<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 March 31, 1999
Commission File No. 33-4984
PCB BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Tennessee 62-1641671
- -------------------------------------------------------- --------------------------------------------------
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification Number)
300 Sunset Dr : Johnson City, Tennessee 37604
- -------------------------------------------------------- --------------------------------------------------
(Address of Principal Executive Office) (Zip Code)
</TABLE>
(423) 915-2222
-----------------------------------------------------------------
(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
---- ----
800,000
----------------
(Outstanding shares of the issuer's common stock as of March 31, 1999)
Transitional Small Business Disclosure Format
Yes No X
---- ----
<PAGE> 2
PCB BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Number Page
- -------------- ----
<S> <C> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1999 (Unaudited) and December 31, 1998 3
Consolidated Statements of Income
Three Months Ended March 31, 1999
and 1998 (Unaudited) 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1999 and 1998 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7 - 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Default Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-k 10
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- --------------------------------------------------------------------------------
PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
-------------------------
March 31, December 31,
ASSETS 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and due from Banks 2,255 $ 2,048
Federal funds sold 3,315 6,574
Securities held to maturity 500 500
Securities available-for-sale, at fair value 16,531 12,157
Other Investments 266 266
Loans 66,713 67,052
Allowance for loan losses (835) (825)
-------- --------
Loans, net 65,878 66,227
-------- --------
Premises and equipment 3,277 3,217
Accrued income receivable 584 502
Other assets 149 83
-------- --------
$ 92,755 $ 91,574
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
- ---------------------------------------------------------------------------------------------
Liabilities:
Deposits:
Non-interest bearing $ 9,331 $ 9,432
Interest bearing 74,446 72,377
-------- --------
Total deposits 83,777 81,809
Accrued interest payable 218 405
Other Liabilities 336 981
-------- --------
Total Liabilities 84,331 83,195
-------- --------
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 415 310
Unrealized Holding Gain/Loss-Equity 9 69
-------- --------
Total shareholder's equity 8,424 8,379
-------- --------
$ 92,755 $ 91,574
======== ========
</TABLE>
<PAGE> 4
PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
----------------------
Three Months Ended
1999 1998
-------- --------
<S> <C> <C>
INTEREST INCOME:
Loans, including fees $ 1,493 $ 1,359
Securities:
Taxable 120 52
Tax exempt 60 5
Federal funds sold 67 61
-------- --------
Total interest income 1,740 1,477
-------- --------
INTEREST EXPENSE:
Deposits 924 776
Other borrowings -- --
-------- --------
Total interest expense 924 776
-------- --------
Net interest income 816 701
PROVISION FOR LOAN LOSSES 19 33
-------- --------
Net interest income after provision for loan losses 797 668
-------- --------
OTHER INCOME:
Service charges on deposit accounts 57 11
Other service charges, commissions and fees 6 28
-------- --------
Total other income 63 39
-------- --------
OTHER EXPENSES:
Salaries and employee benefits 362 294
Occupancy expense 56 41
Other operating expenses 234 162
-------- --------
Total other expenses 652 497
-------- --------
Income before income taxes 208 210
INCOME TAXES 84 85
TAX-EXEMPT SECURITIES ADJUSTMENT 20 2
-------- --------
Net income 144 127
======== ========
Earnings per share 0.18 0.16
======== ========
Weighted average shares outstanding 800,000 800,000
-------- --------
</TABLE>
<PAGE> 5
PCB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
Three Months Ended
---------------------
1999 1998
------- -------
<S> <C> <C>
INCREASE(DECREASE) IN CASH AND DUE FROM BANKS
Cash flows from operating activities:
Net Income $ 144 $ 127
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and Amortization 68 56
Provision for loan losses 19 33
Increase in accrued income receivable (69) (1)
Other, net (280) (190)
------- -------
Net cash provided(used) by operating activities (118) 25
------- -------
Cash flows from investing activities:
(Increase)/decrease in federal funds sold 3,259 (5,463)
Purchases of held to maturity securities -- 1,960
Purchases of securities available-for-sale (4,467) (1,994)
Net (increase)/decrease in loans 360 (1,693)
Purchases of premises and equipment (121) (679)
Purchases of Federal Home Loan Bank stock -- (38)
------- -------
Net cash used by investing activities (969) (7,907)
------- -------
Cash flows from financing activities:
Dividends paid-out (40)
Increase in deposits 1,334 7,831
------- -------
Net cash provided by financing activities 1,294 7,831
------- -------
Net increase in cash 207 (51)
Cash and due from banks at beginning of period 2,048 2,151
------- -------
Cash and due from banks at end of period $ 2,255 $ 2,100
======= =======
Cash payments for interest $ 1,110 $ 543
======= =======
Cash payments for income taxes $ 70 $ --
======= =======
</TABLE>
<PAGE> 6
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 principals 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, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. 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, 1998.
<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 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 1999. Total assets have grown $1.18 million or 1.2% since December 31, 1998.
During the period January 1, 1999 to March 31, 1999, the growth in total assets
has been funded by increases in deposits of $1.97 million or 2.4%. 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 decreased $339,000 or .5% since December 31, 1998. Investment
securities have increased $4.37 million or 35% since December 31, 1998.
NONPERFORMING ASSETS AND RISK ELEMENTS. The Bank had $25,000 in nonperforming
assets at March 31, 1999. Diversification within the loan portfolio is an
important means of reducing inherent lending risks. At March 31, 1999, the Bank
had no concentrations of ten percent or more of total loans in any single
industry nor any geographical area outside of the immediate market area of the
Bank.
