SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
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(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____________to______________
Commission File No. 0-24135
PCB Holding Company
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(Exact name of registrant as specified in its charter)
Indiana 35-2040715
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
819 Main Street, Tell City, Indiana 47586
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 1-812-547-7094
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________________________________________________________________________________
Former name, former address and former fiscal year, if changed since last report
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] 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: 384,210 shares of common stock were outstanding as of October
31, 2000.
PCB HOLDING COMPANY
INDEX
Part I Financial Information Page
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Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999 (unaudited) 3
Consolidated Statements of Income for the three months
and nine months ended September 30, 2000 and 1999
(unaudited) 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and 1999 (unaudited) 5
Notes to consolidated financial statements (unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II. Other Information 13
Signatures 14
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PART I - FINANCIAL INFORMATION
PCB HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
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2000 1999
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(In thousands)
ASSETS
Cash and due from banks $ 89 $ 230
Interest bearing deposits with banks 1,654 2,309
Securities available for sale, at fair value 1,125 1,113
Loans receivable, net 25,711 24,054
Federal Home Loan Bank stock, at cost 207 196
Premises and equipment 416 228
Other assets 271 244
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Total Assets $ 29,473 $ 28,374
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LIABILITIES
Deposits $ 21,239 $ 20,464
Federal Home Loan Bank advances 2,500 2,000
Accrued expenses and other liabilities 68 76
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Total Liabilities 23,807 22,540
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STOCKHOLDERS' EQUITY
Preferred stock of $.01 per share
Authorized 1,000,000 shares; none issued - -
Common stock of $.01 per share
Authorized 4,000,000 shares; issued
412,620 shares 4 4
Additional paid-in capital 3,814 3,814
Retained earnings-substantially restricted 2,320 2,260
Accumulated other comprehensive income -
net unrealized loss on securities available for sale (44) (51)
Unearned stock compensation (120) (144)
Less treasury stock, at cost - 28,410 shares
(4,600 shares at December 31, 1999) (308) (49)
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Total Stockholders' Equity 5,666 5,834
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Total Liabilities and Stockholders' Equity $ 29,473 $ 28,374
===========================
See accompanying notes to consolidated financial statements.
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PCB HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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(In thousands, except per share data)
INTEREST INCOME
Loans $ 504 $ 424 $ 1,464 $ 1,235
Securities 18 19 55 54
Federal Home Loan Bank dividends 4 4 12 12
Interest bearing deposits with banks 25 23 79 75
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Total interest income 551 470 1,610 1,376
INTEREST EXPENSE
Deposits 275 242 793 727
Federal Home Loan Bank advances 43 13 122 13
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Total interest expense 318 255 915 740
Net interest income 233 215 695 636
Provision for loan losses 3 2 7 5
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Net interest income after provision for loan losses 230 213 688 631
NON-INTEREST INCOME
Service charges on deposit accounts 6 4 18 10
Other income 4 3 12 9
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Total non-interest income 10 7 30 19
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NON-INTEREST EXPENSE
Compensation and benefits 116 93 326 268
Occupancy and equipment 12 9 32 28
Deposit insurance premiums 1 3 3 9
Loss on sale of investments - 25 - 25
Other operating expenses 63 57 196 173
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Total non-interest expense 192 187 557 503
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Income before income taxes 48 33 161 147
Income tax expense 18 9 62 55
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Net Income 30 24 99 92
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during the period 10 (10) 7 (27)
Less: reclassification adjustment - 15 - 15
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Other comprehensive income (loss) 10 5 7 (12)
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Comprehensive Income $ 40 $ 29 $ 106 $ 80
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Net income per common share, basic $ 0.08 $ 0.06 $ 0.26 $ 0.23
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Net income per common share, diluted $ 0.08 $ 0.06 $ 0.26 $ 0.23
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See accompanying notes to consolidated financial statements.
