1
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2001
-------------
Commission File No. 333-04113
COMMUNITY CENTRAL BANK CORPORATION
----------------------------------
(Exact name of small business issuer as specified in its charter)
Michigan 38-3291744
-------- ----------
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
100 North Main Street, PO Box 7, Mount Clemens, MI 48046-0007
-------------------------------------------------------------
(Address of principal executive offices)
(810) 783-4500
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at August 9, 2001
----- -----------------------------
Common Stock, $5 stated value 2,661,922 Shares
Transitional Small Business Disclosure Format:
Yes No X
----- -----
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART I
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Community Central Bank Corporation (the
"Corporation") include the consolidation of its subsidiary; Community Central
Bank (the "Bank").
Following are the Corporation's Consolidated Balance Sheet as of June 30, 2001
and 2000, and December 31, 2000, and Consolidated Statements of Operations,
Comprehensive Income, and Cash Flow for the quarter and six month periods ended
June 30, 2001 and 2000. These unaudited financial statements are for interim
periods, and do not include all disclosures normally provided with annual
financial statements. The interim statements should be read in conjunction with
the financial statements and footnotes contained in the Corporation's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000.
In the opinion of management, the interim statements referred to above contain
all adjustments (consisting of normal, recurring items) necessary for a fair
presentation of the financial statements. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, December 31, June 30,
2001 2000 2000
--------- ------------ ---------
Assets (in thousands)
Cash and due from banks $ 5,852 $ 5,412 $ 5,991
Federal funds sold 18,500 27,600 18,400
--------- --------- ---------
Cash and Cash Equivalents 24,352 33,012 24,391
--------- --------- ---------
Securities available for sale, at fair value 38,773 18,508 9,882
Investment securities, at amortized cost 1,849 2,134 4,341
Loans
Residential mortgage loans 24,480 28,421 29,682
Commercial loans 123,952 121,953 120,765
Installment loans 5,071 5,889 6,184
--------- --------- ---------
Total Loans 153,503 156,263 156,631
Allowance for credit losses (2,668) (2,654) (2,193)
--------- --------- ---------
Net Loans 150,835 153,609 154,438
--------- --------- ---------
Net property and equipment 1,785 1,873 1,808
Accrued interest receivable 1,119 1,247 1,004
Other assets 1,230 1,256 1,236
--------- --------- ---------
Total Assets $ 219,943 $ 211,639 $ 197,100
========= ========= =========
(continued)
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, December 31, June 30,
2001 2000 2000
--------- ------------ ---------
Liabilities (in thousands, except share data)
Deposits
Noninterest bearing demand deposits $ 25,124 $ 18,983 $ 21,041
NOW and money market accounts 21,114 20,488 17,105
Savings deposits 7,082 8,768 8,075
Time deposits 135,157 137,900 128,016
--------- --------- ---------
Total deposits 188,477 186,139 174,237
--------- --------- ---------
Short term borrowings 6,556 4,157 2,712
Accrued interest payable 669 990 430
Other liabilities 187 203 414
Federal Home Loan Bank advances 3,000 -- --
Capitalized lease obligation 1,004 1,012 1,018
ESOP note payable 396 421 446
--------- --------- ---------
Total Liabilities 200,289 192,922 179,257
--------- --------- ---------
Stockholders' Equity
Common stock -- $5 stated value;
9,000,000 shares authorized; 2,661,922
shares issued and outstanding at
6-30-2001, 12-31-2000 and 6-30-2000 13,309 13,309 13,310
Additional paid-in capital 5,016 5,016 5,016
Accumulated surplus 1,531 742 95
Unearned employee benefit (396) (421) (446)
Accumulated other comprehensive income 194 71 (132)
--------- --------- ---------
Total Stockholders' Equity 19,654 18,717 17,843
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 219,943 $ 211,639 $ 197,100
========= ========= =========
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
------ ------ ------ ------
(in thousands, except per share data)
Interest Income
Loans (including fees) $3,120 $3,564 $6,576 $6,938
Securities 458 227 815 445
Federal funds sold 328 221 735 420
------ ------ ------ ------
Total Interest Income 3,906 4,012 8,126 7,803
------ ------ ------ ------
Interest Expense
Deposits 2,009 1,967 4,341 3,836
Short term borrowings 49 25 85 45
Capitalized lease obligation 42 46 84 90
Advances from FHLB 6 -- 6 --
------ ------ ------ ------
Total Interest Expense 2,106 2,038 4,516 3,971
------ ------ ------ ------
Net Interest Income 1,800 1,974 3,610 3,832
Provision for credit losses 75 165 175 300
------ ------ ------ ------
Net Interest Income after Provision 1,725 1,809 3,435 3,532
------ ------ ------ ------
Noninterest Income
Deposit service charges 66 62 135 127
Net realized security gain 54 -- 95 --
Other income 80 72 143 134
------ ------ ------ ------
Total Noninterest Income 200 134 373 261
------ ------ ------ ------
Noninterest Expense
Salaries, benefits, and payroll taxes 610 538 1,195 1,039
Premises and fixed asset expense 200 173 389 340
Other operating expense 529 637 1,036 1,207
------ ------ ------ ------
Total Noninterest Expense 1,339 1,348 2,620 2,586
------ ------ ------ ------
Income Before Taxes 586 595 1,188 1,207
Provision for income taxes 196 212 399 429
------ ------ ------ ------
Net Income $ 390 $ 383 $ 789 $ 778
====== ====== ====== ======
(continued)
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Per share data:
Basic earnings $0.15 $0.15 $0.30 $0.30
Diluted earnings $0.15 $0.15 $0.30 $0.30
===== ===== ===== =====
Cash Dividends $---- $---- $---- $----
===== ===== ===== =====
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
----- ----- ----- -----
(in thousands)
Net Income as Reported $390 $383 $789 $778
Other Comprehensive Income, Net of Tax
Change in unrealized gain on securities
available for sale 12 22 123 12
