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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
Commission File No. 33-4984
PCB BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
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Tennessee 62-1641671
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(State or other jurisdiction of incorporation) (I.R.S. Employer Identification Number)
300 Sunset Dr : Johnson City, Tennessee 37604
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(Address of Principal Executive Office) (Zip Code)
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(423) 915-2222
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(Issuer's Telephone Number Including Area Code)
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
None
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Indicate by the check mark whether the Issuer: (1) has filed all reports
required by Section 13 or 15 (d)of the Securities Exchange Act of 1934 during
the preceding 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
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800,000
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(Outstanding shares of the issuer's common stock as of March 31, 1998)
Transitional Small Business Disclosure Format
Yes No X
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PCB BANCORP, INC.
INDEX
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<CAPTION>
Number Page
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1998 (Unaudited) and December 31, 1997 3
Consolidated Statements of Income
Three Months Ended March 31, 1998
and 1997 (Unaudited) 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Default Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-k 9
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
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<CAPTION>
(In Thousands)
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March 31, December 31,
ASSETS 1998 1997
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Cash and due from Banks 2,100 $ 2,151
Federal funds sold 7,586 2,123
Securities held to maturity 720 2,717
Securities available-for-sale, at fair value 3,432 1,443
Other Investments 119 81
Loans 59,902 58,208
Allowance for loan losses (757) (728)
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Loans, net 59,145 57,480
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Premises and equipment 2,930 2,299
Accrued income receivable 383 369
Deferred income taxes, net 27 108
Other assets 128 104
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$ 76,570 $ 68,875
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LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 6,750 $ 7,326
Interest bearing 61,604 53,197
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Total deposits 68,354 60,523
Accrued interest payable 233 495
Other Liabilities 57 55
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Total Liabilities 68,644 61,073
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Shareholder's equity:
Preferred stock, no par value, 1,000,000 shares authorized;
none issued 0 0
Common stock, $1 par value, 3,000,000 shares authorized;
800,000 shares issued and outstanding 800 800
Additional paid-in capital 7,200 7,200
Retained Earnings (75) (202)
Unrealized Holding Gain/Loss-Equity 1 4
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Total shareholder's equity 7,926 7,802
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$ 76,570 $ 68,875
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PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
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(In Thousands)
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Three Months Ended
1998 1997
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INTEREST INCOME:
Loans, including fees $ 1,359 $ 843
Securities:
Taxable 52 103
Tax exempt 5 -
Federal funds sold 61 15
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Total interest income 1,477 961
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INTEREST EXPENSE:
Deposits 776 454
Other borrowings - 5
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Total interest expense 776 459
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Net interest income 701 502
PROVISION FOR LOAN LOSSES 33 126
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Net interest income after provision for loan losses 668 376
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OTHER INCOME:
Service charges on deposit accounts 11 19
Other service charges, commissions and fees 28 4
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Total other income 39 23
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OTHER EXPENSES:
Salaries and employee benefits 294 227
Occupancy expense 41 27
Other operating expenses 162 111
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Total other expenses 497 365
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Income before income taxes 210 34
INCOME TAXES 85 15
T/E MUNICIPAL SECURITIES ADJUSTMENT 2
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Net income 127 19
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Earnings per share 0.16 0.02
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Weighted average shares outstanding 800,000 800,000
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PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
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<CAPTION>
(In Thousands)
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Three Months Ended
1998 1997
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INCREASE(DECREASE) IN CASH AND DUE FROM BANKS
Cash flows from operating activities:
Net Income $ 127 $ 19
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and Amortization 56 28
Provision for loan losses 33 126
Increase in accrued income receivable (1) (21)
Other, net (190) (69)
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Net cash provided (used) by operating activities 25 83
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Cash flows from investing activities:
Increase in federal funds sold (5,463) 1,331
Purchases, net maturities, of held to maturity securities 1,960 (10)
Purchases, net maturities, of securities available-for-sale (1,994) (799)
Net increase in loans (1,693) (10,095)
Purchases of premises and equipment (679) (228)
Purchases of FHLB Stock (38)
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Net cash used by investing activities (7,907) (9,801)
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Cash flows from financing activities:
Increase in deposits 7,831 9,961
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Net cash provided by financing activities 7,831 9,961
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Net increase in cash (51) 243
Cash and due from banks at beginning of period 2,151 1,167
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Cash and due from banks at end of period $ 2,100 $ 1,410
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Cash payments for interest $ 543 $ 397
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Cash payments for income taxes $ - $ -
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PCB BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the financial information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1997.
6
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Item 2. Management's Discussion And Analysis of Financial Condition and Results
of Operations
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FINANCIAL CONDITION
People's Community Bank (the "Bank") represents virtually all of the assets of
PCB Bancorp, Inc. (the "Company"). The Company's consolidated results of
operations are dependent primarily on net interest income, which is the
difference between the interest income earned on interest-earning assets, such
as loans and investments, and the interest expense incurred on interest-bearing
liabilities, such as deposits and other borrowings. The Bank, which was opened
December 15, 1995, has continued to experience growth during the first quarter
of 1998. Total assets have grown $7.7 million or 11% since December 31, 1997.
