<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
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(X)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30,2000
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File No. 0-24135
PCB Holding Company
-------------------
(Exact name of registrant as specified in its charter)
Indiana 35-2040715
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
819 Main Street, Tell City, Indiana 47586
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 1-812-547-7094
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________________________________________________________________________________
Former name, former address and former fiscal year, if changed since last report
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [_] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS; Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 386,485 shares of common stock were outstanding as of July 31,
2000.
<PAGE>
PCB HOLDING COMPANY
INDEX
<TABLE>
<CAPTION>
Part I Financial Information Page
----
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2000
and December 31, 1999 (unaudited) 3
Consolidated Statements of Income for the three months
and six months ended June 30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999 (unaudited) 5
Notes to consolidated financial statements (unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II. Other Information 13-14
Signatures 15
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
PCB HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
-------- ------------
2000 1999
---- ----
(In thousands)
ASSETS
Cash and due from banks $ 108 $ 230
Interest bearing deposits with banks 1,883 2,309
Securities available for sale, at fair value 1,110 1,113
Loans receivable, net 25,709 24,054
Federal Home Loan Bank stock, at cost 207 196
Premises and equipment 397 228
Other assets 294 244
----------------------
Total Assets $ 29,708 $ 28,374
======================
LIABILITIES
Deposits $ 21,503 $ 20,464
Federal Home Loan Bank advances 2,500 2,000
Accrued expenses and other liabilities 62 76
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Total Liabilities 24,065 22,540
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STOCKHOLDERS' EQUITY
Preferred stock of $.01 per share
Authorized 1,000,000 shares; none issued - -
Common stock of $.01 per share
Authorized 4,000,000 shares; issued and
outstanding 412,620 shares 4 4
Additional paid-in capital 3,814 3,814
Retained earnings-substantially restricted 2,289 2,260
Accumulated other comprehensive income -
net unrealized loss on securities available for sale (54) (51)
Unearned stock compensation (128) (144)
Less treasury stock, at cost - 26,135 shares
(4,600 shares at December 31, 1999) (282) (49)
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Total Stockholders' Equity 5,643 5,834
---------------------
Total Liabilities and Stockholders' Equity $ 29,708 $ 28,374
=====================
See accompanying notes to consolidated financial statements.
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<PAGE>
PCB HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- ---------
2000 1999 2000 1999
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 499 $ 411 $ 960 $ 811
Securities 19 15 37 35
Federal Home Loan Bank dividends 4 4 8 8
Interest bearing deposits with banks 29 27 54 52
-------------------- ---------------
Total interest income 551 457 1,059 906
INTEREST EXPENSE
Deposits 267 235 518 485
Federal Home Loan Bank advances 45 - 79 -
-------------------- ---------------
Total interest expense 312 235 597 485
Net interest income 239 222 462 421
Provision for loan losses 2 1 4 3
-------------------- ---------------
Net interest income after provision for loan losses 237 221 458 418
NON-INTEREST INCOME
Service charges on deposit accounts 7 3 12 6
Other income 4 4 8 6
-------------------- ---------------
Total non-interest income 11 7 20 12
-------------------- ---------------
NON-INTEREST EXPENSE
Compensation and benefits 104 87 210 175
Occupancy and equipment 9 9 20 19
Deposit insurance premiums 1 3 2 6
Other operating expenses 68 55 133 116
-------------------- ---------------
Total non-interest expense 182 154 365 316
-------------------- ---------------
Income before income taxes 66 74 113 114
Income tax expense 26 32 44 46
-------------------- ---------------
Net Income 40 42 69 68
OTHER COMPREHENSIVE LOSS, NET OF TAX:
Unrealized losses on securities:
Unrealized holding losses arising during the period - (5) (3) (17)
Less: reclassification adjustment - - - -
-------------------- ---------------
Other comprehensive loss - (5) (3) (17)
-------------------- ---------------
Comprehensive Income $ 40 $ 37 $ 66 $ 51
==================== ===============
Net income per common share, basic $0.11 $ 0.11 $0.18 $0.17
==================== ===============
Net income per common share, diluted $0.10 $ 0.11 $0.18 $0.17
==================== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
PCB HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 69 $ 68
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of premiums and accretion of
discounts on securities, net (1) (1)
Provision for loan losses 4 3
Depreciation expense 10 8
Deferred income taxes (12) -
Stock compensation expense 16 -
Net change in other assets/liabilities (52) (9)
------------------------
Net Cash Provided By Operating Activities 34 69
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CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing deposits with banks 426 243
Proceeds from maturity of securities available for sale - 350
Purchase of securities available for sale - (250)
Net increase in loans receivable (1,659) (1,582)
Purchase of Federal Home Loan Bank stock (11) -
Purchase of premises and equipment (179) (8)
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Net Cash Used in Investing Activities (1,423) (1,247)
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CASH FLOWS FROM FINANCIAL ACTIVITIES
Net increase in deposit accounts 1,039 211
Net increase in advances from Federal Home Loan Bank 500 1,000
Purchase of treasury stock (233) -
Cash dividends paid (39) (32)
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Net Cash Provided By Financing Activities 1,267 1,179
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Net Decrease in Cash and Due From Banks (122) 1
Cash and due from banks at beginning of period 230 43
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Cash and Due From Banks at End of Period $ 108 $ 44
========================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
PCB HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Interim Information
PCB Holding Company (the "Company") is the holding company for Peoples
Community Bank (the "Bank"), a federally chartered stock savings bank
located in Tell City, Indiana.
