<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 June 30, 1999
-------------
[_] 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 June 30, 1999
- --------------------------------------------
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) - June 30,
1999 and December 31, 1998. 2
Consolidated Statements of Income (unaudited) -
For the Six Months Ended June 30, 1999 and 1998
and For the Three Months Ended June, 30 1999 and
1998. 3
Consolidated Statements of Cash Flows (unaudited) -
For the Six Months Ended June 30, 1999 and 1998. 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 13
</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 six month period ended June 30, 1999 are not
necessarily indicative of the results to be expected for the full year.
<PAGE>
CBC Holding Company and Subsidiary
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
Assets 1999 1998
------------ ------------
<S> <C> <C>
Cash and due from banks $ 2,121,830 $ 2,430,708
Federal funds sold 160,000 4,450,000
------------ ------------
Total cash and cash equivalents 2,281,830 6,880,708
------------ ------------
Securities available for sale, at fair value 14,318,388 14,287,599
Loans, net of unearned income 34,489,188 32,194,281
Less- allowance for loan losses (446,949) (430,078)
------------ ------------
Loans, net 34,042,239 31,764,203
------------ ------------
Bank premises and equipment, less accumulated depreciation 2,046,497 2,102,186
Accrued interest receivable 526,445 624,225
Intangible assets, net of amortization 2,162,257 2,316,564
Other assets and accrued income 222,751 51,962
------------ ------------
Total Assets $ 55,600,407 $ 58,027,447
============ ============
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing $ 5,937,455 $ 7,274,269
Interest-bearing 42,535,904 43,378,990
------------ ------------
Total deposits 48,473,359 50,653,259
Other liabilities and accrued expenses 248,436 350,684
Other borrowed funds 111,500 111,500
------------ ------------
Total liabilities 48,833,295 51,115,443
------------ ------------
Shareholders' Equity
Commom 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 347,617 261,911
Accumulated other comprehensive income (221,475) 9,123
------------ ------------
Total shareholders' equity 6,767,112 6,912,004
------------ ------------
Total Liabilities and Shareholders' Equity $ 55,600,407 $ 58,027,447
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
CBC Holding Company and Subsidiary
Consolidated Statements of Income
For the Six Months Ended June 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 766,630 $ 767,070 $1,495,200 $1,485,686
Income on federal funds sold 21,345 17,875 62,797 52,221
Interest on securities 201,721 212,382 404,052 428,251
---------- ---------- ---------- ----------
Total interest income 989,696 997,327 1,962,049 1,966,158
Interest Expense:
Interest on NOW and money market deposits 75,294 72,421 150,848 144,766
Interest on savings deposits 23,909 21,369 45,779 42,518
Interest on time deposits 361,656 358,641 720,057 713,194
Other interest expense 5,131 3,953 6,170 7,081
---------- ---------- ---------- ----------
Total interest expense 465,990 456,384 922,854 907,559
---------- ---------- ---------- ----------
Net interest income before loan losses 523,706 540,943 1,039,195 1,058,599
Less - provision for loan losses 15,000 15,000 30,000 30,000
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 508,706 525,943 1,009,195 1,028,599
---------- ---------- ---------- ----------
Other Operating Income:
Service charges on deposit accounts 72,862 62,935 148,721 131,631
Other service charges, commissions and fees 15,316 8,128 33,759 19,499
Gain on sales of investment securities -- 14,473 -- 16,687
Other income 6,009 2,015 17,774 3,997
---------- ---------- ---------- ----------
Total other operating income 94,187 87,551 200,254 171,814
---------- ---------- ---------- ----------
Other Operating Expense:
Salaries 186,817 161,383 364,742 333,538
Employee benefits 45,440 38,788 93,620 82,415
Net occupancy expenses 43,174 41,655 88,508 82,661
Equipment rental and depreciation of equipment 45,904 39,016 81,044 77,397
Amortization 61,724 56,620 138,032 113,240
Other expenses 161,104 200,894 322,378 370,216
---------- ---------- ---------- ----------
Total other operating expenses 544,163 538,356 1,088,324 1,059,467
---------- ---------- ---------- ----------
Income Before Income Taxes 58,730 75,138 121,125 140,946
Income tax provision 14,382 16,735 35,419 42,612
---------- ---------- ---------- ----------
Net Income $ 44,348 $ 58,403 $ 85,706 $ 98,334
========== ========== ========== ==========
Income Per Share* $ 0.07 $ 0.09 $ 0.13 $ 0.15
========== ========== ========== ==========
</TABLE>
* Net Income / 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 Six Months Ended June 30, 1999 and 1998
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 85,706 $ 98,334
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 30,000 30,000
Depreciation 60,618 67,794
Amortization of intangible assets 152,617 113,240
Gain on sale of securities -- (16,687)
Loss on sale of property and equipment -- 141
Changes in accrued income and other assets 27,149 (149,913)
Changes in accrued expenses and other liabilities (186,130) (1,160)
----------- -----------
Net cash provided by operating activities 169,960 141,749
----------- -----------
