UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 number 0-15600
CBC BANCORP, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-1179862
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
128 Amity Road, Woodbridge, CT 06525
(Address or principal executive offices) (Zip Code)
(203) 389-2800
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year
if changed from last report)
Indicate by check mark whether the registrant (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 [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or
15 (d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
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:
As of June 30, 1996, there were 1,961,761 shares of CBC
Bancorp, Inc. Common Stock, par value $.01 per share,
outstanding.CBC BANCORP, INC.
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets 1
June 30, 1996 and December 31, 1995
Unaudited Consolidated Statements of Operations 2
Three Months and Six Months Ended June 30, 1996 and June 30, 1995
Unaudited Consolidated Statements of Changes in Shareholders' 3
Equity -- Six Months Ended June 30, 1996 and June 30, 1995
Unaudited Consolidated Statements of Cash Flows 4
Six Months Ended June 30, 1996 and June 30, 1995
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 December 31,
(Dollars in 000's) (UNAUDITED) 1996 1995
<S> <C> <C>
ASSETS
LOANS (net of allowance for loan losses:
1996, $2,209; 1995,$2,070): $52,657 $56,382
INVESTMENT SECURITIES HELD FOR SALE 5,552 7,582
FEDERAL FUNDS SOLD 5,881 5,000
TOTAL EARNING ASSETS 64,090 68,964
CASH AND DUE FROM BANKS 2,089 1,937
ACCRUED INTEREST RECEIVABLE 595 782
PROPERTY AND EQUIPMENT - NET 758 789
ASSETS HELD FOR LEASE 6,573 7,573
PREPAID AND OTHER ASSETS 510 522
OTHER REAL ESTATE OWNED 1,764 2,713
TOTAL ASSETS $76,379 $83,280
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Demand $7,621 $8,672
Savings and NOW 11,198 13,319
Money market 2,271 2,546
Time deposits under $100 45,516 49,342
Time deposits of $100 or more 5,692 5,166
TOTAL DEPOSITS $72,298 $79,045
ACCRUED INTEREST PAYABLE 626 532
DIVIDENDS PAYABLE 661 1,330
OTHER LIABILITIES 320 459
SENIOR NOTES 548 548
CAPITAL NOTES 220 220
MANDATORY CONVERTIBLE CAPITAL NOTES 1,090 1,090
TOTAL LIABILITIES $75,763 $83,224
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Preferred Stock $12,620 $11,240
Common Stock 19 19
Additional paid-in capital 8,892 9,604
Unrealized gain (loss) on
marketable equity securities (4) (2)
Accumulated deficit (20,911) (20,805)
TOTAL SHAREHOLDERS' EQUITY $616 $56
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$76,379 $83,280
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three MonthsEnded Six Months Ended
June 30, June 30,
(Dollars in 000's except per share data) (UNAUDITED)
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,210 $1,278 $2,448 $2,562
Interest and dividends on investments:
US Treasury and Government
agency securities 76 74 163 246
Other securities 9 16 15 42
Interest on federal funds sold 90 67 172 124
TOTAL INTEREST INCOME $1,385 $1,435 $2,798 $2,974
INTEREST EXPENSE:
Interest on deposits:
Savings and time deposits
under $100 $684 $693 $1,418 $1,352
Time deposits of $100 or more 74 106 149 165
Total Interest on Deposits 758 799 1,567 1,517
Interest on borrowed money:
Long-term borrowings 58 44 117 86
Other 7 6 13 14
Total Interest on borrowed money 65 50 130 100
TOTAL INTEREST EXPENSE 823 849 1,697 1617
NET INTEREST INCOME 562 586 1,101 1,357
Provision for loan losses 60 275 100 350
NET INTEREST INCOME (LOSS) AFTER
PROVISION FOR LOAN LOSSES $502 $311 $1,001 $1,007
OTHER OPERATING INCOME:
Service fees on deposits $264 $139 $518 $284
Net gain (loss) on sale of
securities (6) 0 10 (1)
Lease asset income 157 199 331 316
Gain on sale of loans -- 45 -- 62
Other 37 24 71 71
TOTAL OTHER OPERATING INCOME $452 $407 $930 $732
OTHER OPERATING EXPENSES:
Salaries and employee benefits 474 $545 $939 $1,116
Occupancy 99 73 177 161
Supplies and communications 37 43 74 84
Professional services 105 77 203 238
Furniture and equipment maintenance 12 19 24 39
Depreciation and amortization 25 49 79 102
FDIC insurance 52 69 104 137
Other insurance 23 22 48 44
Other real estate owned 94 365 195 440
Other 85 27 194 87
TOTAL OTHER OPERATING EXPENSES $1,006 $1,289 $2,037 $2,448
INCOME (LOSS) BEFORE INCOME TAX AND
EXTRAORDINARY ITEM (52) (571) (106) (709)
Income tax -- -- -- --
INCOME BEFORE EXTRAORDINARY ITEM (52) (571) (106) (709)
Extraordinary item - Tax benefit from
