<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Transition Period From to
-------------- -----------------
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 [ ]
809,700
----------------
(Outstanding shares of the issuer's common stock as of June 30, 2000)
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
June 30, 2000 (Unaudited) and December 31, 1999 2
Consolidated Statements of Income
Three Months ended June 30, 2000 and 1999 (Unaudited) 3
Six Months ended June 30, 2000 and 1999 (Unaudited) 3
Consolidated Statements of Shareholders' Equity
Six Months ended June 30, 2000 and 1999 (Unaudited) 6
Consolidated Statements of Cash Flows
Six Months ended June 30, 2000 and 1999 (Unaudited) 7
Notes to Consolidated Financial Statements (Unaudited) 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Default Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-k 15
</TABLE>
<PAGE> 3
PCB BANCORP, INC.
FINANCIAL STATEMENTS
WITH
ACCOUNTANT'S REVIEW REPORT
For the Quarters Ended June 30, 2000 and 1999
<PAGE> 4
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
PCB Bancorp, Inc.
Johnson City, TN 37602
We have reviewed the accompanying consolidated statement of financial condition
of PCB Bancorp, Inc. and wholly-owned subsidiary as of June 30, 2000 and the
related consolidated statement of changes in stockholders' equity for the six
months ended June 30, 2000 and the consolidated statements of income for the
three and six months ended June 30, 2000 and 1999 and consolidated statements of
cash flows for the six months ended June 30, 2000 and 1999. These financial
statements are the responsibility of the Bank's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
Blackburn, Childers & Steagall, PLC
July 31, 2000
<PAGE> 5
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and Due from Banks $ 5,350,090 6,049,616
Federal Funds Sold 3,395,000 1,359,000
Securities Held-to-Maturity 600,668 600,749
Securities Available-for-Sale 20,036,310 20,043,328
Loans Receivable, Net 79,011,748 70,146,050
Accrued Interest Receivable 655,917 619,196
Premises and Equipment, Net 3,052,382 3,152,084
Restricted Investments - Stock in Federal Home Loan Bank, Cost 300,000 275,500
Deferred Tax Asset 180,323 152,612
Other Assets 247,447 98,340
------------- ------------
Total Assets $ 112,829,885 102,496,475
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand Deposits $ 11,420,465 9,841,868
Savings and NOW Deposits 35,329,918 40,130,428
Other Time Deposits 55,852,402 40,845,777
Accrued Interest Payable 418,029 321,903
Dividends Payable 48,582 --
Accounts Payable and Other Liabilities 1,004,641 2,865,411
------------- ------------
Total Liabilities 104,074,037 94,005,387
------------- ------------
SHAREHOLDERS' EQUITY:
Common Stock - $1 par value; 3,000,000 shares authorized; 809,700 and
806,200 shares issued and outstanding
at 6-30-00 and 12-31-99, respectively 809,700 806,200
Additional Paid-in Capital 7,295,500 7,259,000
Retained Earnings 1,105,474 861,168
Accumulated Other Comprehensive Income (454,826) (435,280)
------------- ------------
Total Shareholder's Equity 8,755,848 8,491,088
------------- ------------
Total Liabilities and Shareholders' Equity $ 112,829,885 102,496,475
============= ============
</TABLE>
See Accompanying Notes and Accountant's Review Report
2
<PAGE> 6
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
The Three Months Ended The Six Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest on Loans $1,698,575 1,401,282 3,274,160 2,827,892
Interest on Investments 348,377 238,123 689,967 418,169
Interest on Federal Funds Sold 19,824 30,692 32,909 98,004
---------- ---------- --------- ---------
Total Interest Income 2,066,776 1,670,097 3,997,036 3,344,065
---------- ---------- --------- ---------
INTEREST EXPENSE:
Interest on Interest Bearing Checking Accounts 24,870 12,297 46,849 27,498
