the loan should be reported as nonaccrual. Any exceptions to
automatic nonaccrual status at 90 days must be approved in writing by the Loan
Committee, Credit Administration Officer, and the Chief Financial Officer. A
nonaccrual asset may be restored to an accrual status when none of its principal
or interest is due and unpaid, when it otherwise becomes well secured, and in
the process of collection.
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.
11
<PAGE> 12
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
A summary of nonperforming assets is as follows:
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
------ -----
(in thousands)
<S> <C> <C>
Impaired loans:
Nonaccrual $600 $ --
---- -----
Total impaired loans 600 --
Other real estate -- --
---- -----
Total nonperforming assets $600 $ --
==== =====
Impaired loans as a percentage of
total loans 0.38% 0.00%
==== =====
Total nonperforming assets as a percentage
of total assets 0.29% 0.00%
==== =====
</TABLE>
A summary of total loans past due 90-days and still accruing interest is as
follows:
<TABLE>
<CAPTION>
September 30, September 30,
2000 1999
---- ----
(in thousands)
<S> <C> <C>
Commercial $ -- $ --
Residential real estate 79 --
Installment 41 --
---- ------
Total loans past due 90 days or more
and still accruing interest $120 $ --
==== ======
</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. 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.
12
<PAGE> 13
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
LIABILITIES
During the nine months ended September 30, 2000, total deposits increased by
$19.4 million, to $182.2 million.
Short term borrowings at September 30 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>
September 30, September 30,
2000 1999
------------- ------------
(in thousands, except percentages)
<S> <C> <C>
Amount outstanding at end of period $5,086 $2,518
Weighted average interest rate on ending balance 3.92% 4.10%
Maximum amount outstanding at any month end
during the period $5,086 $3,195
</TABLE>
CAPITAL
The Corporation declared a 10% stock dividend on March 7, 2000. The dividend was
paid on April 21, 2000, to stockholders of record on April 6, 2000. As a result,
approximately $1.2 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 a 10% stock
dividend in the first quarter of 1999.
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>
September 30, December 31, September 30, Minimum
2000 1999 1999 Requirement
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Tier I capital to risk-weighted assets 11.45% 12.30% 13.09% 4%
Total capital to risk-weighted assets 12.71% 13.55% 14.31% 8%
Primary capital to assets 9.79% 10.10% 10.48% 5.5%
Total capital to assets 9.79% 10.10% 10.48% 6%
Tier I capital to quarterly average assets (leverage) 9.01% 9.46% 10.15% 4%
</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 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 in equity. Repayment of the loan will be made solely
from contributions by the Corporation, which has guaranteed the loan.
13
<PAGE> 14
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows the changes in stockholders' equity for the nine
months ended September 30, 2000:
<TABLE>
<CAPTION>
Additional Unearned Accumulated Other
Common Paid-In Accumulated Employee Comprehensive Total
Stock Capital Deficit Benefits Income (Loss) Equity
--------- ----------- -------- ---------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1999 $12,100 $ 6,226 ($ 683) ($ 470) ($ 144) $17,029
Stock dividend 1,210 (1,210) -- -- -- --
Net income -- -- 1,210 -- -- 1,210
Release of ESOP shares -- -- -- 37 -- 37
Other comprehensive income -- -- -- -- 56 56
------- ------- ------- ------- ------- -------
Balance September 30, 2000 $13,310 $ 5,016 $ 527 ($ 433) ($ 88) $18,332
======= ======= ======= ======= ======= =======
</TABLE>
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 Nine Months Ended
September 30, 2000 vs. 1999 September 30, 2000 vs. 1999
-------------------------------- -------------------------------
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 $ 131 $ 56 $ 75 $ 111 ($ 90) $ 201
Securities -- (5) 5 (87) (110) 23
Loans 1,001 793 208 3,220 2,699 521
------- ------- ------- ------- ------- -------
Total 1,132 844 288 3,244 2,499 745
------- ------- ------- ------- ------- -------
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts (66) (16) (50) (159) (47) (112)
Savings deposits 15 15 -- 75 75 --
Time deposits 776 477 299 1,871 1,275 596
Short term borrowings 15 15 -- 6 8 (2)
Long term debt (3) (2) (1) 18 20 (2)
------- ------- ------- ------- ------- -------
Total 737 489 248 1,811 1,331 480
------- ------- ------- ------- ------- -------
Net Interest Income $ 395 $ 1,433
======= =======
</TABLE>
14
<PAGE> 15
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
For the nine months ended September 30, 2000, net interest income increased by
33%, or $1.4 million over the nine months ended September 30, 1999. This was due
to managements efforts to focus on variable rate loan products to better match
the deposit funding base. Increases in volume also enhanced net interest income.