In the opinion of the management, the unaudited consolidated financial
statements include all normal adjustments considered necessary to present
fairly the financial position as of June 30, 2000, and the results of
operations for the three months and six months ended June 30, 2000 and 1999
and cash flows for the six months ended June 30, 2000 and 1999. Interim
results are not necessarily indicative of results that may be expected for
a full year.
The consolidated financial statements and notes are presented as permitted
by Form 10-QSB, and do not contain certain information included in the
Company's audited consolidated financial statements and notes for the year
ended December 31, 1999.
The consolidated financial statements include the accounts of the Company,
the Bank and its wholly-owned subsidiary, Peoples Building and Loan Service
Corp. All material intercompany balances and transactions have been
eliminated in consolidation.
2. Supplemental Disclosures of Cash Flow Information
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30,
--------
2000 1999
----- -----
(In thousands)
<S> <C> <C>
Cash payments for:
Interest $ 598 $ 484
Taxes 65 64
</TABLE>
-6-
<PAGE>
PCB HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
3. Comprehensive Income
Comprehensive income is defined as the change in equity (net assets) of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners. Comprehensive income for the Company includes net
income and other comprehensive income representing the net unrealized gains
and losses on securities available for sale. The following tables set
forth the components of other comprehensive income (loss) and the allocated
tax amounts for the three and six months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended
-----------------
June 30,
--------
2000 1999
---- ----
(In thousands)
<S> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding losses arising during the period $ - $ (8)
Income tax benefit - 3
-----------------------
Net of tax amount - (5)
-----------------------
Less: reclassification adjustment for (gains)
losses included in net income - -
Income tax expense (benefit) - -
-----------------------
- -
-----------------------
Other comprehensive loss $ - $ (5)
=======================
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30,
--------
2000 1999
---- ----
(In thousands)
<S> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding losses arising during the period $ (5) $ (28)
Income tax benefit 2 11
-----------------------
Net of tax amount (3) (17)
-----------------------
Less: reclassification adjustment for (gains)
losses included in net income - -
Income tax expense (benefit) - -
-----------------------
- -
-----------------------
Other comprehensive loss $ (3) $ (17)
=======================
</TABLE>
-7-
<PAGE>
PCB HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
4. Net Income Per Common Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Basic:
Net income $ 40 $ 42 $ 69 $ 68
================================================================
Shares:
Weighted average common shares outstanding 377,786 396,750 384,384 396,750
================================================================
Net income per common share, basic $ 0.11 $ 0.11 $ 0.18 $ 0.17
================================================================
Diluted:
Net income $ 40 $ 42 $ 69 $ 68
================================================================
Shares:
Weighted average common shares outstanding 377,786 396,750 384,384 396,750
Add: Dilutive effect of outstanding options 2,432 - 1,796 -
Add: Dilutive effect of restricted share awards 2,809 - 2,870 -
----------------------------------------------------------------
Weighted average common shares
outstanding, as adjusted 383,027 396,750 389,050 396,750
================================================================
Net income per common share, diluted $ 0.10 $ 0.11 $ 0.18 $ 0.17
================================================================
</TABLE>
-8-
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Safe Harbor Statement for Forward Looking Statements
This report may contain forward-looking statements within the meaning of the
federal securities laws. These statements are not historical facts, rather
statements based on the Company's current expectations regarding its business
strategies and their intended results and its future performance. Forward-
looking statements are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of future performance. Numerous
risks and uncertainties could cause or contribute to the Company's actual
results, performance and achievements to be materially different from those
expressed or implied by the forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation, general economic
conditions, including changes in market interest rates and changes in monetary
and fiscal policies of the federal government; legislative and regulatory
changes; the Company's ability to remedy any computer malfunctions that may
result from the advent of the Year 2000; and other factors disclosed
periodically in the Company's filings with the Securities and Exchange
Commission.
