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 March 31, 1997
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 (IRS Employer
incorporation or organization) Identification No.)
612 Bedford Street, Stamford, CT 06901
(Address or principal executive offices) (Zip Code)
(203) 708-8850
(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 March 31, 1997 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
March 31, 1997 and December 31, 1996
Unaudited Consolidated Statements of Operations 2
Three Months Ended March 31, 1997 and March 31, 1996
Unaudited Consolidated Statements of Changes in Shareholders' 3
Equity --Three Months Ended March 31, 1997 and March 31, 1996
Unaudited Consolidated Statements of Cash Flows 4
Three Months Ended March 31, 1997 and March 31, 1996
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> March 31, December 31,
(Dollars in 000's) (UNAUDITED) 1997 1996
<S> <C> <C>
ASSETS
LOANS (net of allowance for loan losses:
1997, $1,712; 1996, $1,602): $60,671 $57,741
INVESTMENT SECURITIES HELD FOR SALE 6,482 6,429
FEDERAL FUNDS SOLD 4,827 6,328
TOTAL EARNING ASSETS 71,980 70,498
CASH AND DUE FROM BANKS 2,263 2,057
ACCRUED INTEREST RECEIVABLE 1,011 727
PROPERTY AND EQUIPMENT - NET 714 715
ASSETS HELD FOR LEASE 6,250 6,250
PREPAID AND OTHER ASSETS 489 478
OTHER REAL ESTATE OWNED 599 1,304
TOTAL ASSETS $83,306 $82,029
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Demand $ 7,203 $ 8,732
Savings and NOW 11,477 11,471
Money market 2,341 2,298
Time deposits under $100 49,445 47,879
Time deposits of $100 or more 6,794 5,916
TOTAL DEPOSITS $77,260 $76,296
ACCRUED INTEREST PAYABLE 850 772
DIVIDENDS PAYABLE 218 161
OTHER LIABILITIES 377 480
SENIOR NOTES 548 548
CAPITAL NOTES 220 220
MANDATORY CONVERTIBLE CAPITAL NOTES 1,090 1,090
TOTAL LIABILITIES $80,563 $79,567
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Preferred Stock $16,820 $16,380
Common Stock 19 19
Additional paid-in capital 7,555 8,052
Unrealized gain (loss) on
marketable equity securities 564 4
Accumulated deficit (22,215) (21,993)
TOTAL SHAREHOLDERS' EQUITY $2,743 $2,462
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $83,306 $82,029
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended March 31,
(Dollars in 000's except per share data) (UNAUDITED)
1997 1996
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,433 $1,237
Interest and dividends on investments:
US Treasury and Government agency securities 60 88
Other securities 0 7
Interest on federal funds sold 93 82
TOTAL INTEREST INCOME $1,586 $1,414
INTEREST EXPENSE:
Interest on deposits:
Savings and time deposits under $100 $732 $734
Time deposits of $100 or more 85 75
Total Interest on Deposits 817 809
Interest on borrowed money:
Long-term borrowings 20 48
Other 50 18
Total Interest on borrowed money 70 66
TOTAL INTEREST EXPENSE 887 875
NET INTEREST INCOME 699 539
Provision for loan losses 105 40
NET INTEREST INCOME (LOSS) AFTER PROVISION
FOR LOAN LOSSES $594 $499
OTHER OPERATING INCOME:
Service fees on deposits $100 $253
Net gain (loss) on sale of securities (8) 16
Lease asset income 130 175
Other 41 34
TOTAL OTHER OPERATING INCOME $263 $478
OTHER OPERATING EXPENSES:
Salaries and employee benefits $481 $465
Occupancy 89 91
Supplies and communications 43 37
Professional services 95 98
Furniture and equipment maintenance 11 12
Depreciation and amortization 55 41
FDIC insurance 53 52
Other insurance 20 25
Other real estate owned 120 101
Other 112 109
TOTAL OTHER OPERATING EXPENSES $1,079 $1,031
INCOME (LOSS) BEFORE INCOME TAX AND
EXTRAORDINARY ITEM (222) (54)
Income tax -- --
INCOME BEFORE EXTRAORDINARY ITEM (222) (54)
Extraordinary item - Tax benefit from
net operating loss carryforward -- --
Net income (loss) ($222) ($54)
Less preferred stock dividends (497) (342)
Loss applicable to common stock ($719) ($396)
Net loss per common share ($ .37) ($.20)
Weighted Average Common Shares (Primary) 1,961,761 1,961,761
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<CAPTION>
($ and shares in 000's) (UNAUDITED)
Unrealized
Loss on Retained
Common Stock Additional Marketable Earnings
Number of Preferred Paid-in Equity (Accum.