net operating losscarryforward -- -- -- --
Net income (loss) ($ 52) ($571) ($106) ($709)
Less preferred stock dividends
(369) (311) (712) (604)
Loss applicable to common stock
($421) ($882) ($818) ($1,313)
Net loss per common share
($.22) ($.44) ($.42) ($.65)
Weighted Average Common Shares (Primary)
1,961,761 2,012,514 1,961,761 2,012,514
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<CAPTION>
($ and shares in 000's) (UNAUDITED)
Common Unrealized
Stock Loss on Retained
Number Additional Marketable Earnings
of Preferred Paid-in Equity (Accum.
Shares Amount Stock Capital Securities Deficit) Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995
1,962 $19 $11,240 $9,604 ($2) ($20,805) $56
Preferred dividends
accrued Series 1 (97) (97)
Preferred dividends
accrued Series 2 (229) (229)
Preferred dividends
accrued Series 3 (386) (386)
Issuance of Preferred
Stock 1,380 1,380
Change in unrealized
loss on marketable
equity securities (2) (2)
Net income (loss) (106) (106)
BALANCE, JUNE 30,
1996 1,962 $19 $12,620 $8,892 ($4) ($20,911) $616
BALANCE, DECEMBER 31,
1994 2,013 $20 $9,830 $11,032 ($218) ($19,207) $1,457
Preferred dividends
accrued Series 1 (100) (100)
Preferred dividends
accrued Series 2 (236) (236)
Preferred dividends
accrued Series 3 (268) (268)
Change in unrealized loss on
marketable equity securities 156 156
Issuance of Preferred Stock 260 260
Net income (loss) (709) (709)
BALANCE, 2,013 $20 $10,090 $10,428 ($62) ($19,916) $560
JUNE
30,1995
</TABLE>
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30,
($ IN 000's) (UNAUDITED) 1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) ($106) ($709)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Provision for losses on loans 100 350
Provision for OREO reserves 115 --
Provision for depreciation and amortization 79 102
Increase (decrease) in deferred
loan fees and costs - net (7) (20)
Amortization (accretion) of net
investment security premiums(discounts) 23 50
(Gain) on sale of securities (10) 1
Loss (gain) on sale and provision
for write-downs of other real
estate owned 319 335
Decrease in accrued interest receivables 187 96
Decrease (increase) in prepaid
and other assets 34 (241)
Increase (decrease) in
accrued interest payable 94 (525)
Increase (decrease) in deferred revenue -- (23)
Increase (decrease) in other liabilities (140) (173)
Net cash provided (used)
by operating activities $688 ($757)
INVESTING ACTIVITIES:
Net decrease(increase) in federal funds sold ($881) $(5)
Proceeds from sales and maturities
of investment securities 6,322 9,027
Purchases of investment securities (4,307) (988)
Decrease (increase) in loans 3,475 3,218
Proceeds from sales of OREO 726 803
Purchases of OREO/Cap Exp. (57) --
Purchases of property and equipment (67) (109)
Purchase of assets held for lease -- (7,959)
Proceeds from sales of assets held for lease 1,000 3,346
Net cash provided by investing activities $6,211 $7,333
FINANCING ACTIVITIES:
Net increase (decrease) in demand, savings
and money market deposit accounts ($3,446) ($4,024)
Net decrease in time deposits (3,301) (2,632)
Net cash used in financing activities ($6,747) ($6,656)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 152 (80)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 1,937 3,130
CASH AND DUE FROM BANKS AT END OF QUARTER 2,089 3,050
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the quarter for:
Interest on deposits and borrowed money 1,603 2,141
Income taxes -- --
NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfers of loans to Other Real Estate Owned 67 438
Transfer of Other Real Estate Owned to loans 221 --
Mortgage Recorder as Loan Recovery 300 --
Preferred stock dividend declared 711 344
Unrealized gain (loss) on valuation
of instruments available for sale (2) 156
Issuance of preferred stock dividend 1,380 260
</TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
NOTE A:BASIS OF PRESENTATION
The accompanying consolidated financial statements include the
accounts of CBC Bancorp, Inc. (the "Company") and its subsidiary,
Connecticut Bank of Commerce (the "Bank"). The consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
preparing such financial statements, management is required to
make estimates and assumptions that effect the reported amounts of
assets and liabilities as of the date of the consolidated balance
sheets and the revenues and expenses for the period. Actual
results could differ significantly from those estimates. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results are not necessarily