Because of the risks and uncertainties inherent in forward-looking statements,
readers are cautioned not to place undue reliance on them, whether included in
this report or made elsewhere from time to time by the Company or on its behalf.
The Company assumes no obligation to update any forward-looking statements.
Financial Condition
Total assets increased 4.7% from $28.4 million at December 31, 1999 to
$29.7 million at June 30, 2000, primarily as a result of an increase in loans
receivable, net, which was funded primarily by growth in deposits and advances
from the Federal Home Loan Bank of Indianapolis.
Loans receivable, net, were $25.7 million at June 30, 2000, compared to
$24.1 million at December 31, 1999, a 6.9% increase.
Other debt securities available for sale (U.S. government agency
obligations) were $1.1 million at December 31, 1999 and June 30, 2000.
Cash and interest bearing deposits with banks decreased from $2.5 million
at December 31, 1999 to $2.0 million at June 30, 2000 as a result of increased
loan originations and the purchase of treasury stock.
Total deposits increased from $20.5 million at December 31, 1999 to $21.5
million at June 30, 2000 primarily as a result of the growth in demand and time
deposit accounts.
Total stockholders' equity decreased from $5.8 million at December 31, 1999
to $5.6 million at June 30, 2000. Total stockholders' equity increased as a
result of retained net income of $30,000 and decreased due to purchases of
treasury stock of $233,000.
-9-
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Results of Operations
Net income. Net income was $69,000 for the six months ended June 30, 2000,
compared to $68,000 for the six months ended June 30, 1999. The increase in net
income for 2000 compared to 1999 resulted primarily from an increase in net
interest income, offset by an increase in non-interest expense.
Net interest income for the six month periods ended June 30, 2000 and 1999.
Net interest income increased 9.7% from $421,000 in 1999 to $462,000 for 2000 as
a result of an increase in total interest income offset by an increase in
interest expense. The average yield on interest-earning assets increased from
7.10% for 1999 to 7.40% for 2000. The average balance of total interest-earning
assets was $25.5 million for 1999 compared to $28.6 million for 2000. The
average cost of interest-bearing liabilities increased from 4.95% for 1999 to
5.14% for 2000 while the average balance of interest-bearing liabilities was
$19.6 million for 1999 compared to $23.2 million for 2000. The increase in the
cost of funds resulted primarily from the use of Federal Home Loan Bank advances
to fund loan growth beginning in the third quarter of 1999. The average cost of
borrowings was 6.56% for the six months ended June 30, 2000. The average cost
of deposits was 4.97% for the six months ended June 30, 2000 compared to 4.95%
for the same period in 1999. The interest rate spread for 1999 was 2.15%
compared to 2.26% for 2000. The increase in average interest-earning assets and
average interest-bearing liabilities for 2000 compared to 1999 relates primarily
to the growth in the loan portfolio and deposits, respectively.
Net interest income for the three month periods ended June 30, 2000 and
1999. Net interest income increased from $222,000 for 1999 to $239,000 for 2000
as a result of an increase in total interest income of $94,000 offset by an
increase in total interest expense of $77,000 due to growth in loans funded by
growth in deposits and Federal Home Loan Bank advances.
Provision for loan losses. The provision for loan losses was $4,000 for
the six month period ended June 30, 2000 and $3,000 for the six month period
ended June 30, 1999. Provision for loan losses are charges to earnings to bring
the total allowance for loan losses to a level considered adequate by management
to provide for probably known and inherent loan losses based on management's
evaluation of the collectability of the loan portfolio, including the nature of
the portfolio, credit concentrations, trends in historical loss experience,
specific impaired loans, and economic conditions. In determining the adequacy
of the allowance for loan losses, the Company reviews all loans quarterly, and
loans are assigned a risk weighting based on asset classification. The
allowance for loan losses was $56,000 at June 30, 2000 and $54,000 at December
31, 1999. Management has deemed these amounts as adequate on those dates based
on its best estimate of probable known and inherent loan losses. At June 30,
2000, non-performing loans totaled $337,000. Included in non-performing loans
are loans over 90 days past due secured by one-to-four family residential real
estate in the amount of $319,000. These loans are accruing interest as the
estimated value of the collateral and collection efforts are deemed sufficient
to ensure full recovery.
Non-interest income. Non-interest income was $20,000 for the six months
ended June 30, 2000 and $12,000 for the same period in 1999. Non-interest
income was $11,000 for the second quarter of 2000 compared to $7,000 for the
second quarter of 1999. The increase is primarily the result of an increase in
service charges on deposit accounts due to increased activity and growth in
these accounts.
-10-
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Non-interest expenses. Non-interest expenses totaled $365,000 for the six
months ended June 30, 2000 compared to $316,000 for the same period in 1999.