Shares Amount Stock Capital Securities Deficit) Total
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31,1996 1,962 $19 $16,380 $8,052 $4 ($21,993) $2,462
Preferred dividends
accrued Series 1 (60) (60)
Preferred dividends
accrued Series 2 (113) (113)
Preferred dividends
accrued Series 3 (324) (324)
Issuance of
Preferred Stock 440 440
Change in unrealized
loss on marketable
equity securities 560 560
Net income (loss) (222) (222)
BALANCE,
MARCH 31, 1997 1,962 $19 $16,820 $7,555 $564 ($22,215) $2,743
BALANCE,
DECEMBER 31, 1995 1,962 $19 $11,240 $9,604 ($2) ($20,805) $56
Preferred dividends
accrued Series 1 (49) (49)
Preferred dividends
accrued Series 2 (116) (116)
Preferred dividends
accrued Series 3 (177) (177)
Change in unrealized
loss on marketable
equity securities (1) (1)
Issuance of
Preferred Stock 1,080 1,080
Net income (loss) (54) (54)
BALANCE,
MARCH 31, 1996 1,962 $19 $12,320 $9,262 ($3) ($20,859) $739
</TABLE>
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended March 31,
($ IN 000's) (UNAUDITED) 1997 1996
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) ($222) ($54)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Provision for losses on loans 105 40
Provision for losses on foreclosed real estate 105 61
Provision for depreciation and amortization 55 41
Increase (decrease) in deferred
loan fees and costs - net 35 (6)
Amortization (accretion) of net investment
security premiums (discounts) 1 20
(Gain) loss on sale of securities 8 (16)
(Gain) loss on sale other real estate owned 50 148
Decrease (increase) in accrued interest receivables (284) 149
Decrease (increase) in prepaid and other assets (11) (8)
Increase (decrease) in accrued interest payable 78 (64)
Increase (decrease) in other liabilities (103) (128)
Net cash provided (used) by operating activities $(183) $183
INVESTING ACTIVITIES:
Net decrease (increase) in federal funds sold $1,501 ($4,140)
Proceeds from sales and maturities
of investment securities 498 2,297
Purchases of investment securities 0 (300)
Decrease (increase) in loans (3,121) 3,621
Proceeds from sales of OREO 613 --
Purchases of OREO/Cap Exp. (12) (51)
Purchases of property and equipment (54) --
Proceeds from sales of assets held for lease 0 1,000
Net cash provided by investing activities $(575) $2,427
FINANCING ACTIVITIES:
Net increase (decrease) in demand,
savings and money market deposit accounts ($1,480) ($1,596)
Net decrease in time deposits 2,444 (1,545)
Net cash used in financing activities $964 ($3,141)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 206 (531)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 2,057 1,937
CASH AND DUE FROM BANKS AT END OF QUARTER $2,263 $1,406
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the quarter for:
Interest on deposits and borrowed money 887 812
Income taxes -- --
NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfers of loans to Other Real Estate Owned -- 67
Transfer of Other Real Estate Owned to loans -- 221
Preferred stock dividend declared 497 341
Unrealized gain (loss) on valuation
of instruments available for sale 560 (1)
Issuance of preferred stock dividend 440 1,080
</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, 1997.
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, 1996.
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. On September 27, 1996,the Company and
the Bank entered into a subscription agreement with the majority
shareholder to issue 170 shares of Preferred Series III stock in exchange
for $1.7 million. In December 1996, the original subscription agreement
was amended to increase the amount of capital infusion to $2.4 million
in exchange for the issuance of an additional 69 shares of Preferred
Series III stock. The increased capitalization was
directly attributed to the appreciation of the marketable equity
securities originally contributed in September 1996. These transactions
were entered into in furtherance of the 1996 Capital Plan. The FDIC
has determined that, for regulatory accounting purposes, the additional
$687,000 capital injection does not qualify as Tier 1 Capital
and , as such, the Tier 1 Leverage Ratio at December 31, 1996 was 5.36%.
