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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2000
Commission file number: 0-17482
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---- -----
County Bank Corp
Michigan EIN 38-0746329
83 W. Nepessing St., Lapeer, MI 48446
(810) 664-2977
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 of 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
--- ---
Indicate the number of shares outstanding as of each of the issuer's classes of
common stock, as of the latest practicable date.
There are 1,186,472 shares of common stock outstanding as of March 31, 2000.
<PAGE> 2
COUNTY BANK CORP
FORM 10-Q
For the Quarter ended March 31, 2000
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
Balance Sheets-
At March 31, 2000 and December 31, 1999 4
Statements of Income-
For the three months ended March 31, 2000 and 1999 5
Statement of Cash Flows
For the three months ended March 31, 2000 and 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and the Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K 10
All items except those set forth above are inapplicable and have been omitted.
SIGNATURES 11
</TABLE>
2
<PAGE> 3
Part I - Financial Information
Item I - Financial Statements
Introduction to Financial Statements
The consolidated financial statements of County Bank Corp and subsidiary, Lapeer
County Bank & Trust Co., have been prepared, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading when
read in conjunction with financial statements and the notes thereto included in
County Bank Corp's Form 10-K as filed with the Securities and Exchange
Commission for the year ended December 31, 1999.
The financial information presented reflects all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. The
results for interim periods are not necessarily indicative of the results to be
expected for the year.
3
<PAGE> 4
<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEETS (in thousands)
March 31 December 31
2000 1999
<S> <C> <C>
ASSETS
Cash and due from banks $ 14,585 $ 12,883
Investment securities available for sale 20,085 21,565
Investment securities held to maturity 28,236 28,189
--------- ----------
Total investment securities 48,321 49,754
Federal funds sold 6,250 4,900
Loans 138,671 134,651
Less: Reserve for possible loan losses 1,945 1,913
--------- ----------
Net loans 136,726 132,738
Bank premises and equipment 4,185 4,227
Interest receivable and other assets 3,261 2,895
--------- ----------
TOTAL ASSETS $ 213,328 $ 207,397
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 37,797 $ 34,977
Interest bearing demand 57,300 54,318
Savings 41,059 41,164
Time 51,480 51,723
---------- ----------
Total deposits 187,636 182,182
Interest payable and other liabilities 1,489 1,390
---------- ----------
TOTAL LIABILITIES 189,125 183,572
STOCKHOLDERS' EQUITY
Common Stock-$5.00 par value, 1,200,000 shares
authorized and 593,236 shares outstanding
5,932 5,932
Surplus 8,634 8,634
Undivided profits 9,584 9,023
Unrealized gains and losses on securities available for sale 53 236
---------- ----------
TOTAL STOCKHOLDERS' EQUITY
24,203 23,825
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 213,328 $ 207,397
---------- ==========
</TABLE>
4
<PAGE> 5
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENTS
(in thousands) Three months nded
March 31
2000 1999
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 2,927 $ 2,515
Interest on investments 690 703
Interest on Federal funds sold 51 121
-------- --------
TOTAL INTEREST INCOME 3,668 3,339
INTEREST EXPENSE
Demand deposits 527 360
Savings deposits 273 294
Time deposits 670 637
Interest on Federal funds purchased 1 -
-------- --------
TOTAL INTEREST EXPENSE 1,471 1,291
-------- --------
NET INTEREST INCOME
2,197 2,048
Provision for possible loan losses 60 30
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 2,137 2,018
OTHER INCOME
Service fees on loan and deposit accounts 264 265
Other 304 321
-------- --------
TOTAL OTHER INCOME 568 586
OTHER EXPENSES
Salaries and employee benefits 1,039 941
Net occupancy expense 241 243
Other 393 375
-------- --------
TOTAL OTHER EXPENSE 1,673 1,559
INCOME BEFORE PROVISION FOR FEDERAL
INCOME TAX 1,032 1,045
Provision for Ferderal income tax 258 273
-------- --------
NET INCOME 774 772
======== ========
EARNINGS PER SHARE
Net income $ 0.65 $ 0.65
Cash dividend declared $ 0.18 $ 0.16
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
(in thousands) Three months ended
March 31
2000 1999
<S> <C> <C>
Cash flows from operating activities
Net income
$ 774 $ 772
Adjustments to reconcile net income to net cash
provided from operating activities
Depreciation and amortization 117 199
Provision for loan losses 60 30
Net amortization and accretion of securities 30 40
Deferred income taxes - -
Net gain on sale of investment securities - -
(Gain) loss on other real estate owned (2) -
Net change in accrued interest receivable (396) (538)
Net change in accrued interest payable and other 193 82
-------- --------
Net cash provided by operating activities 776 585
Cash flows form investing activities
Proceeds from sale of investment securities: AFS 961 -
Proceeds from maturities of investment securities: AFS 1,353 303
Proceeds from maturities of investment securities: HTM 567 799
Purchase of investment securities: AFS (1,000) (1,956)
Purchase of investment securities: HTM (751) (847)
Net (increase) decrease in loans (4,051) (3,092)
Proceeds from the sale of other real estate 32 -
Premises and equipment expenditures (75) (758)
-------- --------
Net cash provided from (used in) investing activities (2,964) (5,551)
Cash flows from financing activities
