<PAGE> 1
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 June 30, 1998
Commission File No. 33-4984
PCB BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
Tennessee 62-1641671
- ------------------------------------------ ------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
300 Sunset Dr : Johnson City, Tennessee 37604
- ------------------------------------------ ------------------------------
(Address of Principal Executive Office) (Zip Code)
(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
-----------------
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 June 30, 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
<S> <C> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1998 (Unaudited) and December 31, 1997 3
Consolidated Statements of Income
Three Months and Six Months Ended June 30, 1998
and 1997 (Unaudited) 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 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
</TABLE>
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PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
===================================================================================================
PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
(In Thousands)
---------------------------
June 30, December 31,
ASSETS 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from Banks $ 3,359 $ 2,151
Federal funds sold 3,462 2,123
Securities held to maturity 500 2,717
Securities available-for-sale, at fair value 5,615 1,443
Other Investments 245 81
Loans 63,655 58,208
Allowance for loan losses (796) (728)
-------- --------
Loans, net 62,859 57,480
-------- --------
Premises and equipment 3,117 2,299
Accrued income receivable 469 369
Deferred income taxes, net -- 108
Other assets 140 104
-------- --------
$ 79,766 $ 68,875
===========================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ---------------------------------------------------------------------------------------------------
Liabilities:
Deposits:
Non-interest bearing $ 8,891 $ 7,326
Interest bearing 62,392 53,197
-------- --------
Total deposits 71,283 60,523
Accrued interest payable 320 495
Other Liabilities 100 55
-------- --------
Total Liabilities 71,703 61,073
-------- --------
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 62 (202)
Unrealized Holding Gain/Loss-Equity 1 4
-------- --------
Total shareholder's equity 8,063 7,802
-------- --------
$ 79,766 $ 68,875
===========================
</TABLE>
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PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unauditied)
<TABLE>
<CAPTION>
(In Thousands) (In Thousands)
---------------------- ----------------------
Three Months Ended Six Months
Ended
1998 1997 1998 1997
---------- --------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $ 1,470 $ 1,046 $ 2,829 $ 1,889
Securities:
Taxable 58 89 110 192
Tax exeempt 18 -- 23 --
Federal funds sold 56 13 117 28
-------- -------- -------- --------
Total interest income 1,602 1,148 3,079 2,109
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits 827 566 1,603 1,020
Other borrowings -- 2 -- 7
-------- -------- -------- --------
Total interest expense 827 568 1,603 1,027
-------- -------- -------- --------
Net interest income 775 580 1,476 1,082
PROVISION FOR LOAN LOSSES 41 79 74 205
-------- -------- -------- --------
Net interest income after provision for loan losses 734 501 1,402 877
-------- -------- -------- --------
OTHER INCOME:
Service charges on deposit accounts 12 24 23 43
Other service charges, commissions and fees 32 17 60 21
-------- -------- -------- --------
Total other income 44 41 83 64
-------- -------- -------- --------
OTHER EXPENSES:
Salaries and employee benefits 315 248 609 475
Occupancy expense 45 36 86 63
Other operating expenses 199 179 361 290
-------- -------- -------- --------
Total other expenses 559 463 1,056 828
-------- -------- -------- --------
Income before income taxes 219 79 429 113
INCOME TAXES 89 31 174 46
TAX-EXEMPT SECURITIES ADJUSTMENT 7 -- 9 --
-------- -------- -------- --------
Net income 137 48 264 67
==================================================
Earnings per share 0.17 0.06 0.33 0.08
======== ======== ======== ========
Weighted average shares outstanding 800,000 800,000 800,000 800,000
======== ======== ======== ========
</TABLE>
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PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
-----------------------
Six Months Ended
1998 1997
------------ ----------
INCREASE(DECREASE) IN CASH AND DUE FROM BANKS
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 264 $ 67
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and Amortization 112 58
Provision for loan losses 74 205
Increase in accrued income receivable (63) (64)
Other, net (86) 140
-------- --------
Net cash provided(used) by operating activities 301 406
-------- --------
Cash flows from investing activities:
Increase in federal funds sold (1,339) 584
Purchases of held to maturity securities 2,180 1,983
Purchases of securities available-for-sale (4,166) (799)
Net increase in loans (5,447) (16,381)
Purchases of premises and equipment (917) (852)
Purchases of Federal Home Loan Bank stock (164)
-------- --------
Net cash used by investing activities (9,853) (15,465)
-------- --------
Cash flows from financing activities:
Increase in deposits 10,760 16,079
-------- --------
Net cash provided by financing activities 10,760 16,079
-------- --------
Net increase in cash 1,208 1,020
Cash and due from banks at beginning of period 2,151 1,167
-------- --------
Cash and due from banks at end of period $ 3,359 $ 2,187
======== ========
Cash payments for interest $ 1,283 $ 539
======== ========
Cash payments for income taxes $ - $ -
======== ========
</TABLE>
5
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PCB BANCORP, INC. AND SUBSIDIARY
Notes and 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 six month period ended June 30, 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
<PAGE> 7
Item 2. Management's Discussion And Analysis of Financial Condition and Results
of Operations
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 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 second quarter of 1998.
