<PAGE>
U. S. 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, 1998
--------------------
[_] Transition report under Section 13 or 15 (d) of the Exchange Act
For the transition period from___________ to__________
Commission file number 0-22451
---------------------
CBC HOLDING COMPANY
-----------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
GEORGIA 58-2311557
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
102 West Roanoke Drive, Fitzgerald, GA 31750
--------------------------------------------------
(Address of Principal Executive Offices)
(912) 423-4321
------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
--------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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 ____
-----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock $1 par value,
--------------------------
664,097 shares outstanding at September 30, 1998
- ------------------------------------------------
Transitional Small Business Disclosure Format (check one):
Yes _____ No X
-----
<PAGE>
CBC Holding Company
and Subsidiary
INDEX
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
<S> <C>
The following financial statements are provided for CBC Holding Company
and the subsidiary bank, Community Banking Company of Fitzgerald.
Consolidated Balance Sheets (unaudited) - September 30, 1998 and
December 31, 1997. 2
Consolidated Statements of Income (unaudited) - For the Nine Months
Ended September 30, 1998 and 1997 and For the Three Months Ended
September 30, 1998 and 1997. 3
Consolidated Statements of Cash Flows (unaudited) - For the Nine Months
Ended September 30, 1998 and 1997. 4
Notes to Consolidated Financial Statements (unaudited) 5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
PART II: OTHER INFORMATION 12
</TABLE>
The consolidated financial statements furnished have not been examined by
independent certified public accountants, but reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the results of
operations for the periods presented.
The results of operations for the nine month period ended September 30, 1998 are
not necessarily indicative of the results to be expected for the full year.
1
<PAGE>
CBC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,911,533 $ 1,383,896
Federal funds sold 860,000 1,800,000
------------- ------------
Total cash and cash equivalents 2,774,533 3,183,896
------------- ------------
Securities available for sale, at fair value 12,075,932 13,494,030
Loans, net of uncarried income 33,846,201 30,364,898
Less allowance for loan losses (417,775) (386,717)
------------- ------------
Loans, net 33,428,426 29,978,181
------------- ------------
Bank premises and equipment, less accumulated depreciation 2,137,071 2,124,870
Accrued interest receivable 697,621 537,221
Intangible assets, net of amortization 2,373,183 2,543,044
Other assets and accrued income 55,900 60,689
------------- ------------
Total Assets $ 53,542,666 $ 51,921,931
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non-interest bearing demand $ 5,152,075 $ 5,198,927
Interest-bearing demand 12,092,427 11,396,685
Savings 2,836,421 2,762,434
Time deposits over $100,000 6,971,371 6,558,157
Other time deposits 19,079,517 18,886,365
------------- ------------
Total deposits 46,131,811 44,802,568
Accrued interest payable 181,930 253,134
Other liabilities and accrued expenses 224,329 116,782
Other borrowed funds 111,500 73,000
------------- ------------
Total liabilities 46,649,570 45,245,484
------------- ------------
Shareholders' Equity
Common stock, $1 par value, authorized 10,000,000 shares, issued
and outstanding 664,097 shares 664,097 664,097
Paid-in capital surplus 5,976,873 5,976,873
Retained earnings (accumulated deficit) 180,502 (2,177)
Accumulated other comprehensive income 27,624 37,654
------------- ------------
Total shareholders' equity 6,898,096 6,676,447
------------- ------------
Total liabilities and Shareholders' Equity $ 53,542,666 $ 51,921,931
============= ============
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
CBC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
-------- ------- ------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 797,714 $ 707,071 $ 2,283,400 $ 1,919,307
Income on federal funds sold 15,313 9,541 67,534 66,725
Interest on securities 185,994 231,806 614,245 800,405
----------- --------- ----------- -----------
Total interest income 999,021 948,418 2,965,179 2,786,437
----------- --------- ----------- -----------
INTEREST EXPENSE:
Interest on NOW and money market deposits 70,149 70,878 214,915 216,227
Interest on savings deposits 21,352 19,805 63,870 56,499
Interest on time deposits greater than $100,000 97,182 88,668 288,896 281,198
Interest on other time deposits 269,479 290,460 790,959 902,663
Other interest expense 2,704 2,594 9,785 6,212
----------- --------- ----------- -----------
Total interest expense 460,866 472,405 1,368,425 1,462,799
----------- --------- ----------- -----------
Net interest income before loan losses 538,155 476,013 1,596,754 1,323,638
Loss-provision for loan losses 15,000 10,500 45,000 31,500
----------- --------- ----------- -----------
Net interest income after provision for loan losses 523,155 465,513 1,551,754 1,292,138
----------- --------- ----------- -----------
OTHER OPERATING INCOME:
Service charges on deposit accounts 73,008 62,863 204,639 180,225
Other service charges, commissions and fees 6,582 11,100 26,081 34,526
Gain on sales of investment securities 6,390 12,110 23,077 12,110
Other income 6,839 2,130 10,836 6,387
----------- --------- ----------- -----------
Total other operating income 92,819 88,200 264,633 233,248
----------- --------- ----------- -----------
OTHER OPERATING EXPENSES:
Salaries 165,924 174,803 499,462 516,676
Employee benefits 37,194 42,406 119,609 129,797
Net occupancy expenses 45,979 47,665 128,640 134,388
Equipment rental and depreciation of equipment 39,746 33,517 117,143 94,163
Amortization 56,621 55,140 169,861 168,381
Other expenses 157,762 135,605 527,978 429,486
----------- --------- ----------- -----------
Total other operating expenses 503,226 489,136 1,562,693 1,472,891
---------- --------- ----------- -----------
INCOME BEFORE INCOME TAXES 112,748 64,580 253,094 52,495
Income tax provision 28,401 21,957 71,013 28,180
----------- --------- ----------- -----------
NET INCOME $ 84,347 $ 42,623 $ 182,681 $ 24,315
=========== ========= =========== ===========
INCOME PER SHARE* $ 0.13 $ 0.06 $ 0.28 $ 0.04
=========== ========= =========== ===========
</TABLE>
* Net Income (Loss)/ weighted average outstanding shares of 664,097.
See accompanying notes to consolidated financial statements
3
<PAGE>
CBC HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1998 AND 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months ended
September 30,
1998 1997
---------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 182,681 $ 24,315
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 45,000 31,500
Depreciation 80,547 92,363
Amortization of intangible assets 169,861 168,381
Gain on sale of securities (23,077) (12,110)
Loss on sale of property and equipment 141 -
Changes in accrued income and other assets (163,581) (5,439)
Changes in accrued expenses and other liabilities 26,817 (105,667)
---------------- -------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 318,389 193,343
---------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in loans made to customers (3,495,247) (8,125,555)
Purchase of securities available for sale (3,548,306) (2,508,672)
Proceeds from sale and maturities of available for sale securities 5,040,952 7,976,661
Proceeds from sale of property and equipment 1,271 -
Purchases of Property and equipment (94,161) (59,344)
---------------- -------------------
Net cash used in investing activities (2,095,491) (2,716,910)
---------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in demand and savings account 722,874 (341,831)
Net change in other time deposits 606,365 1,889,115)
Proceeds from short-term borrowings and federal funds purchased 38,500 55,000
---------------- -------------------
Net cash provided by (used in) financing activities 1,367,739 (2,175,946)
---------------- -------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (409,363) (4,699,513)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,183,896 7,005,359
---------------- -------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,774,533 $ 2,305,846
================ ===================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 1,439,629 $ 1,104,999
================ ==================
Cash paid for income taxes $ 38,000 $ -
================ ==================
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information, and with the instructions to Form 10-QSB and Item
310 (b) of Regulation S-B of the Securities and Exchange Commission.
Accordingly, they do not include all of the 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 nine month period ended
September 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.