Interest on Money Market Accounts 54,517 52,759 106,984 94,422
Interest on Passbook Accounts 298,113 418,695 639,284 833,247
Interest on Certificates of Deposit 697,783 405,972 1,251,452 858,128
Interest on Other Borrowed Funds 82,406 -- 160,802 --
---------- ---------- --------- ---------
Total Interest Expense 1,157,689 889,723 2,205,371 1,813,295
---------- ---------- --------- ---------
Net Interest Income 909,087 780,374 1,791,665 1,530,770
Provision for Loan Losses 51,767 18,555 101,132 37,235
---------- ---------- --------- ---------
Net Interest Income after Provision for Loan Losses 857,320 761,819 1,690,533 1,493,535
---------- ---------- --------- ---------
NON-INTEREST INCOME:
Service Charges 103,479 79,664 199,370 140,706
Loan Origination Fees 90,154 46,384 159,548 104,830
Net Gains (Losses) from Sale of Loans 200 (181) 2,122 7,267
Net Realized Gain on Sales and Calls of Securities -- 2,721 -- 2,721
Miscellaneous 238 543 2,122 1,331
---------- ---------- --------- ---------
Total Non-Interest Income 194,071 129,131 363,162 256,855
---------- ---------- --------- ---------
</TABLE>
(Continued)
3
<PAGE> 7
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
The Three Months Ended The Six Months Ended
--------------------------------- ------------------------------------
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NON-INTEREST EXPENSE:
Salaries 353,496 289,677 698,384 592,974
Payroll Taxes 25,375 24,157 56,695 54,984
Employee Benefits 36,233 20,232 76,116 48,505
Occupancy Expense 28,040 22,309 52,758 45,580
Rental Expense 6,300 9,300 12,600 15,600
Furniture and Equipment Expense 4,237 6,400 9,528 11,172
Computer Equipment Expense 26,201 25,096 55,347 68,116
Stationery, Supplies and Printing 22,435 11,461 47,571 33,165
Postage, Express and Freight 22,760 16,308 42,887 32,884
Telephone Expense 13,680 13,251 26,355 25,082
Vehicle Expense 5,575 3,087 11,066 5,914
Outside Services 33,035 16,943 57,105 38,309
Teller Over and Short 386 71 88 95
Advertising and Promotion 23,228 28,027 37,622 48,487
Loan Collection Expense 5,863 1,483 11,066 3,640
Bank Security and Protection 559 787 975 1,507
FDIC Assessment 4,799 2,365 9,739 4,623
Insurance 5,323 9,709 14,366 18,754
Dues and Subscriptions 3,526 3,571 9,399 5,478
Franchise Tax Expense 6,750 6,000 13,500 12,000
Refunds and Reimbursements 1,977 703 4,552 3,000
Travel and Meetings 698 1,180 1,218 1,484
Contributions 1,490 1,440 3,090 3,635
Depreciation and Amortization 74,600 74,551 147,519 142,339
Directors' Fees 7,995 8,100 16,095 15,298
Miscellaneous Expenses 20,931 13,340 33,595 28,419
------- ------- --------- ---------
Total Non-Interest Expenses 735,492 609,548 1,449,236 1,261,044
------- ------- --------- ---------
Income Before Taxes 315,899 281,402 604,459 489,346
</TABLE>
(Continued)
4
<PAGE> 8
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
The Three Months Ended The Six Months Ended
----------------------------- -----------------------------
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Income Before Taxes (Brought Forward) 315,899 281,402 604,459 489,346
INCOME TAX PROVISION:
Income Tax Expense 128,247 91,046 214,617 154,604
------- ------- ------- -------
Net Income 187,652 190,356 389,842 334,742
======= ======= ======= =======
Net Income per Share-Basic $ .23 .24 .48 .42
======= ======= ======= =======
Net Income per Share-Assuming Dilution $ .21 .22 .44 .38
======= ======= ======= =======
</TABLE>
See Accompanying Notes and Accountant's Review Report
5
<PAGE> 9
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-in Retained Comprehensive
Stock Capital Earnings Income Total
--------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1999 $ 800,000 7,200,000 671,022 68,578 8,379,034
COMPREHENSIVE INCOME:
Net Income -- -- 671,022 -- 671,022
