<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 March 31, 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 March 31, 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) - March 31, 1999 and
December 31, 1998. 2
Consolidated Statements of Income (unaudited) - For the Three Months
Ended March 31, 1999 and 1998. 3
Consolidated Statements of Cash Flows unaudited) - For the Three Months
Ended March 31, 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 three month period ended March 31, 1999 are
not necessarily indicative of the results to be expected for the full year.
1
<PAGE>
CBC Holding Company and Subsidiary
Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
Assets
Cash and due from banks $ 1,848,214 $ 2,430,708
Federal funds sold 2,660,000 4,450,000
----------- -----------
Total cash and cash equivalents 4,508,214 6,880,708
----------- -----------
Securities available for sale, at fair value 15,022,644 14,287,599
Loans, net of unearned income 32,868,873 32,194,281
Less-allowance for loan losses (436,716) (430,078)
----------- -----------
Loans, net 34,432,157 31,764,203
----------- -----------
Bank premises and equipment, less accumulated depreciation 2,072,766 2,102,186
Accrued interest receivable 475,472 624,225
Intangible assets, net of amortization 2,229,793 2,316,564
Other assets and accrued income 88,382 51,962
----------- -----------
Total Assets $56,829,428 $58,027,447
=========== ===========
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing $ 6,993,144 $ 7,274,269
Interest-bearing 42,520,694 43,378,990
----------- -----------
Total deposits 49,513,838 50,653,259
Other liabilities and accrued expenses 310,132 350,684
Other borrowed funds 111,500 111,500
----------- -----------
Total liabilities 49,935,470 51,115,443
----------- -----------
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) 299,789 261,911
Accumulated other comprehensive income (46,801) 9,123
----------- -----------
Total shareholders' equity 6,893,958 6,912,004
----------- -----------
Total Liabilities and Shareholders' Equity $56,829,428 $58,027,447
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
CBC Holding Company and Subsidiary
Consolidated Statements of Income
For the Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Three Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
Interest Income:
Interest and fees on loans $728,570 $718,616
Income on federal funds sold 41,452 34,346
Interest on securities 202,331 215,869
-------- --------
Total interest income 972,353 968,831
-------- --------
Interest Expense:
Interest on NOW and money market deposits 77,554 72,345
Interest on savings deposits 21,870 21,149
Interest on time deposits 358,401 354,553
Other interest expense 1,039 3,128
-------- --------
Total interest expense 458,864 451,175
-------- --------
Net interest income before loan losses 513,489 517,656
Less - provision for loan losses 15,000 15,000
-------- --------
Net interest income after provision for loan losses 498,489 502,656
-------- --------
Other Operating Income:
Service charges on deposit accounts 75,859 68,696
Other service charges, commissions and fees 18,443 11,371
Other income 11,765 4,196
-------- --------
Total other operating income 106,067 84,263
-------- --------
Other Operating Expense:
Salaries 177,925 172,155
Employee benefits 48,180 43,627
Net occupancy expenses 45,334 41,006
Equipment rental and depreciation of equipment 35,140 38,381
Amortization 76,308 56,620
Other expenses 161,274 169,322
-------- --------
Total other operating expenses 544,161 521,111
-------- --------
Income Before Income Taxes 60,395 65,808
Income tax provision 21,037 25,877
-------- --------
Net Income $ 39,358 $ 39,931
======== ========
Income Per Share* $ 0.06 $ 0.06
======== ========
</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 THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Three Months Ended
March 31,
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 39,358 $ 39,931
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 15,000 15,000
Depreciation 30,309 33,714
Amortization of intangible assets 76,308 56,620
Gain on sale of securities -- (2,214)
Changes in accrued income and other assets 138,687 (1,663)
Changes in accrued expenses and other liabilities (50,630) (22,823)
----------- -----------
Net cash provided by operating activities 249,032 118,565
----------- -----------
Cash Flows from Investing Activities:
Net change in loans made to customers (682,954) (1,126,547)
Purchase of securities available for sale (1,897,188) (1,405,000)
Proceeds from sales and maturities of available for sale securities 1,106,219 1,507,377
Purchases of property and equipment (8,182) (18,648)
----------- -----------
Net cash used in investing activities (1,482,105) (1,042,818)
----------- -----------
Cash Flows from Financing Activities:
Net change in demand and savings accounts (1,592,508) 1,901,685
Net change in other time deposits 453,087 33,175
Proceeds from short-term borrowings and federal funds purchased -- 10,000
----------- -----------
Net cash provided by (used in) financing activities (1,139,421) 1,944,860
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (2,372,494) 1,020,607
Cash and Cash Equivalents, Beginning of Year 6,880,708 3,183,896
----------- -----------
Cash and Cash Equivalents, End of Year $ 4,508,214 $ 4,204,503
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ 469,766 $ 500,101
=========== ===========
Cash paid for income taxes $ 5,336 $ --
=========== ===========
</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
three month period ended March 31, 1999, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999. For further
information refer to the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998.