(2) NEW AND PENDING PRONOUNCEMENTS
During February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" (SFAS 128). SFAS 128 simplifies current standards by eliminating the
presentation of primary earnings per share (EPS) and requiring the
presentation of basic EPS, which includes no potential common shares and
thus no dilution. The Statement also requires entities with complex capital
structures to present basic and diluted EPS on the face of the income
statement and also eliminates the modified treasury stock method of
computing potential common shares. The Statement is effective for financial
statements issued for periods ending after December 15, 1997, including
interim periods. Early application is not permitted. Upon adoption,
restatement of all prior period EPS data presented is required. Based upon
the current capital structure of the Company, this Statement will have no
effect on the EPS calculation.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS 130) and Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131). SFAS 130 establishes
standards for the reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. SFAS 131
specifies the presentation and disclosure of operating segment information
reported in the annual report and interim reports issued to stockholders.
The provisions of both statements will be effective for fiscal years
beginning after December 15, 1997. The management of the Company believes
that the adoption of these statements will not have a material impact on
the Company's financial position, results of operations, or liquidity.
During the nine months ended September 30, 1998, the Company adopted FASB
Statement No. 130, "Reporting Comprehensive Income." The statement requires
the reporting of comprehensive income in addition to net income from
operations. Comprehensive income is a more inclusive financial reporting
methodology that includes disclosure of certain financial information that
historically has not been recognized in the calculation of net income.
During the nine months ended September 30, 1998, the Company had
unrealized holding gains on investment securities which were reported as
comprehensive income. An analysis of accumulated other comprehensive income
since December 31, 1997 follows:
5
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Accumulated other comprehensive income at December 31, 1997 $ 37,654
Other comprehensive income, net of tax:
Change in unrealized gain (loss)
on securities available for sale, net
of deferred income tax benefit of $23,866 46,328
Less: Reclassification adjustment for (gains) losses
realized in net income (12,358)
-----------
33,970
-----------
Accumulated other comprehensive income at September 30, 1998 $ 71,624
===========
</TABLE>
(3) SUPPLEMENTAL FINANCIAL DATA
Components of other operating expenses greater than 1% of total interest
income and other income for the periods ended September 30, 1998 and 1997
are:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Supplies $ 8,707 $ 12,187 $ 36,575 $ 31,229
Courier service 8,987 11,813 32,655 35,063
NCR processing 22,476 22,192 70,113 56,327
Year 2000 10,894 - 29,794 -
</TABLE>
(4) YEAR 2000 COMPLIANCE ISSUES
The Company utilizes and depends on data processing systems and software
to conduct its business. The approach of Year 2000 presents a problem
because many older computers having been programmed to recognize only the
last two digits of a year i.e., "98" is for the year 1998. Accordingly,
with the new millenium approaching, these computers will potentially
recognize the year 2000- "00" as the year 1900, or just not be able to
comprehend the date, thus, potentially affecting the accuracy of, or
ability to process any date sensitive functions.
THE COMPANY'S STATE OF READINESS
The Company and the Bank do not use proprietary computer hardware or
software. (The Company has no hardware or software dependencies other than
through the Bank; hence, all further corporate references in this section
will be to the Bank.) The Bank adopted a plan in 1998 to make the Bank Year
2000 ready (the "Year 2000 Plan"). Pursuant to the Bank's Year 2000 Plan,
the Bank has nearly completed the installation of new personal computers
which will address a majority of the known Year 2000 issues. The Bank has
also created a Year 2000 database to track the compliance efforts of all
major vendors as well as their primary supporting vendors. The Bank has
received certification of Year 2000 compliance from all of its major
vendors
6
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
and logged those certifications in the Year 2000 readiness database. The
Bank has upgraded its primary internal system, an IBM AS400, to a Year 2000
compliant version. The Bank has a customer awareness and employee awareness
seminar planned for November 13, 1998. The seminar will inform customers of
the Bank's efforts and contingency plans to ensure that the Bank will have
a problem-free transition into the next century.
Internal due-diligence testing of vendor certified software will commence
in early November 1998 and is expected to be completed on or before
November 30, 1998. Other items to be tested which are not yet scheduled
include the telephone system, electrical utilities, alarm system, water
system and ISDN connection to remote teller location. These items are
expected to be included in the testing schedule prior to December 31, 1998.