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PCB HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 99 $ 92
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of premiums and accretion of
discounts on securities, net (1) (2)
Provision for loan losses 7 5
Depreciation expense 14 12
Stock compensation expense 24 7
Loss on sale of securities available for sale - 25
Net change in other assets/liabilities (39) 2
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Net Cash Provided By Operating Activities 104 141
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CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing deposits with banks 655 243
Proceeds from sales of securities available for sale - 225
Proceeds from maturity of securities available for sale - 350
Purchase of securities available for sale - (250)
Net increase in loans receivable (1,664) (2,891)
Purchase of Federal Home Loan Bank stock (11) -
Purchase of premises and equipment (202) (23)
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Net Cash Used In Investing Activities (1,222) (2,346)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts 775 348
Net increase in advances from Federal Home Loan Bank 500 2,000
Purchase of treasury stock (259) -
Cash dividends paid (39) (32)
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Net Cash Provided By Financing Activities 977 2,316
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Net Decrease in Cash and Due From Banks (141) 111
Cash and due from banks at beginning of period 230 43
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Cash and Due From Banks at End of Period $ 89 $ 154
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See accompanying notes to consolidated financial statements.
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PCB HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Interim Information
PCB Holding Company (the "Company") is the holding company for Peoples
Community Bank) (the "Bank"), a federally chartered stock savings bank
located in Tell City, Indiana.
In the opinion of the management, the unaudited consolidated financial
statements include all normal adjustments considered necessary to present
fairly the financial position as of September 30, 2000, and the results of
operations for the three months and nine months ended September 30, 2000
and 1999 and cash flows for the nine months ended September 30, 2000 and
1999. Interim results are not necessarily indicative of results that may
be expected for a full year.
The consolidated financial statements and notes are presented as permitted
by Form 10-QSB, and do not contain certain information included in the
Company's audited consolidated financial statements and notes for the year
ended December 31, 1999.
The consolidated financial statements include the accounts of the Company,
the Bank and its wholly-owned subsidiary, Peoples Building and Loan Service
Corp. All material intercompany balances and transactions have been
eliminated in consolidation.
2. Supplemental Disclosures of Cash Flow Information
Nine Months Ended
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September 30,
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2000 1999
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(In thousands)
Cash payments for:
Interest $ 917 $ 742
Taxes 94 78
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PCB HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
3. Comprehensive Income
Comprehensive income is defined as the change in equity (net assets) of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period except those resulting from investments by owners and
distributions to owners. Comprehensive income for the Company includes net
income and other comprehensive income representing the net unrealized gains
and losses on securities available for sale. The following tables set
forth the components of other comprehensive income (loss) and the allocated
tax amounts for the three and nine months ended September 30, 2000 and
1999:
Three Months Ended
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September 30,
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2000 1999
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(In thousands)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 16 $ (17)
Income tax benefit (expense) (6) 7
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Net of tax amount 10 (10)
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Less: reclassification adjustment for (gains)
losses included in net income - 25
Income tax expense (benefit) - (10)
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- 15
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Other comprehensive income $ 10 $ 5
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Nine Months Ended
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September 30,
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2000 1999
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(In thousands)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 12 $ (46)
Income tax benefit (expense) (5) 19
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Net of tax amount 7 (27)
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Less: reclassification adjustment for (gains)
losses included in net income - 25
Income tax expense (benefit) - (10)
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- 15
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Other comprehensive income (loss) $ 7 $ (12)
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PCB HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
4. Net Income Per Common Share
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
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(In thousands, except per share data)
Basic:
Net income $ 30 $ 24 $ 99 $ 92
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Shares:
Weighted average common shares outstanding 371,814 396,750 380,164 396,750
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Net income per common share, basic $ 0.08 $ 0.06 $ 0.26 $ 0.23
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Diluted:
Net income $ 30 $ 24 $ 99 $ 92
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Shares:
Weighted average common shares outstanding 371,814 396,750 380,164 396,750
Add: Dilutive effect of outstanding options 3,319 - 2,329 -
Add: Dilutive effect of restricted share awards 592 575 613 194
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Weighted average common shares
outstanding, as adjusted 375,725 397,325 383,106 396,944
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Net income per common share, diluted $ 0.08 $ 0.06 $ 0.26 $ 0.23
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Safe Harbor Statement for Forward Looking Statements
This report may contain forward-looking statements within the meaning of the
federal securities laws. These statements are not historical facts, rather
statements based on the Company's current expectations regarding its business
strategies and their intended results and its future performance. Forward-
looking statements are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of future performance. Numerous
risks and uncertainties could cause or contribute to the Company's actual
results, performance and achievements to be materially different from those
expressed or implied by the forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation, general economic
conditions, including changes in market interest rates and changes in monetary
and fiscal policies of the federal government; legislative and regulatory
changes; and other factors disclosed periodically in the Company's filings with
the Securities and Exchange Commission.