The large percentage increase in both interest earning assets and interest
bearing liabilities was a function of the Corporation's significant growth
during 2000. The net interest margin improved in the quarter to 4.06%, compared
with 4.00% for the third quarter of 1999. Net interest margin was improved by
continued emphasis on loan and deposit pricing, coupled with demand deposit
growth.
15
<PAGE> 16
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 nine month periods ended September 30, 2000 and 1999.
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 September 30,
----------------------------------- -----------------------------------
2000 1999
--------- --------- --------- --------- --------- ---------
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 $ 24,311 $ 402 6.61% $ 20,915 $ 271 5.18%
Securities 15,713 248 6.31 16,032 248 6.19
Loans 157,369 3,750 9.53 124,093 2,749 8.86
---------- ---------- --------- --------- --------- ---------
Total Earning Assets/
Total Interest Income 197,393 4,400 8.92 161,040 3,268 8.12%
---------- --------- --------- ---------
Cash and due from banks 5,516 4,889
All other assets 1,550 1,745
---------- ---------
Total Assets $ 204,459 $ 167,674
========== =========
Liabilities and Equity
NOW and money market accounts $ 18,621 108 2.32% $ 21,459 174 3.24%
Savings deposits 8,084 60 2.97 6,070 45 2.97
Time deposits 132,107 2,140 6.48 102,634 1,364 5.32
Short term borrowings 4,074 43 4.22 2,684 28 4.17
Capitalized lease obligation 1,448 45 12.43 1,512 48 12.70
---------- ---------- --------- --------- --------- ---------
Total Interest Bearing Liabilities/
Total Interest Expense 164,334 2,396 5.83% 134,359 1,659 4.93%
---------- --------- --------- ---------
Noninterest bearing demand deposits 21,075 15,826
All other liabilities 900 564
Stockholders' equity 18,150 16,925
---------- ---------
Total Liabilities and Equity $ 204,459 $ 167,674
========== =========
Net Interest Income $ 2,004 $ 1,609
========== =========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 4.06% 4.00%
========= =========
</TABLE>
16
<PAGE> 17
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------- -----------------------------------
2000 1999
--------- --------- --------- --------- --------- ---------
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 $ 17,493 $ 822 6.27% $ 19,411 $ 711 4.88%
Securities 14,725 693 6.28 17,064 780 6.09
Loans 152,921 10,688 9.32 114,298 7,468 8.71
--------- --------- -------- --------- --------- --------
Total Earning Assets/
Total Interest Income 185,139 12,203 8.79% 150,773 8,959 7.92%
--------- -------- --------- --------
Cash and due from banks 5,215 4,486
All other assets 1,665 1,826
--------- ---------
Total Assets $ 192,019 $ 157,085
========= =========
Liabilities and Equity
NOW and money market accounts $ 17,311 305 2.35% $ 19,977 464 3.10%
Savings deposits 8,443 190 3.00 5,096 115 3.01
Time deposits 123,334 5,649 6.11 95,493 3,778 5.27
Short term borrowings 2,801 88 4.19 2,532 82 4.32
Capitalized lease obligation 1,463 135 12.30 1,245 117 12.53
--------- --------- -------- --------- --------- --------
Total Interest Bearing Liabilities/
Total Interest Expense 153,352 6,367 5.54% 124,343 4,556 4.89%
--------- -------- --------- --------
Noninterest bearing demand deposits 20,034 15,299
All other liabilities 914 506
Stockholders' equity 17,719 16,937
--------- ---------
Total Liabilities and Equity $ 192,019 $ 157,085
========= =========
Net Interest Income $ 5,836 $ 4,403
========= =========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 4.20% 3.89%
======== ========
</TABLE>
17
<PAGE> 18
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NONINTEREST INCOME
Noninterest income increased by 2%, for the first nine months of 2000, when
ignoring security gains and nonrecurring items for the first six months of 1999.
Credit card merchant fee income increased 23%, or $33,000 for the first nine
months of 2000. The largest components of noninterest income are service charge
fee income and credit card merchant processing fees.
NONINTEREST EXPENSE
Noninterest expense increased for the first nine months by 23%, to $3.9 million
in 2000. 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 increased as the Bank implemented a check imaging operations
center. The Corporation continues to become more efficient as expense growth has
been primarily driven by corresponding revenue and asset growth.