indicative of the results that may be expected for the year ending
December 31, 1996. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
NOTE B:REGULATORY MATTERS
Under the terms of the July 1991 Cease and Desist Order (the "1991
Order"), the Bank must obtain the prior approval of the Federal
Deposit Insurance Corporation ("FDIC") and the Connecticut Banking
Commissioner (the "Banking Commissioner") before paying any cash
dividends to the Company. Under the Bank's approved 1996 Capital
Restoration Plan (the "1996 Capital Plan"), which was approved by
the FDIC and the Banking Commissioner on March 21, 1996, the Bank
has until December 31, 1997 to achieve the 6 percent Tier 1
leverage capital ratio originally mandated by the 1991 Order. The
Bank and its Board of Directors believe that the Bank is in full
compliance with each of the terms of the 1991 Order.
Under the terms of a written agreement (the "Agreement") between
the Company and the Federal Reserve Bank of Boston (the "FRB")
effective November 2, 1994, the holding company is required to
obtain the written approval of the Reserve Bank prior to the
declaration or payment of cash dividends on its outstanding common
or preferred stock, increasing its outstanding borrowings or
incurring additional holding company indebtedness, engaging in
material transactions with the Bank (other than capital
contributions), or making cash disbursements in excess of agreed
upon amounts. All such actions required by the Written Agreement
have been taken by the Company.
NOTE C:PREFERRED STOCK DIVIDEND.
In accordance with the dividend payment provisions of the Series
III Preferred Stock offering, the Board of Directors voted to pay
stock dividends in the amount of 20 shares of Series III Preferred
Stock with a stated value of $200,000 to the shareholders as
satisfaction of the same amount of dividends payable to them as of
June 30, 1996. In addition, the majority shareholder accepted a
stock dividend in the amount of 10 shares of Preferred Series III
Stock with a stated value of $100,000 as satisfaction of the same
amount of Series II Preferred Stock dividends payable to him as of
June 30, 1996.
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONDENSED STATEMENTS OF INCOME
<CAPTION>
Six Months Ended June 30,
($ In thousands, except per share data) 1996 1995
<S> <C> <C>
Net interest income 1,101 1,357
Provision for loan losses 100 350
Net interest income after
provision for loan losses 1,001 1,007
Investment securities gains (losses) 10 (1)
Other non-interest income 920 733
Other real estate owned expense 195 440
Other non-interest expense 1,842 2,008
NET INCOME (LOSS) (106) (709)
Common Per share data
Book value -- --
Net income and Preferred Stock Dividends (.42) (.65)
Cash dividends -- --
Financial Ratios
Yield on interest-bearing assets 8.35 8.12
Cost of funds 4.90 4.24
Interest rate spread 3.45 3.88
Net interest margin 3.29 3.70
Return on average assets(annualized) -- --
Return on average equity(annualized) -- --
Average equity to average assets .42 1.48
At end of quarter:
Loans to deposits 75.88 70.74
Nonperforming loans to total loans 9.51 14.41
Nonperforming assets to total loans and OREO 12.83 20.00
Allowance for loan losses to nonperforming loans 42.32 35.56
Capital ratios of bank subsidiary:
Total risk-based 7.51 6.27
Tier 1 risk-based 6.23 4.99
Tier 1 leverage 4.61 3.72
<CAPTION>
At end of period June 30,
1996 1995
<S> <C> <C>
Total assets 76,379 84,577
Net loans 52,657 55,085
Allowance for loan losses (2,209) (2,083)
Securities 5,552 6,255
Deposits 72,298 80,818
Stockholders' equity 616 560
Outstanding shares 1,961,761 2,012,514
</TABLE>
RESULTS OF OPERATIONS
The Company's net loss for the six months ending June 30, 1996 was
$106,000 or $.05 per share of common stock, an improvement from
the loss of $709,000 or $.35 per share of common stock for the
prior year period. The Company's loss consisted of $117,000 of
interest expense on Company debt which was offset by the Bank's
net income of $11,000 for the period. The Bank's improvement for
the first six months of 1996 is due primarily to: 1) a net
increase in other income of $198,000 from the prior period which
was primarily due to the recovery of service charges in 1996 on dormant
accounts of approximately $266,000. In 1995, the Bank had other income
of $62,000 from SBA loan sales. No SBA loans were originated in 1996,
and 2) a decrease in other operating expenses of $411,000.
