<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 September 30, 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 September 30, 2000.
<PAGE> 2
COUNTY BANK CORP
FORM 10-Q
For the Quarter ended September 30, 2000
PART I: FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets-
At September 30, 2000 and December 31, 1999 4
Statements of Income-
For the three months and nine months ended
September 30, 2000 and 1999 5
Statement of Cash Flows
For the three months and nine months ended
September 30, 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
2
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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
CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEETS (in thousands)
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,516 $ 12,883
Investment securities available for sale 25,093 21,565
Investment securities held to maturity 29,032 28,189
--------- ---------
Total investment securities 54,125 49,754
Federal funds sold 9,150 4,900
Loans 137,416 134,651
Less: Reserve for possible loan losses 2,035 1,913
--------- ---------
Net loans 135,381 132,738
Bank premises and equipment 3,956 4,227
Interest receivable and other assets 3,345 2,895
--------- ---------
TOTAL ASSETS $ 215,473 $ 207,397
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing demand $ 34,167 $ 34,977
Interest bearing demand 61,773 54,318
Savings 39,504 41,164
Time 52,509 51,723
--------- ---------
Total deposits 187,953 182,182
Interest payable and other liabilities 1,772 1,390
--------- ---------
TOTAL LIABILITIES 189,725 183,572
STOCKHOLDERS' EQUITY
Common Stock-$5.00 par value, 3,000,000 shares
authorized and 1,186,472 shares outstanding 5,932 5,932
Surplus 8,634 8,634
Undivided profits 10,802 9,023
Unrealized gains and losses on securities available for sale 380 236
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 25,748 23,825
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 215,473 $ 207,397
========= =========
</TABLE>
4
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CONSOLIDATED INCOME STATEMENTS
(in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
2000 1999 2000 1999
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 3,072 $ 2,698 $ 9,021 $ 7,837
Interest on investments 789 721 2,188 2,145
Interest on Federal funds sold 105 109 253 338
--------- --------- --------- ---------
TOTAL INTEREST INCOME 3,966 3,528 11,462 10,320
INTEREST EXPENSE
Demand deposits 658 425 1,786 1,170
Savings deposits 268 287 810 869
Time deposits 730 653 2,089 1,920
Borrowed funds -- -- 1 --
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE 1,656 1,365 4,686 3,959
--------- --------- --------- ---------
NET INTEREST INCOME 2,310 2,163 6,776 6,361
Provision for possible loan losses 60 30 180 90
--------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 2,250 2,133 6,596 6,271
OTHER INCOME
Service fees on loan and deposit accounts 286 280 827 819
Other 309 321 902 1,027
--------- --------- --------- ---------
TOTAL OTHER INCOME 595 601 1,729 1,846
OTHER EXPENSES
Salaries and employee benefits 1,020 986 3,095 2,923
Net occupancy expense 242 255 714 736
Other 424 407 1,273 1,183
--------- --------- --------- ---------
TOTAL OTHER EXPENSE 1,686 1,648 5,082 4,842
INCOME BEFORE PROVISION FOR FEDERAL
INCOME TAX 1,159 1,086 3,243 3,275
Provision for Federal income tax 298 282 824 861
--------- --------- --------- ---------
NET INCOME $ 861 $ 804 $ 2,419 $ 2,414
========= ========= ========= =========
EARNINGS PER SHARE
Net income $ 0.73 $ 0.68 $ 2.04 $ 2.03
Cash dividend declared $ 0.18 $ 0.16 $ 0.54 $ 0.48
</TABLE>
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STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30
2000 1999
<S> <C> <C>
Cash flows from operating activities
Net income $ 2,419 $ 2,414
Adjustments to reconcile net income to net cash
provided from operating activities
Depreciation and amortization 351 384
Provision for loan losses 180 90
Net amortization and accretion of securities (161) 129
Deferred income taxes - -
Net gain on sale of investment securities - -
(Gain) loss on other real estate owned (2) (56)
Net change in accrued interest receivable (480) (758)
Net change in accrued interest payable and other 308 (62)
------- --------
Net cash provided by operating activities 2,615 2,141
Cash flows from investing activities
Proceeds from sale of investment securities: AFS 961 -
Proceeds from maturities of investment securities: AFS 4,576 5,147
Proceeds from maturities of investment securities: HTM 1,406 5,155
Purchase of investment securities: AFS (8,673) (7,908)
Purchase of investment securities: HTM (2,261) (5,738)
Net (increase) decrease in loans (2,823) (13,403)
Proceeds from the sale of other real estate 32 100
Premises and equipment expenditures (80) (1,642)
------- --------
Net cash provided from (used in) investing activities (6,862) (18,289)
Cash flows from financing activities
Net increase (decrease) in interest bearing and
non-interest bearing demand accounts 6,645 6,455
Net increase (decrease) in savings and time
deposits (874) 488
Cash dividends paid (641) (564)
------- --------
Net cash provided from (used in) financing activities 5,130 6,379
------- --------
Net increase (decrease) in cash and equivalents 883 (9,769)
Cash and equivalents at beginning of year 17,783 23,072
------- --------
Cash and equivalents at end of period $18,666 $ 13,303
======= ========
Cash paid for:
Interest $ 4,648 $ 4,195
Income taxes $ 798 $ 901
</TABLE>
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NOTE 1. INVESTMENTS
(in thousands)
The carrying amount and approximate market value of securities held to maturity
were as follows
<TABLE>
<CAPTION>
September 30, 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 $ 1,543 $ - $ 36 $ 1,507
Obligations of states and political subdivisions 22,044 204 291 21,957