Other Comprehensive Income
Net of Tax:
Change In Unrealized
Gain (Loss) on Securities
Available-For-Sale, Net
of Deferred Income Tax
of $(335,906) (503,858) (503,858)
----------
Total Comprehensive Income 167,164
Stock Option Exercised 6,200 59,000 -- -- 65,200
Cash Dividends -- -- (120,310) -- (120,310)
--------- ---------- ---------- -------- ----------
Balances, December 31, 1999 $ 806,200 7,259,000 861,168 (435,280) 8,491,088
COMPREHENSIVE INCOME:
Net Income -- -- 389,842 -- 389,842
Other Comprehensive Income
Net of Tax:
Change in Unrealized
Gain (Loss) on Securities
Available-For-Sale, Net
of Deferred Income Tax
of $(13,030) (19,546) (19,546)
----------
Total Comprehensive Income 370,296
Stock Option Exercised 3,500 36,500 -- 40,000
Cash Dividends -- -- (145,536) -- (145,536)
--------- ---------- ---------- -------- ----------
Balances, June 30, 2000 $ 809,700 7,295,500 1,105,474 (454,826) 8,755,848
========= ========== ========== ======== ==========
</TABLE>
6
<PAGE> 10
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 389,842 334,742
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation Expense 147,519 131,475
Amortization Expense -- 10,864
Provision for Loan Losses 101,132 37,235
Discount Accretion Net of Premium Amortization (33,518) (15,670)
Origination of Mortgage Loans Held for Sale -- (496,300)
Proceeds from Mortgage Loans Sold -- 876,550
Net Realized (Gains) Loss on Sales and Calls of Securities -- (2,721)
Deferred Income Tax (27,711) (32,755)
(Increase) Decrease in Assets:
Interest Receivable (36,721) (62,598)
Other Assets (149,107) (61,900)
Increase (Decrease) in Liabilities:
Increase (Decrease) in Accrued Interest Payable 96,126 (176,205)
Other Liabilities (1,860,770) (134,810)
------------ ----------
Net Cash Provided (Used) by Operating Activities (1,373,208) 407,907
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (Increase) Decrease in Federal Funds Sold (2,036,000) 2,774,000
Purchases of Available-for-Sale Securities (472,500) (5,779,765)
Proceeds from Maturities and Calls of Available-For-Sale Securities 54,900 1,511,240
Principal Payments Received on Mortgage Back Securities 438,671 505,944
Purchases of Restricted Investments (24,500) (4,700)
Purchases of Premises and Equipment (47,817) (182,952)
Net (Increase) in Loans Receivable (8,966,830) (358,860)
------------ ----------
Net Cash Used for Investing Activities (11,054,076) (1,535,093)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid (96,954) (40,000)
Stock Options Exercised 40,000 --
Net Increase in Deposits 11,784,712 3,240,778
------------ ----------
Net Cash Provided by Financing Activities 11,727,758 3,200,778
------------ ----------
Increase (Decrease) in Cash and Cash Equivalents (699,526) 2,073,592
</TABLE>
(Continued)
7
<PAGE> 11
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents (699,526) 2,073,592
(Brought Forward)
Cash and Cash Equivalents, Beginning of Year 6,049,616 2,048,350
----------- ---------
Cash and Cash Equivalents, End of Period $ 5,350,090 4,121,942
=========== =========
SUPPLEMENTAL DISCLOSURES:
Cash Paid during the Period for Interest $ 2,109,245 1,910,000
=========== =========
Cash Paid during the Period for Income Taxes $ 246,503 205,000
=========== ==========
</TABLE>
See Accompanying Notes and Accountant's Review Report.
8
<PAGE> 12
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instruction to Form 10-QSB. 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 June 30, 2000 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000. 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, 1999.
NOTE 2. ACCOUNTS PAYABLE AND OTHER LIABILITIES:
At December 31, 1999 there was a $2,000,000 balance on a line of credit included
in Accounts Payable and other liabilities. This balance had been repaid in its
entirety at June 30, 2000.