Because of the risks and uncertainties inherent in forward-looking statements,
readers are cautioned not to place undue reliance on them, whether included in
this report or made elsewhere from time to time by the Company or on its behalf.
The Company assumes no obligation to update any forward-looking statements.
Financial Condition
Total assets increased 3.9% from $28.4 million at December 31, 1999 to
$29.5 million at September 30, 2000, primarily as a result of an increase in
loans receivable, net, which was funded primarily by growth in deposits and
advances from the Federal Home Loan Bank of Indianapolis.
Loans receivable, net, were $25.7 million at September 30, 2000, compared
to $24.1 million at December 31, 1999, a 6.9% increase.
Other debt securities available for sale (U.S. government agency
obligations) were $1.1 million at December 31, 1999 and September 30, 2000.
Cash and interest bearing deposits with banks decreased from $2.5 million
at December 31, 1999 to $1.7 million at September 30, 2000 as a result of
increased loan originations and the purchase of treasury stock.
Total deposits increased from $20.5 million at December 31, 1999 to $21.2
million at September 30, 2000 primarily as a result of the growth in demand and
time deposit accounts.
Total stockholders' equity decreased from $5.8 million at December 31, 1999
to $5.7 million at September 30, 2000. Total stockholders' equity increased as a
result of retained net income of $99,000 and decreased due to purchases of
treasury stock of $259,000.
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PART I-ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Results of Operations
Net income. Net income was $99,000 for the nine months ended September 30,
2000, compared to $92,000 for the nine months ended September 30, 1999. The
increase in net income for 2000 compared to 1999 resulted primarily from an
increase in net interest income, offset by an increase in non-interest expense.
Net interest income for the nine month periods ended September 30, 2000 and
1999. Net interest income increased 9.3% from $636,000 in 1999 to $695,000 for
2000 as a result of an increase in total interest income offset by an increase
in interest expense. The average yield on interest-earning assets increased
from 7.09% for 1999 to 7.45% for 2000. The average balance of total interest-
earning assets was $25.9 million for 1999 compared to $28.8 million for 2000.
The average cost of interest-bearing liabilities increased from 4.95% for 1999
to 5.20% for 2000 while the average balance of interest-bearing liabilities was
$19.9 million for 1999 compared to $23.5 million for 2000. The increase in the
cost of funds resulted primarily from the use of Federal Home Loan Bank advances
to fund loan growth beginning in the third quarter of 1999. The average cost of
borrowings was 6.68% for the nine months ended September 30, 2000. The average
cost of deposits was 5.02% for the nine months ended September 30, 2000 compared
to 4.95% for the same period in 1999. The interest rate spread for 1999 was
2.14% compared to 2.25% for 2000. The increase in average interest-earning
assets and average interest-bearing liabilities for 2000 compared to 1999
relates primarily to the growth in the loan portfolio and deposits,
respectively.
Net interest income for the three month periods ended September 30, 2000
and 1999. Net interest income increased from $215,000 for 1999 to $233,000 for
2000 as a result of an increase in total interest income of $81,000 offset by an
increase in total interest expense of $63,000 due to growth in loans funded by
growth in deposits and Federal Home Loan Bank advances.
Provision for loan losses. The provision for loan losses was $7,000 for
the nine month period ended September 30, 2000 and $5,000 for the nine month
period ended September 30, 1999. Provision for loan losses are charges to
earnings to bring the total allowance for loan losses to a level considered
adequate by management to provide for probable known and inherent loan losses
based on management's evaluation of the collectability of the loan portfolio,
including the nature of the portfolio, credit concentrations, trends in
historical loss experience, specific impaired loans, and economic conditions.
In determining the adequacy of the allowance for loan losses, the Company
reviews all loans quarterly, and loans are assigned a risk weighting based on
asset classification. The allowance for loan losses was $55,000 at September
30, 2000 and $54,000 at December 31, 1999. Management has deemed these amounts
as adequate on those dates based on its best estimate of probable known and
inherent loan losses. At September 30, 2000, non-performing loans totaled
$217,000. Included in non-performing loans are loans over 90 days past due
secured by one-to-four family residential real estate in the amount of $173,000.