These improvements were tempered by a decreases in net interest
income of $225,000, excluding interest expense on Company
debt.
Total interest income for the six months ended June 30, 1996
decreased $176,000 or 6% from the three month period ended June
30, 1995. This was due primarily to a 9% decrease in the average
loans outstanding during the six month period, which was tempered
by a slight increase in average interest rates charged for loans.
Total interest expense on interest -bearing liabilities for the
six months ended June 30, 1996 increased $80,000 or 5% from the
six month period ended June 30, 1995. This reflects a 54 basis
point increase on the average rate paid for interest-bearing
deposits and a 65 basis point increase on the average rate paid on
other borrowings. The impact of these rate increases was tempered
by a decrease in average interest-bearing liabilities of
$6,275,000 or 8% from the six month period ended June 30, 1995.
Non-interest income increased $198,000 in the first six months of
1996 over the comparable period in 1995. The increase was largely
attributable to additional service charges in the amount of
$234,000. Non-interest income for the same period in 1995
includes $62,000 of income related to SBA loan sales. The Bank has
not booked any new SBA loan business in 1996.
Non-interest expense decreased $411,000 or 17% for the first six
months ended June 30, 1996 compared to the same period in 1995.
The reduction of non-interest expense reflects management's
efforts to significantly reduce professional fees and Other Real
Estate Owned expenses, as well as overall cost containment
measures in all other general and administrative expenses.
The year-to-date provision for loan losses was $100,000 for 1996
and $350,000 for 1995.
The company's net loss for the second quarter of 1996 was $52,000
or $.03 per common share, a reduction in loss of $519,000 from the
net loss of $571,000 or $.28 per common share for the second
quarter of 1995. The reduction was primarily due to increased
service charges combined with a loan loss provision of $275,000
and an OREO reserve provision of $300,000 taken in the second
quarter of 1995 as required by the Connecticut State Banking
Department based on the results of their examination of the Bank
as of March 31, 1995.
FINANCIAL CONDITION
Gross loans decreased by $3,592,000 or 6% in the aggregate for the
six months ended June 30, 1996. Investment securities and federal
funds sold decreased $1,149,000 or 9%. Assets held for lease
decreased $1,000,000 or 13%. The decrease in loans reflects
management's continued focus on improving the overall asset
quality of the portfolio through the reduction of nonperforming
loans. Nonperforming loans decreased $1,520,000 or 23% for the
period. The remaining decreases are primarily the result of a
decrease in deposits of $6,747,000 or 8%.
In the six months ended June 30, 1996, the Bank disbursed funds of
$6.2million of new financial leasing-related transactions and had
paydowns of $6 million from funds previously deployed. The
financial lease program includes full pay-out leases which are
subsequently placed with permanent lenders, accounts receivable
purchases resulting from leasing transactions and equipment
purchased for financial lease transactions both available for
lease and subject to existing leases Most transactions are short
term in nature.