9
<PAGE> 13
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. INVESTMENTS:
The amortized costs of securities and their approximate fair values are as
follows:
<TABLE>
<CAPTION>
June 30, 2000 (unaudited) December 31, 1999
------------------------------------------------ -----------------------------------------------
Gross Gross Gross Gross
Amortized Unrealized Unrealized Amortized Unrealized Unrealized
Cost Gains Losses Fair Value Cost Losses Gains Fair Value
----------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-Sale
U.S. Government
Federal Agencies $ 8,228,545 2,989 333,192 7,898,342 7,720,191 -- 288,194 7,431,997
State and Municipal
Governments 7,342,924 2,452 275,967 7,069,409 7,395,994 204 283,339 7,112,859
Mortgage-Backed
Securities 5,222,884 1,328 155,653 5,068,559 5,652,610 2,895 157,033 5,498,472
----------- ----- ------- ---------- ---------- ----- ------- ----------
Total Available-for-Sale 20,794,353 6,769 764,812 20,036,310 20,768,795 3,099 728,566 20,043,328
----------- ----- ------- ---------- ---------- ----- ------- ----------
Held-to-Maturity
US Government Agencies 500,000 -- 8,605 491,395 500,000 -- 4,548 495,452
State and Municipal
Governments 100,668 -- 1,629 99,039 100,749 -- 4,442 96,307
----------- ----- ------- ---------- ---------- ----- ------- ----------
Total Held-to-Maturity 600,668 -- 10,234 590,434 600,749 -- 8,990 591,759
----------- ----- ------- ---------- ---------- ----- ------- ----------
Total Investment
Securities $21,395,021 6,769 775,046 20,626,744 21,369,544 3,099 737,556 20,635,087
=========== ===== ======= ========== ========== ===== ======= ==========
</TABLE>
The amortized cost and market value of debt securities at December 31, 1999, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Held-to-Maturity Available-for-Sale
-------------------------- --------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Amounts maturing in:
One year or less $ -- -- 50,000 49,924
After one year through five years -- -- 4,263,672 4,182,011
After five years through ten years 500,000 495,452 6,528,760 6,231,773
After ten years 100,749 96,307 4,273,753 4,081,148
Mortgage-Backed Securities -- -- 5,652,610 5,498,472
---------- ---------- ---------- ----------
$ 600,749 591,759 20,768,795 20,043,328
========== ========== ========== ==========
</TABLE>
Accrued interest on investments at June 30, 2000 and December 31, 1999 was
$254,534 and $241,885, respectively. During the year ended December 31, 1999 and
the six months ended June 30, 2000 the bank received $54,900 and $4,711,563
proceeds from sales and calls of securities with a carrying value based on
historical cost and adjusted for amortization of premiums and accretion of
discounts of $54,900 and $4,700,781 resulting in a realized gain of $10,782 on
sales and calls of securities, respectively.
10
<PAGE> 14
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. LOANS RECEIVABLE:
Loans at December 31 are summarized as follows:
<TABLE>
<CAPTION>
June 30, December 31,
2000 (unaudited) 1999
---------------- ------------
<S> <C> <C>
Commercial $ 38,439,320 $35,563,247
Commercial Real Estate 142,672 147,015
Residential Real Estate 10,523,812 11,726,358
Installment 28,353,555 21,768,308
Consumer 2,364,911 1,666,176
Other 168,965 181,453
------------ ------------
79,993,235 71,052,557
Allowance for Loan Losses (930,109) (863,816)
Unearned Discount on Mortgages and
Installment Loans (52) (232)
Net Deferred Loan Origination Fees (51,326) (42,459)
------------ ------------
$ 79,011,748 $70,146,050
============ ============
</TABLE>
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
June 30, December 31,
2000 (unaudited) 1999
---------------- ------------
<S> <C> <C>
Balance at Beginning of Period $ 863,816 $ 825,649
Provision for Loan Losses 101,132 79,677
Loans Charged Off (37,274) (47,821)
Recoveries on Loans 2,435 6,311
------------ ------------
Balance at End of Period $ 930,109 $ 863,816
============ ============
</TABLE>
A summary of loans by estimated maturity as of December 31, 1999 is as follows:
<TABLE>
<S> <C>
Maturity within one year $ 29,296,509
One to five years 40,670,129
Over five years 1,085,919
------------
$ 71,052,557
============
</TABLE>
Accrued interest receivable on loans at June 30, 2000 and December 31, 1999 was
$401,383 and $377,311, respectively.
At December 31, 1999, the total recorded investment in impaired loans amounted
to $292,818. The amount of the recorded investment in impaired loans for which
there is a related allowance for credit losses at December 31, 1999, is
$158,411. The amount of the recorded investment in impaired loans for which
there is no related allowance for credit loss and is classified as substandard
is $134,407. The amount of accrued interest is recognized prior to principal for
any cash receipts on impaired loans. Interest income in the amount of $17,812
was recognized for cash receipts during 1999.