During the period January 1, 1998 to March 31, 1998, the growth in total assets
has been funded by increases in deposits of $7.8 million or 13%. This growth and
the anticipated future growth will allow the Bank to satisfy its cash
requirements. It is not anticipated that it will be necessary to raise any
additional funds.
Loans have increased $1.7 million or 3% since December 31, 1997. Investment
securities have increased $30 thousand or .71% since December 31, 1997.
NONPERFORMING ASSETS AND RISK ELEMENTS. The Bank had nonperforming assets
totaling $19,220.12 at March 31, 1998. Diversification within the loan profile
is an important means of reducing inherent lending risks. At March 31, 1998, 1-4
Family Residential Loans, (adjustable and construction- with arms of 1, 3, & 5
years), comprised 20.5% of the Bank's total loan portfolio. No other industry or
geographical area outside the Bank's immediate market area were responsible for
at least ten percent of the Bank's loan portfolio at March 31, 1998.
The Bank discontinues the accrual of interest on loans which become ninety days
past due (principal and/or interest), unless the loans are adequately secured
and in the process of collection. Other real estate owned is carried at fair
value, determined by an appraisal. A loan is classified as a restructured loan
when the interest rate is materially reduced or the term is extended beyond the
original maturity date because of the inability of the borrower to service the
debt under the original terms. The Bank had no restructured loans or other real
estate at March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $2.1 million and federal
funds sold of $7.6 million as of March 31, 1998. In addition, loans and
investment securities repricing or maturing in one year or less exceed $25.7
million at March 31, 1998. The Bank has approximately $6.1 million in unfunded
loan commitments. It is not known how much of this will be funded within the
next six months. Other commitments, primarily, standby letters of credit, are
approximately $350,000 at March 31, 1997. In addition to the Federal Home Loan
Bank membership, the Bank has established a federal fund line of credit with a
correspondent bank totaling $2 million to meet unexpected liquidity demands.
With the exception of unfunded loan commitments, there are no known trends or
any known commitments or uncertainties that will result in the Bank's liquidity
increasing or decreasing in a material way. In addition, the Company is not
aware of any recommendations by any regulatory authorities which would have a
material effect on the Company's liquidity, capital resources, or results of
operations.
7
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Total equity capital at March 31, 1998, is $7.9 million or 10% of total assets.
The Bank's capital position is adequate to meet the minimum capital
requirement's as of March 31, 1998 for all regulatory agencies. The Bank's
capital ratios as of March 31, 1998, are as follows:
Tier 1 capital 10.7%
Tier 2 capital 1.0%
Total risk-based 11.7%
RESULTS OF OPERATIONS
The Company had net income of $127,000 in the first quarter compared to income
of $19,000 in the first quarter of 1997. Net interest income was up $199,000 or
40% over the first quarter of 1998 compared to 1997.
Interest income and interest expense both increased from 1997 to 1998 because of
the increase in earning assets and deposits from March 31, 1997 to March 31,
1998. The growth in non-interest income for the first quarter of 1998 reflects
the increase in deposits during 1997 and 1998.
The provision for loan losses was $33,000 in the first quarter of 1998 compared
to $126,000 in the first quarter of 1997. The allowance for loan losses of
$757,000 at March 31, 1998 (approximately 1.25% of loans) is considered to be
adequate to cover losses inherent in the loan portfolio. Management evaluates
the adequacy of the allowance for loan losses monthly and makes provisions for
loan losses based on this evaluation.
8
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) 27 Financial Data Schedule (for SEC use only).
b) The Company did not file any reports on Form 8-K during
the quarter ended March 31, 1998.
9
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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PCB BANCORP, INC.
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(Registrant)
4/11/98 Phillip R. Carriger
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(Date) Phillip R. Carriger, Chairman and Chief Executive
Officer
(Principle Executive Officer)
4/11/98 Larry E. Parks
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(Date) Larry E. Parks, Vice President
(Principle Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,100
<INT-BEARING-DEPOSITS> 2
<FED-FUNDS-SOLD> 7,586
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,432
<INVESTMENTS-CARRYING> 720
<INVESTMENTS-MARKET> 732
<LOANS> 59,902
<ALLOWANCE> 757
<TOTAL-ASSETS> 76,570
<DEPOSITS> 68,354
<SHORT-TERM> 0
<LIABILITIES-OTHER> 290
<LONG-TERM> 0
0
0
<COMMON> 800
<OTHER-SE> 7,126
<TOTAL-LIABILITIES-AND-EQUITY> 76,570
<INTEREST-LOAN> 1,359
<INTEREST-INVEST> 57
<INTEREST-OTHER> 61
<INTEREST-TOTAL> 1,477
<INTEREST-DEPOSIT> 776
<INTEREST-EXPENSE> 776
<INTEREST-INCOME-NET> 701
<LOAN-LOSSES> 33
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 497
<INCOME-PRETAX> 210
<INCOME-PRE-EXTRAORDINARY> 210
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 127
<EPS-PRIMARY> .16
<EPS-DILUTED> .14
<YIELD-ACTUAL> 3.50
<LOANS-NON> 19
<LOANS-PAST> 99
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 393
<ALLOWANCE-OPEN> 728
<CHARGE-OFFS> 15
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 756
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 756
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