Management has completed its assessment of the Bank's significant
commercial loan relationships to determine how much Year 2000 risk may
exist in the Bank's customer base. To the extent that such risk has been
identified, management is requiring those customers to keep the Bank
informed of their progress. Management's current plans are to help the
Bank's customers understand the risks involved, to share the Bank's
strategies and to encourage those customers to satisfy their compliance
requirements on time lines that are consistent with those of the Bank. The
Bank's credit review processes have been modified to address this risk. The
Bank's contingency plans for customers who fail to adequately address this
risk may include, but will not be limited to, requiring such customers to
pay off their loans.
Other third parties, with which the Bank has material relationships that
may be adversely impacted by Year 2000 risks, include its correspondent
banks and the utility companies.
The Bank's correspondent banks provide numerous services, including cash
letter settlements, federal funds sold and purchase lines, securities
safekeeping services, securities settlements, wire settlements, ACH
settlements, and ATM/debit card settlements. The Bank has received limited
communications from these correspondent banks regarding their Year 2000
efforts. In the fourth quarter of 1998, more explicit communications will
be requested as to their current state of readiness, their remediation
plans and their contingency plans.
The Bank's electric, gas, telephone, water and sewer utility companies
have provided limited information on their Year 2000 efforts. The Bank is
continuing to request further information from the utility companies.
The Bank has identified its major risks of Year 2000 issues to be with
its deposit check processing vendor and areas of its primary internal
processing software that are not addressed by the software vendor's
certification. The possible risk in these two areas has been identified as
top priority by the Year 2000 Committee and the Bank's Year 2000 Plan is
already addressing these issues through contacting other vendors for
possible alternatives.
THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES
The Bank's costs for Year 2000 readiness are estimated to be $37,800 for
outsourced Year 2000 project management and $12,400 for Bank employee time.
The majority of these costs have already been expensed in 1998. The Bank
anticipates that there may be additional costs associated with the upgrade
of yet untested software and hardware, however this amount has yet to be
determined and will be directly related to results of testing to be
performed. Management believes that due to the recent upgrades to their
system, any additional costs of upgrading software and hardware that are
incurred would have been incurred in the
7
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
normal course of replacing equipment and technology updates and would not
be significant or have a material impact on the Company's financial
statements as a whole.
THE RISKS OF THE COMPANY'S YEAR 2000 ISSUES
There can be no assurance that all hardware and software that the Bank
will use, or that the Bank's customers, vendors and utility companies will
use, will be Year 2000 compliant. The Bank's customers, vendors and utility
companies may be negatively affected by the Year 2000 issue, and any
difficulties incurred by them in solving Year 2000 issues could negatively
affect their ability to perform their agreements with the Bank. The failure
of the Bank's computer systems or other applications could have a material
adverse effect on the Company's results of operations and financial
condition.
The most reasonably likely worst case Year 2000 scenario for the Bank
appears to be one in which electrical service or phone service were
disrupted to the community for an extended period. As noted above, the
management of the risk associated with the Bank's computer hardware and
software, its commercial customer risk and its correspondent bank risk is
progressing as planned. The most likely source of potential problems
currently appears to be with the utility companies. Electrical service is
the most critical of the utilities. The Bank cannot operate its systems
without a continuous supply of electricity. Short-term disruptions, such as
occur with electrical storms, can be managed in the ordinary course of
business.
The foregoing are forward-looking statements reflecting management's
current assessment and estimates with respect to the Bank's Year 2000
compliance efforts and the impact of Year 2000 issues on the Bank's
business and operations. Various factors could cause actual plans and
results to differ materially from those contemplated by such assessments,
estimates and forward-looking statements, many of which are beyond the
control of the Bank. Some of these factors include, but are not limited to
representations by the Bank's vendors and counterparties, technological
advances, economic considerations, and consumer perceptions. The Bank's
Year 2000 compliance program is an ongoing process involving continual
evaluation and may be subject to change in response to new developments.