CAPITAL ADEQUACY
<TABLE>
The following table summarizes the minimum capital requirements
and capital positions at June 30, 1996 and December 31, 1995:
<CAPTION>
($ in thousands) June 30, 1996 December 31, 1995
Minimum Actual Minimum Actual
Capital Capital Capital Capital
Required Bank Required Bank Bank
-Bank -Bank
<S> <C> <C> <C> <C>
Regulatory Capital
Requirements
Total risk based
capital percentage 8.00% 7.51% 8.00% 6.94%
Total risk based
capital 4,635 4,352 5,080 4,409
Tier 1 risk based
capital percentage 4.00% 6.23% 4.00% 5.67%
Tier 1 risk based
capital 2,318 3,610 2,540 3,599
Leverage (per order)
percentage 6.00% 4.61% 6.00% 4.38%
Leverage (per order) 4,702 3,610 4,927 3,599
</TABLE>
<TABLE>
LOANS
<CAPTION>
($ in thousands) June 30, 1996 December 31, 1995
% of % of
Amount Total Amount Total
<S> <C> <C> <C> <C>
Commercial collateralized
by real estate $27,115 49% $30,083 51%
Commercial other 10,387 19% 9,021 15%
Residential real estate
mortgage 10,188 18% 10,797 19%
Lease financing 5,831 11% 6,860 12%
Consumer 1,391 3% 1,743 3%
Total loans - gross $54,912 100% $58,504 100%
Unearned income ($15) ($22)
Deferred loan fees (31) (30)
Allowance for loan losses (2,209) (2,070)
Total Loans - net $52,657 $56,382
Average outstanding
loans - net $52,729 $58,610
</TABLE>
<TABLE>
NONPERFORMING ASSETS
<CAPTION>
($ in thousands) June 30, December 31,
1996 1995
<S> <C> <C>
Loans past due 90 days or more:
Non-accrual $4,744 $6,383
Accrual 475 356
Total loans past due
90 days or more 5,219 6,739
Other real estate owned ("OREO"):
Foreclosed properties 1,904 3,054
OREO allowance (140) (341)
Total OREO (net) 1,764 2,713
TOTAL NONPERFORMING ASSETS $6,983 $9,452
Nonperforming assets to total
loans (net) and OREO (net) 12.83% 16.00%
Allowance for loan losses
to total loans past due
90 days or more 42.32% 30.72%
As a percentage of total loans:
Loans past due 90 days or more 9.5% 11.51%
Allowance for loan losses 4.02% 3.54%
Non-accrual loans consisted of the following:
($ in thousands) June 30, December 31,
1996 1995
Non-accrual loans:
Real estate loans $2,689 $3,557
Commercial other 2,055 2,826
TOTAL NON-ACCRUAL LOANS $4,744 $6,383
OREO consisted of the following:
($ in thousands) June 30, December 31,
1996 1995
1 - 4 family residential
properties $602 $569
Multifamily residential
properties -- 272
Commercial real estate 764 1,151
Construction & Land Development 398 721
TOTAL OREO $1,764 $2,713
</TABLE>
The Company discontinues the accrual of interest income whenever
reasonable doubt exists as to its ultimate collectability or when
the loan is 90 days or more past due. When the accrual of
interest income is discontinued, all previously accrued interest
income is generally reversed against the current period's income.
A non-accrual loan is restored to an accrual status when it is no
longer delinquent and collectability of interest and principal is
no longer in doubt.
The Company's ability to reduce nonperforming assets is dependent
on conditions in the real estate market and general economy.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through charges
against income and maintained at a level that management considers
adequate to absorb potential losses in the loan portfolio.
Management's estimate of the adequacy of the allowance for loan
losses is based on evaluations of individual loans, estimates of
current collateral values and the results of the most recent
regulatory examination. Management also evaluates the general
risk characteristics inherent in the loan portfolio, prevailing
and anticipated conditions in the real estate market and general
economy, and historical loan loss experience. Loans are charged
against the allowance for loan losses when management believes
that collection is unlikely. Any subsequent recoveries are
credited back to the allowance for loan losses when received.