Mortgage-backed securities 5,445 27 134 5,338
--------- ------- ------- --------
Total $ 29,032 $ 231 $ 461 $ 28,802
========= ======= ======= ========
</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 $ 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>
September 30, 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 $ 16,472 $ - $ 384 $ 16,088
Obligations of states and political subdivisions 1,623 28 1,651
Corporate securities 2 987 - 989
Mortgage-backed securities 6,419 8 62 6,365
--------- ------- ------- --------
Total $ 24,516 $ 1,023 $ 446 $ 25,093
========= ======= ======= ========
</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 $ 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
NOTE 2. LOANS
<TABLE>
<CAPTION>
(in thousands) 9/30/00 12/31/99
<S> <C> <C>
Commercial $ 67,441 $ 64,547
Real estate mortgage 30,301 31,502
Installment 26,449 27,625
Construction 13,225 10,977
--------- ---------
$ 137,416 $ 134,651
========= =========
</TABLE>
Transactions in the reserve for possible loan losses were as follows
<TABLE>
<CAPTION>
Three Nine Three Nine
months months months months
ended ended ended ended
9/30/00 9/30/00 9/30/99 9/30/99
<S> <C> <C> <C> <C>
Beginning balance at beginning of period $ 2,026 $ 1,913 $ 1,922 $ 1,881
Provision charged to earnings 60 180 30 90
Loans charged off 58 108 53 84
Recoveries 7 50 10 22
------- ------- ------- -------
Balance at end of the period $ 2,035 $ 2,035 $ 1,909 $ 1,909
======= ======= ======= =======
Reserve as a percent of total loans 1.48% 1.48% 1.43% 1.43%
Loans outstanding to executive officers, directors, principal $ 2,364 $ 2,427
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 than the normal risk of collectability
</TABLE>
ITEM 2. MANAGEMENTS' DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Financial Condition
Loan demand moderated during the third quarter of 2000. Net loans declined $2.4
million as a result of repayment of certain land development loans. Net loans
increased $2.9 since December 31, 1999. The largest demand was in the commercial
loan area. Mortgage activity declined as a result of increasing interest rates.
Consumer loans also declined during the quarter.
Time deposits increased during the quarter as a result of rate increases.
Savings accounts declined while interest bearing demand accounts continued their
strong growth. This follows a pattern of cash flows that usually impacts the
market in the early months of the year. Non-interest bearing demand deposits
continued to decline slightly. 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 three
quarters of 2000. 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
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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.
Results of Operations
Increasing rates put pressure on the Bank's interest margin. Interest on fees on
loans increased as a result of growth in loans and increases in the Prime rate.
Interest on demand deposits increased due to rate increases and growth as a
result of customers seeking safety from the volatility of the mutual funds
markets. 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.
The allowance for possible loan losses is maintained at a level believed
adequate by management to absorb potential losses from impaired loans as well as
the remainder of the loan portfolio. The allowance for loan losses is based upon
periodic analysis of the portfolio, economic conditions and trends, historical
credit loss experience, borrowers' ability to repay and collateral values.
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
Rate sensitivity analysis (000's), September 30, 2000
<TABLE>
<CAPTION>
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 $ 9,150 $ - $ - $ - $ 9,150 $ -
Investment securities 10,956 659 1,124 2,620 15,359 36,967
Loans 39,448 4,511 3,408 8,717 56,084 87,114
--------- ------- ------- ------- --------- -------
Total rate sensitive assets 59,554 5,170 4,532 11,337 80,593 124,081
Rate sensitive liabilities
(RSL):
Demand deposits 39,846 - 39,846 56,647
Savings deposits 19,485 - 19,485 20,756
Time deposits 7,206 5,797 7,735 9,111 29,849 22,204
--------- ------- ------- ------- --------- -------
Total rate sensitive
liabilities 66,537 5,797 7,735 9,111 89,180 99,607
Repricing gap (RSA-RSL) $ (6,983) $ (627) $(3,203) $ 2,226 $ (8,587) $24,474
========= ======= ======= ======= ========= =======
As a percent of capital -27.1% -2.4% -12.4% 8.6% -33.4% 95.1%
As a percent of total assets -3.2% -0.3% -1.5% 1.0% -4.0% 11.4%
</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 annual net interest income of $88,000
which would result in an after tax change to net interest income, assuming a 34%
tax rate, of $58,000. 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, September 30, 2000
(in thousands)
The difference between market values and current book
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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. Corporations' $ 257 $ 164 $ (179) $ (420) $ (904) $ (1,468) $ (2,060)
securities
Obligations of states and political
subdivisions 3,071 1,947 913 (59) (1,264) (2,381) (3,330)
Mortgage-backed securities 193 113 (1) (116) (252) (412) (568)
------- ------- ------- ------- -------- -------- --------
Total $ 3,521 $ 2,224 $ 733 $ (595) $ (2,420) $ (4,261) $ (5,958)
======= ======= ======= ======== ======== ======== ========
As a percent of capital 13.7% 8.6% 2.8% -2.3% -9.4% -16.5% -23.1%
</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.
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
September 30, 2000.
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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
Dated: November 13, 2000 JOSEPH H. BLACK
----------------
Joseph H. Black
Treasurer
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Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