THE COMPANY'S CONTINGENCY PLANS
The Bank's contingency planning is well under way and involves the
contacting of other vendors for possible alternatives to items which may be
determined not to be Year 2000 compliant as well as interruption in
telephone, electrical and other utility services. The Bank is also
requiring certification of Year 2000 compliance from contingency (backup)
vendors as well as the ability to immediately convert to their systems. The
contingency plan also addresses alternative testing procedures and the
interrelation of different items and modules of the Bank's system.
As noted above, the Bank will attempt to obtain more information on the
readiness of the utilities in order to reduce the degree of uncertainty
surrounding the utility risk. To the extent that economically feasible
contingency plans for utility failures can be determined, management will
incorporate such plans in the Bank's policies.
8
<PAGE>
CBC Holding Company and Subsidiary
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Nine Months in the Periods Ended
September 30, 1998 and 1997
- --------------------------------------------------------------------------------
INTERIM FINANCIAL CONDITION
- ---------------------------
CBC Holding Company (the "Company") reported total assets of $53,542,666 as
of September 30, 1998, compared to $51,921,931 at December 31, 1997. The most
significant change in the composition of assets was an increase in gross loans
from $30,364,898 to $33,846,201. The increase in loans was funded primarily by
an increase in deposits of $1,329,243 (3.0%) and the maturity and calls of
investments totaling $5,040,952, of which $3,548,306 were reinvested. As a
result of the loan growth, the loan to deposit ratio has increased to 73.4% from
67.8% at December 31, 1997. The Company's cash and cash equivalents have
increased by $530,637 to $1,914,533 as of September 30, 1998.
LIQUIDITY
- ---------
The Bank's liquid assets as a percentage of total deposits were 6% at
September 30, 1998, compared to 7.1% at December 31, 1997. The Company has
approximately $2,500,000 in available federal fund lines of credit with
correspondent banks. However, the Company has not advanced on these lines during
1998. At least monthly, management analyzes the level of off-balance sheet
commitments such as unfunded loan equivalents, loan repayments, maturity of
investment securities, liquid investment, and available fund lines in an attempt
to minimize the possibility that a potential shortfall will exist.
CAPITAL
- -------
The capital of the Company totaled $6,893,096 as of September 30, 1998. The
capital of the Company and the Bank exceeded all prescribed regulatory capital
guidelines. Regulations require that the most highly rated banks maintain a Tier
1 leverage ratio of 3% plus an additional cushion of at least 1 to 2 percentage
points. Tier 1 capital consists of common shareholders' equity, less certain
intangibles. The Bank's Tier 1 leverage ratio was 8.4% at September 30, 1998,
compared to 8.3% at December 31, 1997. Regulations require that the Bank
maintain a minimum total risk weighted capital ratio of 8%, with one-half of
this amount, or 4%, made up of Tier 1 capital. Risk-weighted assets consist of
balance sheet assets adjusted by risk category, and off-balance sheet assets or
equivalents similarly adjusted. At September 30, 1998, the Bank had a risk-
weighted total capital ratio of 13.5%, compared to 13.6% at December 31, 1997,
and a Tier I risk-weighted capital ratio of 12.2%, compared to 12.5% at December
31, 1997. The decrease is primarily caused by the continued growth in the loans.