These loans are accruing interest as the estimated value of the collateral and
collection efforts are deemed sufficient to ensure full recovery.
Non-interest income. Non-interest income was $30,000 for the nine months
ended September 30, 2000 and $19,000 for the same period in 1999. Non-interest
income was $10,000 for the third quarter of 2000 compared to $7,000 for the
third quarter of 1999. The increase is primarily the result of an increase in
service charges on deposit accounts due to increased activity and growth in
these accounts.
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Non-interest expenses. Non-interest expenses totaled $557,000 for the nine
months ended September 30, 2000 compared to $503,000 for the same period in
1999. The increase for 2000 compared to 1999 resulted primarily from increases
in compensation and benefits of $58,000 and an increase in other operating
expenses of $23,000. Compensation and benefits have increased due to normal pay
raises and the adoption in July 1999 of a restricted stock compensation plan.
Other operating expenses increased primarily as a result of increased data
processing fees related to additional loan and deposit accounts, advertising
expenses, supervisory expenses and other expenses of operating as a public
company.
Income tax expense. Income tax expense for the nine month period ended
September 30, 2000 was $62,000, compared to $55,000 for the same period in
1999. The effective tax rate for 2000 is 38.5% compared to 37.4% for 1999 due
to the effect of the graduated federal tax rates.
Liquidity and Capital Resources
The Bank's primary sources of funds are customer deposits, proceeds from
loan repayments, maturing securities and FHLB advances. While loan repayments
and maturities are a predictable source of funds, deposit flows and mortgage
prepayments are greatly influenced by market interest rates, general economic
conditions and competition. At September 30, 2000, the Bank had cash and
interest-bearing deposits with banks of $1.7 million and securities available-
for-sale with a fair value of $1.1 million. At September 30, 2000, the Bank
also had an available, but undrawn, credit line of $1.5 million from the FHLB-
Indianapolis.
The Bank's primary investing activity is the origination of one-to-four
family mortgage loans and, to a lesser extent, consumer, multi-family,
commercial real estate and residential construction loans. The Bank also
invests in U.S. Government and agency securities, corporate notes and, to a
lesser extent, mortgage-backed securities.
During the nine months ended September 30, 2000, the Company used excess
capital to repurchase common stock, acquiring 23,810 shares for a total of
$259,000.
The Bank must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit withdrawals,
to satisfy financial commitments and to take advantage of investment
opportunities. At September 30, 2000, the Bank had total commitments to extend
credit of $615,000. Historically, the Bank has been able to retain a
significant amount of its deposits as they mature.
Current OTS regulations require savings institutions to maintain an average
daily balance of liquid assets (cash and eligible investments) equal to at least
4.0% of the average daily balance of its net withdrawable deposits and short-
term borrowings. Historically, the Bank has maintained liquidity levels in
excess of regulatory requirements.
The Bank is required to maintain specific amounts of capital pursuant to
OTS requirements. As of September 30, 2000, the Bank was in compliance with all
regulatory capital requirements which were effective as of such date with
tangible, core and risk-based capital ratios of 14.6%, 14.6% and 23.0%,
respectively.
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PCB HOLDING COMPANY AND SUBSIDIARY
Year 2000 Update
At December 31, 1999, the Company's internal systems and the systems of its
third-party data processor were Year 2000 compliant. The Company has
experienced no errors or difficulties processing financial and operational
information related to the Year 2000 issue.
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PART II
OTHER INFORMATION
PCB HOLDING COMPANY AND SUBSIDIARY
Item 1. Legal Proceedings
Periodically, there have been various claims and lawsuits involving
the Bank, mainly as a defendant, such as claims to enforce liens,
condemnation proceedings on properties in which the Bank holds
security interests, claims involving the making and servicing of real
property loans and other issues incident to the Bank's business. The
Bank is not a party to any pending legal proceedings that it believes
would have a material adverse effect on it's financial condition or
operations.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
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27 Financial Data Schedule
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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 by the undersigned thereunto
duly authorized.
PCB HOLDING COMPANY
(Registrant)
Dated November 6, 2000 BY: /s/ Carl D. Smith
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Carl D. Smith
President and CEO
Dated November 6, 2000 BY: /s/ Clarke A. Blackford
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Clarke A. Blackford
Vice President
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