Cash Flows from Investing Activities:
Net change in loans made to customers (2,308,036) (3,089,951)
Purchase of securities available for sale (3,929,804) (2,405,000)
Proceeds from sales,calls and maturities of available for sale securities 3,668,417 3,538,329
Proceeds from sale of property and equipment -- 1,271
Purchases of property and equipment (19,515) (47,425)
----------- -----------
Net cash used in investing activities (2,588,938) (2,002,776)
----------- -----------
Cash Flows from Financing Activities:
Net change in demand and savings accounts (2,716,246) 3,601,070
Net change in other time deposits 536,346 (151,740)
Proceeds from short-term borrowings and federal funds purchased -- 36,000
----------- -----------
Net cash provided by (used in) financing activities (2,179,900) 3,485,330
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (4,598,878) 1,624,303
Cash and Cash Equivalents, Beginning of Year 6,880,708 3,183,896
----------- -----------
Cash and Cash Equivalents, End of Year $ 2,281,830 $ 4,808,199
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ 960,461 $ 996,893
=========== ===========
Cash paid for income taxes $ 46,836 $ --
=========== ===========
</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 six month period ended June
30, 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.
(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 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 six months ended June 30, 1999, 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, 1998 follows:
5
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Accumulated other comprehensive income at December 31, 1998 $ 9,123
Other comprehensive income, net of tax:
Change in unrealized gain (loss)
on securities available for sale, net
on deferred income tax benefit of $114,093 (220,565)
Less: Reclassification adjustment for (gains) losses
realized in net income (10,033)
----------
(230,598)
----------
Accumulated other comprehensive income at June 30, 1999 $ (221,475)
==========
</TABLE>
(3) Supplemental Financial Data
Components of other operating expenses greater than 1% of total interest
income and other income for the periods ended June 30, 1999 and 1998 are:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Supplies $ 8,553 $ 12,951 $ 23,119 $ 27,868
NCR processing 21,494 24,104 41,962 47,637
Advertising 11,642 11,010 21,957 23,207
Courier service 8,837 11,265 17,825 23,668
</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 millennium
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
effecting 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 completed the installation of new personal computers which addressed a
majority of the known Year 2000 issues. The Bank has upgraded its primary
internal system, an IBM AS400, to a Year 2000 compliant version. The Bank has
received certification of Year 2000 compliance from all of its major vendors and
logged those certifications in a Year 2000 readiness database created to
inventory and track the compliance efforts of all major vendors as well as their
primary supporting vendors.
6
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
The Bank contracts with a third-party consultant to assist with its Year
2000 readiness efforts. The consultants installed a second AS400 and loaded a
backup of the core data processing system of the Bank, which enabled the Bank to
perform testing in a Year 2000 environment using actual data and transactions of
the Bank. Testing of the Bank's core data processing system has been completed
and found to be Year 2000 ready. Bank internal due-diligence testing of mission
critical vendor certified software commenced in early November 1998 and will be
completed before June 30, 1999. Mission critical vendor certified software was
also found to be Year 2000 ready.
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 in addressing Year 2000 problems. 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,
including special provisions in the Bank's loan loss reserve. 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 communications from these
correspondent banks regarding their Year 2000 efforts. The correspondent banks
have communicated to the Bank that their systems are Year 2000 compliant. The
Bank is in the process of scheduling with the correspondent banks the testing of
these systems to verify their Year 2000 readiness.
The Bank's electric, gas, telephone, water and sewer utility companies have
provided limited information on their Year 2000 efforts. The Bank has received
information on electric, water and sewer Year 2000 upgrades on billing-assisting
software and hardware. Local providers of electricity are distributors and rely
completely on electricity producers and switches. Electricity producers have
provided limited information through this media.
The Bank had previously 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. In the first quarter of 1999, the Bank received certification and
proxy testing from its deposit check processing vendor that their system was
Year 2000 compliant. The Bank is currently finalizing testing the system to
verify its Year 2000 readiness. In addition, all areas of the Bank's primary
internal processing software are now certified by the vendor as Year 2000
compliant and the Bank is validating the testing of all areas of this system.