Net increase (decrease) in interest bearing and
non-interest bearing demand accounts 5,802 369
Net increase (decrease) in savings and time deposits (348) (1,354)
Cash dividends paid (214) (183)
-------- --------
Net cash provided from (used in) financing activities 5,240 (1,168)
-------- --------
Net increase (decrease) in cash and equivalents 3,052 (6,134)
Cash and equivalents at beginning of year 17,783 23,072
-------- --------
Cash and equivalents at end of period $ 20,835 $ 16,938
======== ========
Cash paid for:
Interest $ 1,485 $ 1,373
Income taxes 9 -
</TABLE>
6
<PAGE> 7
NOTE 1. INVESTMENTS
(in thousands)
The carrying amount and approximate market value of securities held to maturity
were as follows
<TABLE>
<CAPTION>
March 31, 2000
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Market
Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government securities and obligations of
U.S. Government corporations and political subdivisions $ 1,000 $ - $ 44 $ 956
Obligations of states and political subdivisions 20,952 91 549 20,494
Mortgage-backed securities 6,284 23 122 6,185
-------- ------- -------- --------
Total $ 28,236 $ 114 $ 715 $ 27,635
======== ======= ========= ========
</TABLE>
The carrying amount and approximate market value of securities held to maturity
were as follows
<TABLE>
<CAPTION>
December 31, 1999
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Market
Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government securities and obligations of
U.S. Government corporations and political subdivisions $ 1,000 $ - $ 34 $ 966
Obligations of states and political subdivisions 20,549 174 421 20,302
Mortgage-backed securities 6,640 29 108 6,561
-------- ------- ------- --------
Total $ 28,189 $ 203 $ 563 $ 27,829
======== ======= ======= ========
</TABLE>
The carrying amount and approximate market value of securities available for
sale were as follows
<TABLE>
<CAPTION>
March 31, 2000
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Market
Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government securities and obligations of
U.S. Government corporations and political subdivisions $ 11,975 $ - $ 465 $ 11,510
Obligations of states and political subdivisions 76 - - 76
Corporate securities 546 680 - 1,226
Mortgage-backed securities 7,368 3 98 7,273
-------- ------- ------- --------
Total $ 19,965 $ 683 $ 563 $ 20,085
======== ======= ======= ========
</TABLE>
The carrying amount and approximate market value of securities available for
sale were as follows
<TABLE>
<CAPTION>
December 31, 1999
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Market
Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government securities and obligations of
U.S. Government corporations and political subdivisions $ 11,980 $ - $ 433 $ 11,547
Obligations of states and political subdivisions 1,040 11 1,051
Corporate securities 426 864 1,290
Mortgage-backed securities 7,762 1 86 7,677
--------- ------- ------- ---------
Total $ 21,208 $ 876 $ 519 $ 21,565
========= ======= ======= =========
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
NOTE 2. LOANS
(in thousands) 3/31/00 12/31/99
<S> <C> <C>
Commercial $ 65,307 $ 64,547
Real estate mortgage 30,310 31,502
Installment 27,624 27,625
Construction 15,430 10,977
--------- ---------
$ 138,671 $ 134,651
========= =========
</TABLE>
Transactions in the reserve for possible loan losses were as follows for the
three months ended March 31:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Beginning balance at beginning of period $ 1,913 $ 1,881
Provision charged to earnings 60 30
Loans charged off 32 18
Recoveries 3 3
-------- --------
Balance at end of the period $ 1,944 $ 1,896
======= ========
Reserve as a percent of total loans 1.40% 1.41%
Loans outstanding to executive officers, directors, $ 3,746 $ 3,873
principal shareholders and their related companies. In
the opinion of management, such loans were made on the
same terms and conditions as those to other borrowers
and did not involve more that the normal risk of
collectability
</TABLE>
ITEM 2. MANAGEMENTS' DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Financial Condition
Loan demand was strong during the first quarter of 2000. Net loans increased
$4,051,000 during the quarter. The largest demand was in the commercial loan
area. This increase was earlier than anticipated and is a reflection of the
strong growth in the local market place. Mortgage activity declined as a result
of increasing interest rates.
Consumer loans also declined during the quarter.
Time and savings deposits dropped during the first quarter of the year. This
follows a pattern of cash flows that usually impacts the market in the first
quarter. Demand deposits grew during the quarter. Non interest bearing demand
increased 17% and interest bearing demand deposits grew 20% since December 31,
1999. New commercial customers with large deposit balances contributed to the
growth in non interest demand. Increased use on the Choice product's indexed
interest rate feature contributed to the growth in interest bearing demand
accounts.
The Bank paid a quarterly dividend of $.18 per share during the first quarter.
Increases in deposit accounts and maturities in the investment portfolio met
demands for new loans. The Bank sold securities in the available for sale
portfolio when an opportunity to liquidate low yielding municipal bonds with no
loss arose. The money is invested in Federal funds to meet loan commitments and
respond to loan applications that have not been funded. The Bank continues to
seek investment opportunities to supplement income but remain liquid enough to
meet loan demand.