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, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $2.3 million and federal
funds sold of $3.3 million as of March 31, 1999. In addition, loans and
investment securities repricing or maturing in one year or less exceed $27.3
million at March 31, 1999. The Bank has approximately $5.97 million in unfunded
loan commitments. It is not known how much of this will be funded within the
next six months. Other commitments, primarily stand by letters of credit, are
approximately $1.1 million at March 31, 1999. 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 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
<PAGE> 8
recommendations by any regulatory authorities, which would have a material
effect on the Company's liquidity, capital resources, or results of operations.
Total equity capital at March 31, 1999, is $8.4 million or 9.1% of total assets.
The Bank's capital position is adequate to meet the minimum capital requirements
as of March 31, 1999 for all regulatory agencies. The Bank's capital ratios as
of March 31, 1999, are as follows:
<TABLE>
<S> <C>
Tier 1 capital 12.2%
Tier 2 capital 1.2%
Total risk-based 13.5%
</TABLE>
RESULTS OF OPERATIONS
The Company had net income of $144,000 in the first quarter compared to income
of $127,000 in the first quarter of 1998. Net interest income was up $115,000 or
16.4% over the first quarter of 1999 compared to 1998.
Interest Income and interest expense both increased from 1998 to 1999 because of
the increase in earning assets and deposits from March 31, 1998 to March 31,
1999. The growth in non-interest income for the first quarter of 1998 reflects
the increase in deposits during 1999 reflects the increase in deposits during
1999 and 1998.
The provision for loan losses was $19,000 in the first quarter of 1999 compared
to $33,000 in the first of 1998. The allowance for loan losses of $835,000 at
March 31, 1999 (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.
Year 2000 Report
People's Community Bank, like all other banks and financial institutions, is
currently in the process of addressing the Year 2000 issue. Because we rely on
computer systems, we are placing great emphasis on accessing our Year 2000 risk,
correcting any Year 2000 problems, and providing ample time to adequately test
our systems for Year 2000 readiness. The main phases involved in the Year 2000
project are assessment, renovation, validation, and implementation. A
comprehensive review to assess the systems affected by this issue has been
determined and an implementation plan has been compiled. Our Management and
Board of Directors are involved in our business strategy. We are working with
our regulators to ensure that we take into consideration all pertinent guidance
on Year 2000 issues and stay within the timelines established for dealing with
Year 2000 issues.
Substantially all of the required modification and internal testing work has
been completed as of year-end 1998, with the remainder scheduled for completion
early in
<PAGE> 9
1999. People's Community Bank is also addressing Year 2000 issues that may exist
outside its own technology activities, including its facilities and business
processes, external service providers, and other third parties with which it
interfaces. Significantly all of People's facilities and related systems have
been investigated, and modification is under way. Significant third parties with
which People's interfaces in regard to the Year 2000 problem, include customers,
external service providers, technology vendors, the financial market
infrastructure including payment and clearing systems, and the utility
infrastructure on which all businesses depend. Unreadiness by these parties
could expose People's to the potential for loss, and impairment of business
processes and activities.
People's Community Bank is creating contingency plans intended to address
perceived risks associated with its Year 2000 effort. These activities include
planning to mitigate any remaining risks associated with the remediation of
critical systems, business resumption planning to address the possibility of
systems failure, and resumption planning to address the possibility of failure
of systems or processes outside our control. Our Contingency Plan is scheduled
for completion by June 30, 1999.
People's Community Bank has determined that the Year 2000 issue may be critical
to its operation; however, Management does not believe customer readiness is or
will be material to its overall performance. Management also believes that the
total costs of becoming Year 2000 compliant will not be significant. Through
1998, expenditures for Year 2000 were immaterial, and as of this date, Year 2000
related expenditures are projected to be approximately $30,000.00.
<PAGE> 10
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, 1999
<PAGE> 11
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.
<TABLE>
<S> <C>
PCB BANCORP, INC.
-----------------------------------------------------------
(Registrant)
5/7/99 /s/ Phillip R. Carriger
- -------------------------------- -----------------------------------------------------------
(Date) Phillip R. Carriger, Chairman and Chief Executive Officer
(Principle Executive Officer)
5/7/99 /s/ Larry E. Parks
- -------------------------------- -----------------------------------------------------------
(Date) Larry E. Parks, Vice President
(Principal Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,255
<INT-BEARING-DEPOSITS> 1
<FED-FUNDS-SOLD> 3,315
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16,531
<INVESTMENTS-CARRYING> 500
<INVESTMENTS-MARKET> 505
<LOANS> 66,713
<ALLOWANCE> 835
<TOTAL-ASSETS> 92,755
<DEPOSITS> 83,777
<SHORT-TERM> 0
<LIABILITIES-OTHER> 554
<LONG-TERM> 0
0
0
<COMMON> 800
<OTHER-SE> 7,624
<TOTAL-LIABILITIES-AND-EQUITY> 8,424
<INTEREST-LOAN> 1,493
<INTEREST-INVEST> 180
<INTEREST-OTHER> 67
<INTEREST-TOTAL> 1,740
<INTEREST-DEPOSIT> 924
<INTEREST-EXPENSE> 924
<INTEREST-INCOME-NET> 816
<LOAN-LOSSES> 19
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 652
<INCOME-PRETAX> 208
<INCOME-PRE-EXTRAORDINARY> 208
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 144
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<YIELD-ACTUAL> 3.09
<LOANS-NON> 25
<LOANS-PAST> 913
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 826
<CHARGE-OFFS> 43
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 835
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 835
</TABLE>