The Costs to Address the Company's Year 2000 Issues
The Bank's costs for Year 2000 readiness were $40,453 during 1998 and
additional expenditures of $10,000 are anticipated during 1999. The majority of
the Bank's costs for Year 2000 readiness are for outsourced Year 2000 project
management. Based on the current status of the Bank's Year 2000 project,
management believes that the budgeted amounts for Year 2000 are adequate to
complete the project. 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 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.
7
<PAGE>
CBC Holding Company and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
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 has completed and the Board of Directors has approved a Year 2000
Business Resumption/Contingency Plan. The implementation of the plan 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.
The Business Resumption/Contingency Plan is designed to achieve a level of
emergency preparedness that is broad in its scope, encompassing the risk of loss
or business disruption resulting from unexpected events ranging from equipment
failure to natural disasters. It is designed to enable management continuity,
designate alternative facilities, provide for alternative administrative,
communication and data processing support, establish policies for data backup,
record retention and retrieval, reinforce security policies, and establish
organizational responsibility.
The outline of the Business Resumption/Contingency Plan includes power
outages, cash & tellers, customer service, loans, operations, primary and
secondary liquidity, and security issues. The focus of the Plan is to give
direction to each area of the Bank on how to perform their duties over to next
year leading up to the year 2000 and in the event of possible disruption to
normal operations resulting from Year 2000 issues as well as other possible
disruptions. A particular emphasis of the Plan is to educate and inform
employees and customers about Year 2000 readiness.
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
Notes to Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
To insure adequate cash reserves on hand to service the needs of its
customers, the Bank has opened an account through the Fed Discount Window and
purchased Federal Home Loan Bank stock . This provides additional sources of
liquidity for the Bank and enhances its ability to meet the potential cash
demands of its customers as the millennium approaches.
Employee and Customer Awareness
The Bank believes it is extremely important to communicate information to
employees and customers about the Year 2000 issue. The Bank has conducted
customer and employee awareness seminars designed to provide information about
the Bank's efforts and contingency plans to ensure that the Bank will have a
problem-free transition into the next century.
The Bank's Year 2000 committee has monthly meetings to address the status
of the Year 2000 project and insure the Bank has achieved its objectives and is
maintaining established timelines. In addition, a representative of the Year
2000 committee meets with the Board of Directors of the Bank each month to
review the progress of the Year 2000 efforts. Through this ongoing monitoring
and communication to management and the Board of Directors the Bank is able to
update its employees and its customers of its Year 2000 readiness.
The Bank continues its effort through communication in statements, phone
calls, direct contact, etc. to provide information and assistance to customers
in taking steps to minimize the risk of problems with the Year 2000. In
addition, the Bank regularly holds employee meetings to discuss the Bank's Year
2000 readiness and ways the employees can assist customers in becoming more
knowledgeable about the Year 2000. The Bank has developed a targeted
informational campaign with the slogan "Y2K - We're Prepared To Take You There".
The bank is using various marketing methods including local media, statement
stuffers, lobby posters, and billboards to educate the public on the Year 2000
issue and communicate the Bank's Year 2000 readiness.
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 Six Months in the Periods Ended
June 30, 1999 and 1998
- --------------------------------------------------------------------------------
Interim Financial Condition
- ---------------------------
CBC Holding Company (the "Company") reported total assets of $55,600,407 as
of June 30, 1999, compared to $58,027,447 at December 31, 1998. The most
significant change in the composition of assets was a decrease in cash and cash
equivalents from $6,880,708 to $2,281,830. The decrease in cash and cash
equivalents was primarily attributed to a decrease in federal funds sold of
$4,290,000 (96.4%) due to a decrease in deposits of $2,179,900 and an increase
in loans of $2,294,907.
Liquidity
- ---------
The Bank's liquid assets as a percentage of total deposits were 4.7% at
June 30, 1999, compared to 13.6% at December 31, 1998. The liquidity ratio for
the Bank was 32.01% at June 30, 1999, compared to 38.1% at December 31, 1998.
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 1999. 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 $6,767,112 as of June 30, 1999. 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 8.8% at June 30, 1999,
compared to 8.8% at December 31, 1998. 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 June 30, 1999, the Bank had a risk-weighted
total capital ratio of 13.9%, compared to 13.5% at December 31, 1998, and a Tier
I risk-weighted capital ratio of 12.7%, compared to 12.4% at December 31, 1998.