11
<PAGE> 15
PCB BANCORP, INC.
AND WHOLLY-OWNED SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. EARNINGS PER SHARE:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED
----------------------------------------------------------------------------
June 30, December 31,
2000(unaudited) 1999
----------------------------------------------------------------------------
Weighted-Average Weighted-Average
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Income $389,842 -- -- 671,022 -- --
Basic EPS
Income Available to
Common Stockholders 389,842 809,180 .48 671,022 802,633 .84
Effect of Dilutive Options
Stock Options
(using the Treasury Stock
Method) -- 70,000 -- -- 76,563 --
-------- -------- ---- -------- -------- ----
Diluted EPS
Income Available to
Common Stockholders plus
Assumed Exercise of Options $389,842 879,180 .44 671,022 879,196 .76
======== ======== ==== ======== ======== ====
</TABLE>
12
<PAGE> 16
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 second quarter
of 2000. Total assets have grown $10.3 million or 10.1% since December 31, 1999.
Loans have increased $8.9 million or 12.6% since December 31, 1999. Investment
securities have decreased $7 thousand or .03% since December 31, 1999.
NONPERFORMING ASSETS AND RISK ELEMENTS. The bank had $296,000 in nonperforming
assets at June 30, 2000. Diversification within the loan profile is an important
means of reducing inherent lending risks. At June 30, 2000, 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. At the
present time, the Bank has impaired loans totaling $296,000. In reference to the
impaired loans, the Bank has related allowance for credit losses totaling
$168,000, leaving a balance classified as substandard of $128,000. The Bank also
currently has $128,000 in other real estate owned.
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.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is adequate with cash and due from banks of $5.4 million as of June
30, 2000. In addition, loans and investment securities repricing or maturing in
one year or less exceed $32.2 million at June 30, 2000. The Bank has
approximately $7.53 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 $449,000 at June 30,
2000. The Bank has outside funding sources including fed fund lines of credit,
cash management accounts, and security repurchase agreements with the Federal
Home Loan Bank, AmSouth Bank and Columbus Bank and Trust of Georgia. The amount
of funding available through these agreements totaled $16 million with none
having been drawn as of June 30, 2000. 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. Total equity capital at
June 30, 2000, is $8.8 million or 7.8% of total assets. The Bank's capital
position is adequate to meet the minimum capital requirements as of June 30,
2000 for all regulatory agencies. The Bank's capital ratios as of June 30, 2000,
are as follows:
<TABLE>
<S> <C>
Tier 1 capital 10.5%
Tier 2 capital 1.2%
</TABLE>
13
<PAGE> 17
<TABLE>
<S> <C>
Total risk-based 11.7%
</TABLE>
RESULTS OF OPERATIONS
The Company had net income of $188,000 during the second quarter of 2000
compared to net income of $190,000 during the second quarter of 1999. For the
six months ended June 30, 2000, the Company had net income of $390,000, which
was a 16.5% increase over the same period in 1999. Net interest income was up
$129,000 or 16.49% over the second quarter of 2000 compared to 1999. Net
interest income for the six month period ended June 30, 2000 increased $261,000
or 17.04% over the same period in 1999.
Interest income and interest expense both increased from 1999 to 2000 because of
the increase in earning assets and deposits from June 1999 to June 2000. The
growth in non-interest income for the period ending June 30, 2000 reflects the
increase in deposits during 1999 and 2000.
The provision for loan losses was $52,000 in the second quarter of 2000 compared
to $19,000 in the second quarter of 1999. The allowance for loan losses of
$930,000 at June 30, 2000 (approximately 1.16% 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
the loan losses based on this evaluation.
14
<PAGE> 18
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
None
15
<PAGE> 19
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)
8/7/00 Phillip R. Carriger
---------------------- ----------------------------------------------------------------
(Date) Phillip R. Carriger, Chairman and Chief Executive Officer
(Principle Executive Officer)
8/7/00 Michael Christian
---------------------- ----------------------------------------------------------------
(Date) Michael Christian, Secretary
</TABLE>
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