The changes in the allowance for loan losses were as follows:
Six months ended June 30, 1996 1995
($ in thousands)
Beginning balance $2,070 $2,637
Loans charged off (365) (553)
Recoveries 404 188
Net loan recoveries (charge-offs) 39 (365)
Provision for loan losses 100 75
Ending balance $2,209 $2,347
Net loan charge-offs to average loans outstanding 0.00%
0.60%
While the Company believes its allowance for loan losses is
adequate in light of present economic conditions and the current
regulatory environment, there can be no assurance that the
Company's banking subsidiary will not be required to make future
adjustments to its allowance and charge-off policies in response
to changing economic conditions or future regulatory examinations.
The Connecticut Department of Banking completed its regulatory
examination of the Bank as of the close of business on April 15,
1996. No adjustments to the loan loss or OREO reserves were
required as a result of the examination.
The Bank has adopted Financial Accounting Standard 114 "Accounting
By Creditors for Impaired Loans" effective January 1, 1995. In
connection therewith, Management reviews the non-accrual loan
portfolio and loans past due 90 days and accruing to determine if
there is loan impairment. At June 30, 1996 the Bank's impaired
loans amounted to $4,744,000. The Bank has allocated $1,045,000
of the general loan loss reserve to this portfolio.
SECURITIES
All of the Company's investment securities were available for sale
as of June 30, 1996 and December 31, 1995 in accordance with the
requirements of Statement of Financial Accounting Standards No.
115 (SFAS No. 115) "Accounting for Certain Investments in Debt and
Equity Securities." The specific accounting policies pertaining
to SFAS No. 115 are detailed in the Summary of Accounting Policies
to the Company's Consolidated Statements included in Item 14 of
the December 31, 1995 Form 10-K.
<TABLE>
<CAPTION>
At June 30, 1996 Amortized Gross Unrealized Estimated Estimated
($ in thousands) Cost Gains Losses Market Value
<S> <C> <C> <C> <C>
US Treasury Securities $4,006 -- ($2) $4,004
US Government Agency Security 1,000 -- (2) 998
Certificate of Deposit 300 -- -- 300
State of Israel Bond 250 -- -- 250
TOTAL INVESTMENT SECURITIES $5,556 -- ($4) $5,552
<CAPTION>
At December 31, 1995 Amortized Gross Unrealized Estimated Estimated
($ in thousands) Cost Gains Losses Market Value
<S> <C> <C> <C> <C>
US Treasury Notes $6,293 -- ($195) $6,098
Certificate of Deposit 500 -- -- 500
State of Israel Bond 500 -- -- 500
Marketable Equity Securities 205 -- (23) 182
TOTAL INVESTMENT SECURITIES $7,498 -- ($218) $7,280
</TABLE>
NET INTEREST INCOME
The following table presents condensed average statements of
condition, including non-accrual loans, the components of net
interest income and selected statistical data:
<TABLE>
<CAPTION>
Six months ended June 30, 1996 1995
Average Average Average Average
($ in thousands) Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Assets:
Loans $54,633 2,448 9.01% $59,446 $2,562 8.69%
Securities 6,144 178 5.83% 9,973 288 5.82%
Federal Funds Sold 6,578 172 5.26% 4,476 124 5.59%
Total Earning
Assets 67,355 2,798 8.35% 73,895 2,974 8.12%
Cash and due
from banks 1,888 2,230
Other assets 10,354 11,079
Total Assets $79,597 $87,204
Liabilities & Stockholder's equity:
Interest-bearing deposits:
Time certificates 52,810 1,435 5.46% $56,366 $1,339 4.79%
Savings deposits 14,721 132 1.80% 17,837 178 2.01%
Total interest-bearing
deposits 67,531 1,567 4.66% 74,203 1,517 4.12%
Other borrowings 2,147 130 12.17% 1,750 100 11.52%
Total interest-bearing
liabilities 69,678 1,697 4.90% 75,953 1,617 4.24%
Demand deposits 7,870 8,241
Other liabilities 1,713 1,719
Stockholders' equity 336 1,291
Total liabilities and
stockholders' equity $79,597 $87,204
Net interest income/rate spread 1,101 3.45% 1,357 3.88%
Net interest margin 3.29% 3.70%
</TABLE>
The following table presents the changes in interest income and
expense for each major category of interest-bearing assets and
interest-bearing liabilities, and the amount of the change
attributable to changes in average balances (volume) and rates.
Changes attributable to both volume and rate changes have been
allocated in proportion to the relationship of the absolute dollar
amount of the changes in volume and rate.