Using generally accepted accounting principles, the additional $687,000
resuted in a leverage ratio of 6.20% and the Bank would have met the capital
requirements of the 1991 Order. The $687,000 of additional capital
will be recognized by the Bank as Tier 1 Capital for regulatory capital
purposes upon liquidation of the marketable securities provided that the net
proceeds equal $2.4 million. During the three months ended March 31, 1997,
approximately 20% of the marketable equity securities were liquidated
and $144,000 of the $687,000 was recognized as additional Tier 1 Capital
for regulatory purposes. At March 31, 1997, the Tier 1 leverage ratio
as calculated according to generally accepted accounting principles was
5.89% and for regulatory accounting purposes was 5.24%. The
FDIC completed an examination of the Bank as of December 31, 1996.
For purposes of prompt corrective action, the Bank was classified as
adequately capitalized.
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 32 shares of Series III Preferred Stock
with a stated value of $320,000 to the shareholders as satisfaction of
the same amount of dividends payable to them as of March 31, 1997. In
addition, the majority shareholder accepted a stock dividend in the
amount of 12 shares of Preferred Series III Stock with a stated value
of $120,000 as satisfaction of the same amount of Series II
Preferred Stock dividends payable to him as of March 31, 1997.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL HIGHLIGHTS
<TABLE>
CBC BANCORP, INC. AND SUBSIDIARY
CONDENSED STATEMENTS OF INCOME March 31,
<CAPTION>
Three Monthes Ended march 31, 1997 1996
($ In thousands, except per share data)
<S> <C> <C>
Net interest income 699 539
Provision for loan losses 105 40
Net interest income after
provision for loan losses 594 499
Investment securities gains (losses) (8) 16
Other non-interest income 271 462
Other real estate owned expense 120 101
Other non-interest expense 959 930
NET INCOME (LOSS) (222) (54)
Common Per share data
Book value (7.17) (5.90)
Net income and Preferred Stock Dividends (.37) (.20)
Cash dividends -- --
Financial Ratios (Percentage)
Yield on interest-bearing assets 9.15 8.59
Cost of funds 4.99 4.94
Interest rate spread 4.16 3.65
Net interest margin 4.03 3.27
Return on average assets(annualized) -- --
Return on average equity(annualized) -- --
Average equity to average assets 3.10 .49
At end of quarter:(Percentage)
Loans to deposits 78.52 69.60
Nonperforming loans to total loans 5.50 8.39
Nonperforming assets to total loans and OREO 6.59 12.89
Allowance for loan losses to nonperforming loans 49.78 40.25
Capital ratios of bank subsidiary: GAAP
Total risk-based 8.84 7.36
Tier 1 risk-based 7.57 6.09
Tier 1 leverage 5.89 4.44
<CAPTION>
At end of period March 31, 1997 1996
<S> <C> <C>
Total assets 83,306 80,019
Net loans 60,671 52,834
Allowance for loan losses (1,721) (1,849)
Securities 6,482 5,580
Deposits 77,260 75,904
Stockholders' equity 2,743 739
Outstanding shares 1,961,761 1,961,761
</TABLE>
RESULTS OF OPERATIONS
The Company's net loss for the three months ending March 31, 1997 was
$222,000 or $.37 per share of common stock , as compared to a net loss
of $54,000 for the three months ending March 31, 1996 or $.20 per share.
The net loss in 1996 was reduced by a $112,000 recovery of prior period
service charges. This nonrecurring income combined with an
increased loan loss provision of $65,000 , resulted in the
unfavorable variance for the period.
Total interest income for the three months ended March 31, 1997
increased $172,000 or 12% from the three month period ended March 31, 1996.
The increase can be attributed to a 12% increase in average loans
outstanding combined with a 56 bp increase in the
yield on average earning assets for the period.
Total interest expense on interest-bearing liabilities for the three months
ended March 31, 1997 increased by approximately 1% or $12,000 from the
three month period ended March 31, 1996. Both average interest-bearing
liabilities and the average interest rates paid increased slightly.
Non-interest expense increased by $48,000 or 4.6% for the three months
ended March 31, 1997 compared to the same period in 1996. The increase
of non-interest expense can be attributed to the rescheduling of accruals
in line with the restructure of management. The most significant increase
can be attributed to provisions taken on Other Real Estate Owned .
Salary and benefits increased slightly by 3.4%. Management is continuing
its focus on overall cost containment measures.