The increase for 2000 compared to 1999 resulted primarily from increases in
compensation and benefits of $35,000 and an increase in other operating expenses
of $17,000. Compensation and benefits have increased due to normal pay raises
and the adoption in July 1999 of a restricted stock compensation plan. Other
operating expenses increased primarily as a result of increased data processing
fees related to additional loan and deposit accounts, advertising expenses,
supervisory expenses and other expenses of operating as a public company.
Income tax expense. Income tax expense for the six month period ended June
30, 2000 was $44,000, compared to $46,000 for the same period in 1999. The
effective tax rate for 2000 is 38.9% compared to 40.5% for 1999 due to the
effect of the graduated federal tax rates.
Liquidity and Capital Resources
The Bank's primary sources of funds are customer deposits, proceeds from
loan repayments, maturing securities and FHLB advances. While loan repayments
and maturities are a predictable source of funds, deposit flows and mortgage
prepayments are greatly influenced by market interest rates, general economic
conditions and competition. At June 30, 2000, the Bank had cash and interest-
bearing deposits with banks of $2.0 million and securities available-for-sale
with a fair value of $1.1 million. At June 30, 2000, the Bank also had an
available, but undrawn, credit line of $1.9 million from the FHLB-Indianapolis.
The Bank's primary investing activity is the origination of one-to-four
family mortgage loans and, to a lesser extent, consumer, multi-family,
commercial real estate and residential construction loans. The Bank also
invests in U.S. Government and agency securities, corporate notes and, to a
lesser extent, mortgage-backed securities.
During the six months ended June 30, 2000, the Company used excess capital
to repurchase common stock, acquiring 21,535 shares for a total of $233,000.
The Bank must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit withdrawals,
to satisfy financial commitments and to take advantage of investment
opportunities. At June 30, 2000, the Bank had total commitments to extend
credit of $520,000. Historically, the Bank has been able to retain a
significant amount of its deposits as they mature.
Current OTS regulations require savings institutions to maintain an average
daily balance of liquid assets (cash and eligible investments) equal to at least
4.0% of the average daily balance of its net withdrawable deposits and short-
term borrowings. Historically, the Bank has maintained liquidity levels in
excess of regulatory requirements.
The Bank is required to maintain specific amounts of capital pursuant to
OTS requirements. As of June 30, 2000, the Bank was in compliance with all
regulatory capital requirements which were effective as of such date with
tangible, core and risk-based capital ratios of 14.4%, 14.4% and 25.6%,
respectively.
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<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Year 2000 Update
At December 31, 1999, the Company's internal systems and the systems of its
third-party data processor were Year 2000 compliant. The Company has
experienced no errors or difficulties processing financial and operational
information related to the Year 2000 issue.
-12-
<PAGE>
PART II
OTHER INFORMATION
PCB HOLDING COMPANY AND SUBSIDIARY
Item 1. Legal Proceedings
Periodically, there have been various claims and lawsuits involving the
Bank, mainly as a defendant, such as claims to enforce liens,
condemnation proceedings on properties in which the Bank holds security
interests, claims involving the making and servicing of real property
loans and other issues incident to the Bank's business. The Bank is not
a party to any pending legal proceedings that it believes would have a
material adverse effect on it's financial condition or operations.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on April 24,
2000. There were 408,020 shares entitled to vote at the time of the
annual meeting. Holders of 321,708 shares were represented at the
meeting. The results of the vote on the matters presented at the
meeting is as follows:
1. The following individuals were elected as directors:
Vote Vote Term to
Name For Withheld Expire
---- --- --------- ------
James L. Wittmer 301,563 20,145 2003
Howard L. Traphagen 301,563 20,145 2003
Broker non-votes totaled 0.
The terms of directors Carl D. Smith, James G. Tyler, Daniel P.
Lutgring and Marion L. Ress continued after the annual meeting.
2. The appointment of Monroe Shine & Co., Inc. as auditors for the
Corporation for the fiscal year ending December 31, 2000 was
ratified by stockholders by the following vote:
For 321,508; Against 200; Abstain 0
Broker non-votes totaled 0.
Item 5. Other Information
Not applicable.
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<PAGE>
PART II
OTHER INFORMATION
PCB HOLDING COMPANY AND SUBSIDIARY
Item 6. Exhibits and Reports on Form 8-K
Exhibits
--------
27 Financial Data Schedule
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
PCB HOLDING COMPANY
(Registrant)
Dated August 10, 2000 BY: /s/ Carl D. Smith
------------------------------- ---------------------------------
Carl D. Smith
President and CEO
Dated August 10, 2000 BY: /s/ Clarke A. Blackford
------------------------------- ---------------------------------
Clarke A. Blackford
Vice President
-15-