Total assets have grown $3,196 million or 4.2% since March 31, 1998 and $10,891
million or 15.8% since December 31, 1997. Growth in total assets was funded by
an increase in deposits of $2,929 million or 4.3% since March 31, 1998 and
$10,760 million or 17.8% since December 31, 1997. This growth and 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 $3,753 million or 6.3% since March 31, 1998 and $5,447 or
9.4% since December 31, 1997. Investment securities have increased $2,089
million or 48.9% since March 31, 1998 and $2,119 or 50.0% since December 31,
1997.
NONPERFORMING ASSETS AND RISK ELEMENTS. The Bank did not have any nonperforming
assets at June 30, 1998. Diversification within the loan portfolio is an
important means of reducing inherent lending risks. At June 30, 1998, the Bank
had no concentrations of ten percent or more of total loans in any single
industry nor any geographical area outside the immediate market area of the
Bank.
The Bank discontinues the accrual of interest on loans which become ninety days
past due (principle 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 has no restructured loans or other real
estate at June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $3.3 million and federal
funds sold of $3.5 million as of June 30, 1998. In addition, loans and investing
securities repricing or maturing in one year or less exceed $28.5 million at
June 30, 1998. The Bank has approximately $5.0 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 $560,000 at June 30, 1998. In order to collateralize public unit
deposits as required by the State of Tennessee Collateral Pool Board, the Bank
has an advance of $350,000 on a $2 million line of credit with the Federal Home
Loan Bank of Cincinnati at June 30, 1998. 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
<PAGE> 8
Total equity capital at June 30, 1998 is $8.1 million or 10.1 % or total assets.
The Bank's capital position is adequate to meet the minimum capital requirements
as of June 30, 1998 for all regulatory agencies. The Bank's capital ratios as of
June 30, 1998, are as follows:
Tier 1 capital 10.0 %
Tier 2 capital 1.0 %
Total risk-based capital 11.0 %
RESULTS OF OPERATIONS
The Company had net income of $137,000 in the second quarter 1998 compared to
net income $48,000 in the second quarter of 1997. Net interest income was up
$195,000 or 33.6% over the second 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 June 30, 1997 to June 30, 1998.
The growth in non-interest income for the second quarter of 1998 reflects the
increase in deposits during 1997 and 1998.
The provision for loan losses was $41,000 in the second quarter of 1998 compared
to $79,000 in the second quarter of 1997. The allowance for loan losses of
$796,000 at June 30, 1998 (approximately 1.25% of total 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
<PAGE> 9
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 June 30, 1998.
9
<PAGE> 10
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.
PCB BANCORP, INC.
----------------------------------
(Registrant)
8/5/98 /s/ Phillip R. Carriger
- ----------------------- ----------------------------------
(Date) Phillip R. Carriger, Chairman and
Chief Executive Officer
(Principle Executive Officer)
8/5/98 /s/ Larry E. Parks
- ----------------------- ----------------------------------
(Date) Larry E. Parks, Vice President
(Principle Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,357
<INT-BEARING-DEPOSITS> 2
<FED-FUNDS-SOLD> 3,462
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,615
<INVESTMENTS-CARRYING> 500
<INVESTMENTS-MARKET> 509
<LOANS> 63,655
<ALLOWANCE> 796
<TOTAL-ASSETS> 79,766
<DEPOSITS> 71,283
<SHORT-TERM> 0
<LIABILITIES-OTHER> 420
<LONG-TERM> 0
0
0
<COMMON> 800
<OTHER-SE> 7,263
<TOTAL-LIABILITIES-AND-EQUITY> 79,766
<INTEREST-LOAN> 2,829
<INTEREST-INVEST> 133
<INTEREST-OTHER> 117
<INTEREST-TOTAL> 3,079
<INTEREST-DEPOSIT> 1,603
<INTEREST-EXPENSE> 1,603
<INTEREST-INCOME-NET> 1,476
<LOAN-LOSSES> 74
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,056
<INCOME-PRETAX> 429
<INCOME-PRE-EXTRAORDINARY> 264
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 264
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
<YIELD-ACTUAL> 3.64
<LOANS-NON> 5
<LOANS-PAST> 97
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 471
<ALLOWANCE-OPEN> 728
<CHARGE-OFFS> 19
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 796
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 796
</TABLE>