The year-to-date provision for loan losses was $105,000 for 1997 and
$40,000 for 1996. The increase in the provision from period to period
is primarily the result of increased loan volume and revised
reserve methodology.
FINANCIAL CONDITION
Gross loans increased by $3,144,000 or 5.29% in the aggregate for
the three months ended March 31, 1997. The level of nonperforming
assets continued to trend downward, decreasing by $1,129,000 or 22%
reflecting management's continued focus on improving the
overall asset quality of the portfolio, while growing the bank.
Investment securities remained level. Federal funds sold decreased
by $1,501,000 as these assets were used to fund loan growth.
Deposits increased by $964,000 or 1.26% for the three months
ended March 31, 1997. This is attributed to management's efforts
to grow the Bank.
In the three months ended March 31, 1997, the Bank disbursed funds of
$6.4 million of new financial leasing-related transactions and had
paydowns of $5.9 million from funds previously deployed. Under the
financial lease program, the Bank provides short term
financial leases which are subsequently placed with permanent lenders,
and purchases interests in pools of financial lease receivable.
The Bank also acquires equipment for creditworthy lessees under fully
amortizing financial leases. The majority of transactions are short
term in nature.
During 1996, the Bank established a receivable purchase program.
Under this program, the Bank satisfies the working capital needs
of selected corporations, including Fortune 500 and 1,000 companies
as well as privately-held concerns, through the acquisition of
said companies accounts and contract receivables. The Bank purchases
receivables from companies which provide goods or services located
across the US. The obligors are typically large to mid-size
corporations as well as the US Government, state and local
municipalities. In the three months ended March 31, 1997, the Bank
purchased approximately $4 million of such receivables.
CAPITAL ADEQUACY
<TABLE>
The following table summarizes the minimum capital requirements and capital positions of
the Bank at March 31, 1997 and December 31, 1996:
<CAPTION>
($ in thousands) March 31, 1997 December 31, 1996
Minimum Actual Minimum Actual
Capital Capital Capital Capital
Required Under RAP Under GAAP Required Under RAP Under GAAP
<S> <C> <C> <C> <C> <C> <C>
Regulatory Capital Requirements
Total risk based capital percentage 8.00% 8.06% 8.84% 8.00% 8.30% 9.31%
Total risk based capital 5,154 5,193 5,743 4,999 5,183 5,879
Tier 1 risk based capital percentage 4.00% 6.79% 7.57% 4.00% 7.03% 8.04%
Tier 1 risk based capital 2,577 4,377 4,920 2,499 4,392 5,079
Leverage (per order) percentage 6.00% 5.24% 5.89% 6.00% 5.36% 6.20%
Leverage (per order) 5,015 4,377 4,920 4,914 4,392 5,079
</TABLE>
The regulatory capital requirements are being presented under two scenarios:
(1)RAP which excludes the additional capital infusion made at 12/31/96; and
(2) GAAP which includes the capital infusion and represents the application
of generally accepted accounting principals. See "Note B: Regulatory
Matters" for further explanations.
<TABLE>
LOANS
<CAPTION>
($ in thousands) March 31, 1997 December 31, 1996
% of % of
Amount Total Amount Total
<S> <C> <C> <C> <C>
Commercial collateralized by real estate $24,737 40% $25,058 42%
Commercial other 11,449 18% 11,108 19%
Residential real estate mortgage 14,072 22% 13,690 23%
Lease financing 6,699 11% 4,877 8%
Accounts Receivable Purchases 3,934 6% 3,199 5%
Consumer 1,680 3% 1,494 3%
Total loans - gross $62,571 100% $59,427 100%
Unearned income ($72) ($8)
Deferred loan fees (116) (76)
Allowance for loan losses (1,712) (1,602)
Total Loans - net $60,671 $57,741
Average outstanding loans - net $59,876 $54,230
</TABLE>
<TABLE>
NONPERFORMING ASSETS
<CAPTION>
($ in thousands) March 31, December 31,
1997 1996
<S> <C> <C>
Loans past due 90 days or more:
Non-accrual $2,976 $2,825
Accrual 463 1,038
Total loans past due 90 days or more 3,439 3,863
Other real estate owned ("OREO"):
Foreclosed properties 867 1,517
OREO allowance (268) (213)
Total OREO (net) 599 1,304
TOTAL NONPERFORMING ASSETS $4,038 $5,167
Nonperforming assets to total
loans (net) and OREO (net) 6.59% 8.75%
Allowance for loan losses to total
loans past due 90 days or more 49.78% 41.47%
As a percentage of total loans:
Loans past due 90 days or more 5.50% 6.50%
Allowance for loan losses 2.74% 2.70%
</TABLE>
<TABLE>
Non-accrual loans consisted of the following:
<CAPTION>
($ in thousands) March 31, December 31,
1997 1996
<S> <C> <C>
Non-accrual loans:
Real estate loans $2,290 $3,557
Commercial other 686 2,826
TOTAL NON-ACCRUAL LOANS $2,976 $6,383