Asset Quality
- -------------
Nonperforming assets which includes nonaccruing loans, repossessed
collateral and loans for which payments are more than 90 days past due, totaled
$153,200, an increase of $112,500 from December 31, 1998. There were no related
party loans which were considered nonperforming at June 30, 1999. The
composition of the nonperforming assets is presented in the following table:
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 Six Months in the Periods Ended
June 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- ----------
<S> <C> <C>
Loans on nonaccrual $136,900 $ -
Loans over 90 days past-due & accruing 16,300 40,700
Other repossessed collateral - -
-------- ----------
Total nonperforming assets $153,200 $ 40,700
======== ==========
Total nonperforming assets as a percentage
of total loans (gross) and other real estate 0.04% 0.01%
---- ----
</TABLE>
The allowance for loan losses totaled $446,949 at June 30, 1999, an
increase of $16,871 from December 31, 1998. The allowance for loan losses
represented 1.3% and 1.3% of total loans at June 30, 1999 and December 31, 1998,
respectively. An analysis of the allowance for loan losses since December 31,
1998 follows:
<TABLE>
<S>
Allowance for loan losses at December 31, 1998 <C>
$ 430,078
Charge-offs:
Commercial
Real Estate -
Installment -
22,571
------------
Total 22,571
------------
Recoveries:
Commercial
Real Estate -
Installment -
Total 9,442
------------
9,442
------------
Provision charged to income 30,000
------------
Allowance for loan losses at June 30, 1999 $ 446,949
============
</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 evaluation process, there can be no assurance that loan
11
<PAGE>
CBC Holding Company and Subsidiary
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Six Months in the Periods Ended
June 30, 1999 and 1998
- --------------------------------------------------------------------------------
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
May 1999. 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 June 30, 1999, the Bank had $14,318,388 in investment securities
available-for-sale. The net unrealized loss on available for sale securities,
net of deferred taxes, was $221,475 on June 30, 1999. During the period ended
June 30, 1999, the maturities and calls of investment securities totaled
$3,668,417, resulting in neither a gain or loss. 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 six months of 1999 was $1,009,195, a
decrease of $19,404 (2.0%) compared to the same period for 1998. Interest income
for the first six months of 1999 was $1,962,049, representing a decrease of
$4,109 (.02%) over the same period in 1998. The decrease in interest income was
primarily due to a decrease in interest on investments. Interest expense for the
first six months of 1999 increased $15,295 (1.7%) compared to the same period in
1998. The increase in interest expense is primarily due an increase in average
interest bearing deposits.
Amounts charged to expense related to the allowance for loan losses were
$30,000 for the first six months of 1999 and 1998.
Other operating income for the first six months of 1999 was $210,111, an
increase of $38,297 (22.3%) compared to the same period in 1998. The increase in
service charges on deposit accounts of $17,090 (13.0%) 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 commissions on credit life of $8,509
and an increase in mortgage origination fees of $9,274.
Other operating expenses for the first six months of 1999 were $1,088,324,
an increase of $28,857 (2.70%) compared to the same period for 1998. The
increase is primarily attributable to an increase in amortization of
organizational expenses of $24,791 as required by Statement of Position 98-5.
12
<PAGE>
CBC Holding Company and Subsidiary
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
six months ended June 30, 1999.
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 six months ended
June 30, 1999.
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
- -------------------------
George Ray
President / Chief Executive Officer
Date: August 11, 1999
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,121,830
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 160,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 14,318,388
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 34,489,188
<ALLOWANCE> (446,449)
<TOTAL-ASSETS> 55,600,407
<DEPOSITS> 48,473,359
<SHORT-TERM> 111,500
<LIABILITIES-OTHER> 248,436
<LONG-TERM> 0
0
0
<COMMON> 664,097
<OTHER-SE> 6,103,015
<TOTAL-LIABILITIES-AND-EQUITY> 55,600,407
<INTEREST-LOAN> 1,495,200
<INTEREST-INVEST> 408,652
<INTEREST-OTHER> 62,797
<INTEREST-TOTAL> 1,962,049
<INTEREST-DEPOSIT> 916,684
<INTEREST-EXPENSE> 6,170
<INTEREST-INCOME-NET> 1,009,195
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,088,324
<INCOME-PRETAX> 130,982
<INCOME-PRE-EXTRAORDINARY> 85,706
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,706
<EPS-BASIC> .13
<EPS-DILUTED> .13
<YIELD-ACTUAL> 4.25
<LOANS-NON> 136,900
<LOANS-PAST> 236,400
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,920,100
<ALLOWANCE-OPEN> 430,078
<CHARGE-OFFS> 22,571
<RECOVERIES> 9,442
<ALLOWANCE-CLOSE> 446,949
<ALLOWANCE-DOMESTIC> 446,949
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
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