Change from June 30, 1995
to June 30, 1996 attributable
to:
($ in thousands) Volume Rate Total
Interest income:
Loans (209) 95 (114)
Investment securities (110) 0 (110)
Short-term investments 55 (7) 48
Total interest income (264) 88 (176)
Interest expense:
Deposits:
Time certificates (78) 174 96
Savings deposits (29) (18) (47)
Total interest expense on deposits (107) 156 49
Other interest-bearing liabilities 24 7 31
Total interest expense (83) 163 80
NET INTEREST INCOME (181) (75) (256)
COMMITMENTS AND CONTINGENCIES
The Company and certain of its then directors and officers are
defendants in a suit alleging violations under the Securities
Exchange Act of 1934. The suit is described more fully in Item 3
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1994, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard 119 ("SFAS No. 119")
"Disclosure About Derivative Financial Instruments and Fair Value
of Financial Instruments" effective for year ends beginning after
December 15, 1994, except for entities with less than $150 million
in total assets in the current statement of financial position.
For these entities, the statement shall be effective for financial
statements issued for fiscal years ending after December 15, 1995.
The Company does not hold or issue any derivative financial
instruments, and accordingly the statement will not have a
material effect on the consolidated financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation." SFAS No. 123 allows companies to
continue to account for their stock option plans in accordance
with APB Opinion 25 but encourages the adoption of a new
accounting method based on the estimated fair market value of
employee stock options. Companies electing not to follow the new
fair value based method are required to provide expanded footnote
disclosures, including pro forma net income and earnings per
share, determined as if the company had applied the new method.
SFAS No. 123 is required to be adopted prospectively beginning
January 1, 1996. Management intends to continue to account for
its stock option plans in accordance with APB Opinion 25 and
provide supplemental disclosures as required by SFAS No. 123,
beginning in 1996.
PART II. OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
(a) Exhibit 27: Financial Data Schedule
(b) None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned duly authorized.
CBC BANCORP, INC.
(Registrant)
Date: August 8, 1996
Dennis Pollack
President and Chief Executive Officer
Barbara Van Bergen
Chief Accounting Officer
EXHIBIT 27 FINANCIAL DATA SCHEDULE
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> SIX MONTHS
<PERIOD-END> JUNE 30, 1996
<CASH> 2,089
<INT-BEARING DEPOSITS>
<FED-FUNDS-SOLD> 5,881
<TRADING-ASSETS>
<INVESTMENTS-HELD-FOR-SALE> 5,552
<INVESTMENTS-CARRYING>
<INVESTMENTS-MARKET>
<LOANS> 54,866
<ALLOWANCE> 2,209
<TOTAL-ASSETS> 76,379
<DEPOSITS> 72,298
<SHORT-TERM> 548
<LIABILITIES-OTHER> 1,607
<LONG-TERM> 1,310
<COMMON> 19
12,620
<OTHER-SE> (12,004)
<TOTAL-LIABILITIES-AND-EQUITY> 76,379
<INTEREST-LOAN> 2,488
<INTEREST-INVEST> 178
<INTEREST-OTHER> 172
<INTEREST-TOTAL> 2,798
<INTEREST-DEPOSIT> 1,567
<INTEREST-EXPENSE> 1,697
<INTEREST-INCOME-NET> 1,001
<LOAN-LOSSES> 100
<SECURITIES-GAINS> 10
<EXPENSE-OTHER> 2,037
<INCOME-PRETAX> (106)
<INCOME-PRE-EXTRAORDINARY>
<EXTRAORDINARY>
<CHANGES>
<NET-INCOME> (106)
<EPS-PRIMARY> (.42)
<EPS-DILUTED>
<YIELD-ACTUAL> 3.29
<LOANS-NON> 4,744
<LOANS-PAST> 5,219
<LOANS-TROUBLED>
<LOANS-PROBLEM>
<ALLOWANCE-OPEN> 2,070
<CHARGE-OFFS> 365
<RECOVERIES> 404
<ALLOWANCE-CLOSE> 2,209
<ALLOWANCE-DOMESTIC> 2,209
<ALLOWANCE-FOREIGN>
<ALLOWANCE-UNALLOCATED>
</TABLE>