</TABLE>
<TABLE>
OREO consisted of the following:
<CAPTION>
($ in thousands) March 31, December 31,
1997 1996
<S> <C> <C>
1 - 4 family residential properties $64 $386
Commercial real estate 260 575
Construction & Land Development 275 343
TOTAL OREO $599 $1,304
</TABLE>
The Company discontinues the accrual of interest income whenever reasonable
doubt exists as to its ultimate collectability or when the loan is 90 days
or more past due. When the accrual of interest income is discontinued,
all previously accrued interest income is generally reversed against
the current period's income. A non-accrual loan is restored to an accrual
status when it is no longer delinquent and collectability of
interest and principal is no longer in doubt.
The Company's ability to reduce nonperforming assets is dependent on
conditions in the real estate market and the general economy.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through charges against
income and maintained at a level that management considers adequate to
absorb potential losses in the loan portfolio. Management's estimate
of the adequacy of the allowance for loan losses is based on evaluations
of individual loans, estimates of current collateral values and the results
of the most recent regulatory examination. Management also evaluates
the general risk characteristics inherent in the loan portfolio, prevailing
and anticipated conditions in the real estate market and general economy,
and historical loan loss experience. Loans are charged against
the allowance for loan losses when management believes that collection
is unlikely. Any subsequent recoveries are credited back to the allowance
for loan losses when received.
<TABLE>
The changes in the allowance for loan losses were as follows:
<CAPTION>
Three months ended March 31, 1997 1996
($ in thousands)
<S> <C> <C>
Beginning balance $1,602 $2,070
Loans charged off (7) (297)
Recoveries 12 36
Net loan recoveries (charge-offs) 5 (261)
Provision for loan losses 105 40
Ending balance $1,712 $1,849
Net loan charge-offs to
average loans outstanding 0.00% 3.43%
</TABLE>
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.
Management reviews the non-accrual loan portfolio, restructured loans
and loans past due 90 days and accruing to determine if there is
loan impairment. At March 31, 1997 the Bank's impaired loans amounted
to $2,976,000. The Bank has allocated $527,000 of the general loan loss
reserve to this portfolio.
SECURITIES
All of the Company's investment securities were available for sale
as of March 31, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
At March 31, 1997 Amortized Gross Unrealized Estimated
($ in thousands) Cost Gains Losses Market Value
<S> <C> <C> <C> <C>
US Treasury Securities $4,004 -- ($3) $4,001
Marketable Equity Securities 1,914 567 -- 2,481
TOTAL INVESTMENT SECURITIES $5,918 $567 ($3) $6,482
<CAPTION>
At December 31, 1996 Amortized Gross Unrealized Estimated
($ in thousands) Cost Gains Losses Market Value
<S> <C> <C> <C> <C>
US Treasury Notes $4,005 $4 -- $4,009
Marketable Equity Securities 2,420 -- -- 2,420
TOTAL INVESTMENT SECURITIES $6,425 $4 -- $6,429
</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>
Three months ended March 31, 1997 1996
Average Average Average Average
$ in thousands) Balance Interest Rate Balance Interest Rate
<S>
Assets: <C> <C> <C> <C> <C> <C>
Loans $59,876 1,433 9.71% $53,185 $1,237 9.35%
Securities 4,012 60 6.07% 6,736 95 5.67%
Federal Funds Sold 6,401 93 5.89% 6,306 82 5.23%
Total Earning Assets 70,289 1,586 9.15% 66,227 1,414 8.59%
Cash and due from banks 1,697 1,983
Other assets 11,516 12,922
Total Assets $83,502 $81,132
Liabilities &
Stockholder's equity:
Interest-bearing deposits:
Time certificates 56,934 757 5.39% $54,010 $744 5.54%
Savings deposits 12,919 60 1.89% 15,117 65 1.73%
Total interest-bearing deposits 69,853 817 4.74% 69,127 809 4.70%
Other borrowings 2,100 70 13.52% 2,130 66 12.46%
Total interest-bearing
liabilities 71,953 887 4.99% 71,257 875 4.94%
Demand deposits 7,613 7,774
Other liabilities 1,334 1,704
Stockholders' equity 2,602 397
Total liabilities and
stockholders' equity $83,502 $81,132
Net interest income/rate spread $699 4.16% $539 3.65%
Net interest margin 4.03% 3.27%
</TABLE>
The following table presents the changes in interest income and expense
for each major category of interest-bearing assets and interest-bearing
liabilities, and the amount of the change attributable to changes in
average balances (volume) and rates. Changes attributable to both
volume and rate changes have been allocated in proportion to the
relationship of the absolute dollar amount of the changes in volume and rate.