ASSET QUALITY
- -------------
Nonperforming assets which includes nonaccruing loans, repossessed
collateral and loans for which payments are more than 90 days past due, totaled
$3,802, an increase of $3,685 from December 31, 1997. There were no related
party loans which were considered nonperforming at September 30, 1998. The
composition of the nonperforming assets is presented in the following table:
9
<PAGE>
CBC Holding Company and Subsidiary
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Nine Months in the Periods Ended
September 30, 1998 and 1997
================================================================================
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Loans on nonaccrual $ - $ 117
Other real estate owned - -
Other repossessed collateral 3,802 -
------------- ------------
Total nonperforming assets $ 3,802 $ 117
============= ============
Total nonperforming assets as a percentage
of total loans (gross) and other real estate 0.01% 0.00%
----- -----
</TABLE>
The allowance for loan losses totaled $417,775 at September 30, 1998, an
increase of $31,058 from December 31, 1997. The allowance for loan losses
represented 1.2% and 1.3% of total loans at September 30, 1998 and December 31,
1997, respectively. An analysis of the allowance for loan losses since December
31, 1997 follows:
<TABLE>
<S> <C>
Allowance for loan losses at December 31, 1997 $ 386,717
Charge-offs:
Commercial -
Real Estate -
Installment 17,957
-----------
Total 17,957
-----------
Recoveries:
Commercial -
Real Estate -
Installment 4,015
-----------
Total 4,015
-----------
Provision charged to income 45,000
Allowance for loan losses at September 30, 1998 $ 417,775
===========
</TABLE>
The loan portfolio is reviewed periodically to evaluate the outstanding
loans and to measure the performance of the portfolio and the adequacy of the
allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses, and internal credit ratings. Management's judgment as to
the adequacy of the allowance is based upon a number of assumptions about future
events which it believes to be reasonable, but which may or may not be
reasonable. However, because of the inherent uncertainty of assumptions made
during the
10
<PAGE>
CBC Holding Company and Subsidiary
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Nine Months in the Periods Ended
September 30, 1998 and 1997
- --------------------------------------------------------------------------------
evaluation process, there can be no assurance that loan losses in future periods
will not exceed the allowance for loan losses of that additional allocations to
the allowance will not be required.
The Bank was most recently examined by its primary regulatory authority in
January 1998. There were no recommendations by the regulatory authority that in
management's opinion will have material effects on the Bank's liquidity, capital
resources or operations.
INVESTMENT SECURITIES
- ---------------------
At September 30, 1998, the Bank had $12,075,932 in investment securities
available-for-sale. The net unrealized gain on available for sale securities,
net of deferred taxes, was $71,624 on September 30, 1998. During the period
ended September 30, 1998, the maturities and calls of investment securities
totaled $5,040,952 resulting in a net gain of $23,077. The Bank invests
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable and tax exempt
securities.
RESULTS OF OPERATIONS
- ---------------------
Net interest income for the first nine months of 1998 was $1,596,754, an
increase of $273,116 (20.6%) compared to the same period for 1997. Interest
income for the first nine months of 1998 was $2,965,179, representing an
increase of $178,742 (6.4%) over the same period in 1997. The growth in interest
income was primarily due to an increase in loan balances. Interest expense for
the first nine months of 1998 decreased $94,374 (6.5%) compared to the same
period in 1997. The decrease in interest expense is primarily due a favorable
shift in deposit mix and lower rates on time deposits.
Amounts charged to expense related to the allowance for loan losses for the
first nine months of 1998 increased $13,500 compared to the same period for
1997. The increase is primarily attributable to the loan growth for the first
nine months in 1998 and management's belief in maintaining a reasonable level of
the allowance for loan losses in relationship to total loans.
Other operating income for the first nine months of 1998 was $264,633, an
increase of $31,385 (13.5%) compared to the same period in 1997. The increase in
service charges on deposit accounts of $24,414 (13.5%) is due to an increase in
the number of accounts and deposit activity. The remaining increase in other
income was primarily due to an increase in gains on sale of investments of
$10,967.
Other operating expenses for the first nine months of 1998 were $1,562,693,
an increase of $89,802 (6.10%) compared to the same period for 1997. This
increase is primarily attributable to an increase of $29,794 (33.2% of increase)
in Year 2000 related charges.
11
<PAGE>
CBC Holding Company
and Subsidiary
- --------------------------------------------------------------------------------
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
There are no material legal proceedings to which the Company is a party or
of which their property is the subject.
Item 2. Changes in Securities
(a) Not Applicable
(b) Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security-Holders
There were no matters submitted to security holders for a vote during the
nine months ended September 30, 1998.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits - 27.1 Financial Data Schedule
B. There have been no reports filed on form 8-K for the nine months ended
September 30, 1998.
SIGNATURES
- ----------
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CBC HOLDING COMPANY
/s/ George Ray
- -----------------------------
George Ray
President/Chief Executive Officer
Date: November 10, 1998
12
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