8
<PAGE> 9
Results of Operations
Increasing rates put pressure on the Bank's interest margin. The Bank is closely
matched, but deposits reprice in advance and in anticipation of Federal Reserve
Board action that increases the prime rate and consequently provides higher loan
yields. Other income categories performed at the similar levels to the previous
year. Other expenses increased in response to the opening of a new branch in
Imlay City, Michigan in August of 1999. The branch is growing faster than any
office previously opened by the Bank, but the branch will be an expense burden
on the Bank for the next one to two years.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
<TABLE>
<CAPTION>
Rate sensitivity analysis (000's), March 31, 2000
Repricing period in days 0-30 31-90 91-180 181-365 0-365 0ver 365
<S> <C> <C> <C> <C> <C> <C>
Rate sensitive assets (RSA):
Federal fund sold $ 6,250 $ - $ - $ - $ 6,250 $ -
Investment securities 11,135 1,576 2,824 2,178 17,713 30,608
Loans 35,155 2,679 3,513 5,568 46,915 91,756
-------- ------- -------- -------- --------- --------
Total rate sensitive assets 52,540 4,255 6,337 7,746 70,878 122,364
Rate sensitive liabilities (RSL):
Demand deposits 35,546 - 35,546 59,551
Savings deposits 19,600 - 19,600 21,459
Time deposits 7,954 6,915 9,982 6,654 31,505 19,975
-------- ------- -------- -------- --------- --------
Total rate sensitive liabilities 63,100 6,915 9,982 6,654 86,651 100,985
Repricing gap (RSA-RSL) $(10,560) $(2,660) $ (3,645) $ 1,092 $ (15,773) $ 21,379
======== ======= ======== ======== ========= ========
As a percent of capital -43.6% -11.0% -15.1% 4.5% -65.2% 88.3%
As a percent of total assets -5.0% -1.2% -1.7% 0.5% -7.4% 10.0%
</TABLE>
The previous table is a static gap analysis of the differences in repricing
opportunities between rate sensitive assets and rate sensitive liabilities. An
immediate 100 basis point change in rates to both assets and liabilities would
result in an approximate difference in net interest income of $138,000 which
would result in an after tax change to net interest income, assuming a 34% tax
rate, of $91,000. An increase in rates would result in a reduction of income; a
decrease in rates results in an increase in income.
Investment Portfolio Rate Shock Analysis, March 31, 2000 (in thousands) The
difference between market values and current book values assuming the following
basis point changes in rates
<TABLE>
<CAPTION>
-300 -200 -100 even +100 +200 +300
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Gov. and U.S. Gov. $ 180 $ 81 $ (179) $ (549) $ (958) $ (1,370) $ (1,770)
Corporations' securities
Obligations of states and
political subdivisions 2,376 1,361 457 (457) (1,538) (2,511) (3,344)
Mortgage-backed securities
212 102 (32) (194) (372) (549) (725)
------ ------ ------- ------- ------- -------- ---------
Total $2,768 $1,544 $ 246 $(1,200) $(2,868) $ (4,430) $ (5,839)
====== ====== ======= ======= ======= ======== =========
As a percent of capital 11.4% 6.4% 1.0% -5.0% -11.8% -18.3% -24.1%
</TABLE>
The previous table represents approximate changes to the value of readily
marketable securities and is based upon estimates of values from an independent
source. The values are believed to be reliable, but not guaranteed.
9
<PAGE> 10
PART II.
Item 6. Exhibits and Reports on Form 8-K.
A) Not applicable
B) A form 8-K has not been filed during the three months ended March
31, 2000.
10
<PAGE> 11
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 thereunto duly authorized
COUNTY BANK CORP
JOSEPH H. BLACK
---------------
Joseph H. Black
Treasurer
11
<PAGE> 12
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 14,585
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 48,321
<INVESTMENTS-MARKET> 53,038
<LOANS> 138,671
<ALLOWANCE> 1,945
<TOTAL-ASSETS> 213,328
<DEPOSITS> 187,636
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,489
<LONG-TERM> 0
0
0
<COMMON> 5,932
<OTHER-SE> 18,271
<TOTAL-LIABILITIES-AND-EQUITY> 213,328
<INTEREST-LOAN> 2,927
<INTEREST-INVEST> 690
<INTEREST-OTHER> 51
<INTEREST-TOTAL> 3,668
<INTEREST-DEPOSIT> 1,470
<INTEREST-EXPENSE> 1,471
<INTEREST-INCOME-NET> 2,197
<LOAN-LOSSES> 60
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,673
<INCOME-PRETAX> 1,032
<INCOME-PRE-EXTRAORDINARY> 1,032
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 774
<EPS-BASIC> 0.65
<EPS-DILUTED> 0.65
<YIELD-ACTUAL> 8.03
<LOANS-NON> 1,031
<LOANS-PAST> 176
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,913
<CHARGE-OFFS> 32
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 1,945
<ALLOWANCE-DOMESTIC> 349
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,596
</TABLE>
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