(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 three months ended March 31, 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)
===============================================================================
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
of deferred income tax benefit of $28,810 (51,930)
Less: Reclassification adjustment for (gains) (3,994)
losses realized in net income -
--------
(55,924)
--------
Accumulated other comprehensive income
at March 31, 1999 $(46,801)
========
(3) Supplemental Financial Data
Components of other operating expenses greater than 1% of total interest
income and other income for the periods ended March 31, 1999 and 1998 are:
Three Months Ended
March 31,
1999 1998
------- -------
Supplies $14,586 $14,917
Courier service 8,987 12,403
NCR processing 20,468 23,533
(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 have installed a second AS400 and loaded
a backup of the core data processing system of the Bank. This has 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. Other items in the
process of being reviewed for Year 2000 readiness include the telephone system,
utilities and the ISDN connection to the remote teller location.
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 is continuing
to request further information from the utility companies.
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
from its deposit check processing vendor that their system was Year 2000
compliant. The Bank is currently in the process of 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 will have completed testing all areas of this system before June 30,
1999.
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 become a member of the Federal Home Loan Bank and the
Fed Discount Window. 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 is in the process of developing a
targeted campaign which management anticipates beginning in June 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 Three Months in the Periods Ended
March 31, 1999 and 1998
===============================================================================
Interim Financial Condition
- ---------------------------
CBC Holding Company (the "Company") reported total assets of $56,829,428 as
of March 31, 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 $4,508,214. The decrease in cash and cash
equivalents was primarily attributed to a decrease in federal funds sold of
$1,790,000 (26.0%) due to a decrease in deposits of $1,139,421. This decrease in
deposits is considered by management to be a cyclical occurrence during the
first quarter of the year.
Liquidity
- ---------
The Bank's liquid assets as a percentage of total deposits were 9.1% at
March 31, 1999, compared to 13.6% at December 31, 1998. The liquidity ratio for
the Bank was 36.6% at March 31, 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 $6,893,958 as of March 31, 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 8.3% at March 31, 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 March 31, 1999, the Bank had a risk-weighted
total capital ratio of 14.1%, compared to 13.5% at December 31, 1998, and a Tier
I risk-weighted capital ratio of 12.9%, compared to 12.4% at December 31, 1998.
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
$30,351, an increase of $27,721 from December 31, 1998. There were no related
party loans which were considered nonperforming at March 31, 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 Three Months in the Periods Ended
March 31, 1999 and 1998
===============================================================================
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
Loans on nonaccrual $15,015 $ -
Other real estate owned 10,158 -
Other repossessed collateral 5,178 -
------- -----
Total nonperforming assets $30,351 $ -
======= =====
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 $436,716 at March 31, 1999, an
increase of $6,638 from December 31, 1998. The allowance for loan losses
represented 1.3% and 1.3% of total loans at March 31, 1999 and December 31,
1998, respectively. An analysis of the allowance for loan losses since December
31, 1998 follows:
Allowance for loan losses at December 31, 1998 $430,078
Charge-offs:
Commercial -
Real Estate -
Installment 10,623
--------
Total 10,623
--------
Recoveries:
Commercial -
Real Estate -
Installment 2,261
--------
Total 2,261
--------
Provision charged to income 15,000
Allowance for loan losses at March 31, 1999 $436,716
========
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 Three Months in the Periods Ended
March 31, 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
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 March 31, 1999, the Bank had $15,022,644 in investment securities
available-for-sale. The net unrealized loss on available for sale securities,
net of deferred taxes, was $46,801 on March 31, 1999. During the period ended
March 31, 1999, the maturities and calls of investment securities totaled
$1,106,219, 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 three months of 1999 was $513,489, a
decrease of $4,167 (1.0%) compared to the same period for 1998. Interest income
for the first three months of 1999 was $972,353, representing an increase of
$3,522 (.36%) over the same period in 1998. The growth in interest income was
primarily due to an increase in loan balances. Interest expense for the first
three months of 1999 increased $7,689 (1.7%) compared to the same period in
1998. The increase in interest expense is primarily due an increase in interest
bearing deposits.
Amounts charged to expense related to the allowance for loan losses for the
first three months of 1999 did not increase compared to the same period for
1998.
Other operating income for the first three months of 1999 was $106,067, an
increase of $21,804 (25.9%) compared to the same period in 1998. The increase in
service charges on deposit accounts of $7,163 (10.4%) 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 $5,533
and an increase in mortgage origination fees of $4,032.
Other operating expenses for the first three months of 1999 were $544,161,
an increase of $23,050 (4.42%) compared to the same period for 1998. The
increase is primarily attributable to an increase in amortization of
organizational expenses of $12,396 as required by Statement of Position 98-5.
12
<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
three months ended March 31, 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 three months ended
March 31, 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: May 11, 1999
13
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