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 carryforward
would be realized in the future. Beginning in 1999, the Corporation is
recognizing a federal tax provision based on "book taxable" income. Starting in
the third quarter of 1999, the Corporation paid estimated federal income taxes
having utilized the net operating loss carryforward available to the Corporation
as the result of ongoing earnings.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998 Statement of Financial Account Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133") was issued. SFAS 133
requires all derivative instruments to be recorded on the balance sheet at
estimated fair value. Changes in the fair value of derivative instruments are to
be recorded each period either in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, on the type of hedge transaction. SFAS 133 is
effective for the year 2000. The Company is currently evaluating the impact of
SFAS 133. At present, the Company does not believe it will have a material
effect on the consolidated financial position or results of operations.
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 $5.0 million
unsecured federal funds borrowing facilities, and a $20.0 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.
18
<PAGE> 19
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The Corporation's Asset Liability Management Committee ("ALCO"), which meets
monthly, is responsible for reviewing the interest rate sensitivity position of
the Corporation and establishing policies to monitor and limit exposure to
interest rate risk.
The Corporation currently utilizes two quantitative tools to measure and monitor
interest rate risk: static gap analysis and net interest income simulation
modeling. Each of these interest rate risk measurements has limitations, but
management believes when these tools are evaluated together, they provide a
balanced view of the exposure the Corporation has to interest rate risk.
The following table shows the maturity and repricing distribution of the
Corporation's interest earning assets and interest bearing liabilities as of
September 30, 2000. 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. Non-maturing deposits have assumptions as to repricing
standards.
<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 $ 24,300 $ -- $ -- $ -- $ 24,300
Securities 4,001 1,049 10,482 1,491 17,023
Loans 87,978 5,194 55,978 10,157 159,307
-------- -------- -------- -------- --------
Total 116,279 6,243 66,460 11,648 $200,630
-------- -------- -------- -------- ========
Interest bearing liabilities:
NOW and money market
accounts 2,097 6,342 10,124 -- $ 18,563
Savings deposits 623 1,946 5,213 -- 7,782
Jumbo time deposits 43,422 23,643 8,040 -- 75,105
Time deposits < $100,000 24,426 12,630 23,427 -- 60,483
Short term borrowings 5,086 -- -- -- 5,086
Capitalized lease obligation
and ESOP payable 436 13 198 802 1,449
-------- -------- -------- -------- --------
Total 76,090 44,574 47,002 802 $168,468
-------- -------- -------- -------- ========
Interest rate sensitivity gap $ 40,189 (38,331) 19,458 10,846
Cumulative interest rate
sensitivity gap $ 1,858 $ 21,316 $ 32,162
Interest rate sensitivity gap
ratio 1.53 0.14 1.41 14.52
Cumulative interest rate
sensitivity gap ratio 1.02 1.13 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 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 at different rate
levels.
19
<PAGE> 20
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
At September 30, 2000, the Corporation is considered somewhat "asset sensitive"
according to the preceding table. In a downward rate environment, the
Corporation might not be able to decrease prices on interest bearing liabilities
faster than the decrease in rates on interest bearing assets.
On a quarterly basis, the net interest income simulation model is used to
quantify the effects of hypothetical changes in interest rates on the
Corporation's net interest income over a projected twelve-month period. The
model permits management to evaluate the effects of shifts in the Treasury Yield
curve, upward and downward, on net interest income expected in a stable interest
rate environment.
As of June 30, 2000, the most recent and available analysis, the simulation
model projects net interest income would increase by 4.6% of the base net
interest income, assuming an instantaneous parallel shift upward in the yield
curve by 200 basis points. Conversely, if the yield curve were to decrease by
200 basis points, the model projects net interest income would decrease by 4.9%
of the base net interest income.
20
<PAGE> 21
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.
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
11 Computation of Per Share Earnings
27 Financial Data Schedule
21
<PAGE> 22
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 November 9, 2000.
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/ RAY T. COLONIUS
----------------------------------------------
Ray T. Colonius;
Treasurer
(Principal Financial and Accounting Officer)
22
<PAGE> 23
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
3.1 Articles of Incorporation are incorporated by reference
to exhibit 3.1 of the Corporation's Registration
Statement on Form SB-2 (Commission File Number 333-04113)
which became effective 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
11 Computation of Per Share Earnings
27 Financial Data Schedule
23