<TABLE>
Change from March 31, 1996
to March 31, 1997 attributable to:
<CAPTION>
($ in thousands) Volume Rate Total
<S> <C> <C> <C>
Interest income:
Loans 151 45 196
Investment securities (42) 7 (35)
Short-term investments 1 10 11
Total interest income 110 62 172
Interest expense:
Deposits:
Time certificates 26 (13) 13
Savings deposits (14) 9 (5)
Total interest expense on deposits 12 (4) 8
Other interest-bearing liabilities (1) 5 4
Total interest expense 11 1 12
NET INTEREST INCOME 99 61 160
</TABLE>
COMMITMENTS AND CONTINGENCIES
The Company and the Bank in the ordinary course of business are party
to financial instruments with off-balance sheet risk as well as being
party to various legal proceedings. These items are described more
fully in Note 16 of the Company's Consolidated Financial Statements
which are part of the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No.125 ("SFAS" No. 125)
"Accounting for Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities". This statement provides accounting
and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities. Those standards are based
on consistent application of a financial-components approach that focuses
on control. This statement provides implementation guidance for
assessing isolation of transferred assets and for accounting for transfer
of partial interest, servicing of financial assets, securitizations,
transfers of sales-type and direct financing lease receivables,
securities lending transactions, factoring arrangements, transfers
of receivables with recourse and extinguishment of liabilities.
This statement is effective for transfers and servicing of financial
assets and extinguishments of liabilities occurring after
December 31, 1996 and is to be applied prospectively. Management does
not feel this statement will have a material impact on the Company's
financial statements.
In February 1997 the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128 ("SFAS No.128")
"Earnings Per Share". This statement establishes standards for
computing and presenting earnings per share (EPS)and applies to entities
with publicly held common stock or potential common stock. This
statement is effective for financial statements issued for periods
ending after December 15, 1997 with restatement of all prior-period
EPS data presented. This statement will not have a material effect
on the Company's financial statement presentation as losses
have been incurred for all years currently presented.
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: May 14, 1997
Dennis Pollack
President and Chief Executive Officer
Barbara Van Bergen
Chief Financial 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2263
<FED-FUNDS-SOLD> 4827
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6482
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 62571
<ALLOWANCE> 1712
<TOTAL-ASSETS> 83306
<DEPOSITS> 77260
<SHORT-TERM> 1638
<LIABILITIES-OTHER> 1445
<LONG-TERM> 220
<COMMON> 19
0
16820
<OTHER-SE> (14077)
<TOTAL-LIABILITIES-AND-EQUITY> 83306
<INTEREST-LOAN> 1433
<INTEREST-INVEST> 60
<INTEREST-OTHER> 93
<INTEREST-TOTAL> 1586
<INTEREST-DEPOSIT> 817
<INTEREST-EXPENSE> 887
<INTEREST-INCOME-NET> 699
<LOAN-LOSSES> 105
<SECURITIES-GAINS> (8)
<EXPENSE-OTHER> 1079
<INCOME-PRETAX> (222)
<INCOME-PRE-EXTRAORDINARY> (222)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (222)
<EPS-PRIMARY> (.37)
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.03
<LOANS-NON> 2976
<LOANS-PAST> 3439
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1602
<CHARGE-OFFS> 7
<RECOVERIES> 12
<ALLOWANCE-CLOSE> 1712
<ALLOWANCE-DOMESTIC> 1712
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