----- ----- ----- -----
Comprehensive Income $402 $405 $912 $790
===== ===== ===== =====
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
Six Months Ended June 30,
2001 2000
---------- ---------
(in thousands)
Operating Activities
Net income $789 $778
Adjustments to reconcile net income to net cash flow
from operating activities:
Net accretion of security discount 16 (2)
Net gain on sales of securities (95) ----
Provision for credit losses 175 300
Depreciation expense 138 167
Deferred income tax (21) (109)
ESOP compensation expense 25 25
Decrease (Increase) in accrued interest receivable 128 (161)
Decrease (Increase) in other assets 47 (100)
(Decrease) in accrued interest payable (321) (12)
(Decrease) Increase in other liabilities (11) 173
---------- ---------
Net Cash Provided by Operating Activities 870 1,059
Investing Activities
Purchases of securities available for sale (32,690) (1,100)
Maturities, calls, and prepayments of securities
available for sale 12,690 782
Maturities, calls, and prepayments of investment
securities 285 297
Purchases of investment securites ---- ----
Increase in loans 2,599 (15,353)
Purchases of property and equipment (50) (82)
---------- ---------
Net Cash Used in Investing Activities (17,166) (15,456)
Financing Activities
Increase in demand and savings deposits 5,081 (488)
Decrease in time deposits (2,743) 11,879
Increase in short term borrowings 5,399 1,107
Repayment of capitalized lease obligation (76) (76)
Payment of ESOP debt (25) (25)
Fractional shares paid on stock split ---- (1)
---------- ---------
Net Cash Provided by Financing Activities 7,636 12,396
---------- ---------
Decrease in Cash and Cash Equivalents (8,660) (2,001)
Cash and Cash Equivalents at the Beginning
of the Year 33,012 26,392
---------- ---------
Cash and Cash Equivalents at the End
of the Period $24,352 $24,391
========== =========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $4,837 $3,914
Federal Taxes Paid 415 546
========== =========
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion compares the financial condition of the Corporation and
its wholly owned subsidiary, Community Central Bank, at June 30, 2001, December
31, 2000, and June 30, 2000 and the results of operations for the quarter and
six months ended June 30, 2001 and 2000. This discussion should be read in
conjunction with the financial statements and statistical data presented
elsewhere in this report. This report contains forward-looking statements that
are based on management's beliefs, assumptions, current expectations, estimates
and projections about the financial services industry, the economy, and about
the Corporation and the Bank. Words such as "anticipates," "believes,"
"estimates," "expects," "forecasts," "intends," "is likely," "plans,"
"projects," variations of such words and similar expressions are intended to
identify such forward-looking statements. These forward-looking statements are
intended to be covered by the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions ("Future
Factors") that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Actual results and outcomes may materially
differ from what may be expressed or forecasted in the forward-looking
statements. The Corporation undertakes no obligation to update, amend, or
clarify forward looking statements, whether as a result of new information,
future events (whether anticipated or unanticipated), or otherwise.
Future Factors include changes in interest rate and interest rate relationships;
demand for products and services; the degree of competition by traditional and
non-traditional competitors; changes in banking regulation; changes in tax laws;
changes in prices, levies, and assessments; the impact of technological
advances; governmental and regulatory policy changes; the outcomes of
contingencies; trends in customer behavior as well as their ability to repay
loans; changes in the national and local economy; and other factors, including
risk factors, referred to from time to time in filings made by the Corporation
with the Securities and Exchange Commission. These are representative of the
Future Factors that could cause a difference between an ultimate actual outcome
and a preceding forward-looking statement.
COMMUNITY CENTRAL MORTGAGE COMPANY, LLC
Community Central Mortgage Company, ("Mortgage Company") commenced operations on
July 9, 2001. The Bank plans to contribute its residential real estate portfolio
and home equity lines of credit to the Mortgage Company. The Mortgage Company
plans to originate mortgage loans for sale to the secondary market. The Mortgage
Company expects to have the Bank service the mortgages that it does not sell in
the secondary market.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ASSETS
The Corporation's total assets have increased by $8.3 million, to $219.9 million
at June 30, 2001, compared with $211.6 million at December 31, 2000.
The following table shows the amortized cost and estimated fair value of the
Corporation's security portfolio as of the dates indicated. On the balance
sheet, investment securities (i.e., those which the Corporation has the ability
and intent to hold to maturity) are stated at cost, adjusted for amortization of
premium or accretion of discount. Securities available for sale are shown on the
balance sheet at estimated fair value.
June 30, 2001 December 31, 2000 June 30, 2000
--------------------- --------------------- ---------------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
--------- ------- --------- ------- --------- -------
(in thousands)
Securities Available for Sale
United States Government agencies $15,755 $15,961 $14,255 $14,364 $ 6,879 $ 6,781
Mortgage backed securities 2,938 2,971 2,829 2,826 3,096 2,994
Fed Agency / Collateralized mortgage
obligations 16,270 16,312 994 994 -- --
Tax-exempt municipals 3,514 3,529 321 324 106 107
------- ------- ------- ------- ------- -------
Total Securities Available for Sale 38,477 38,773 18,399 18,508 10,081 9,882
------- ------- ------- ------- ------- -------
Investment Securities
United States Government agencies -- -- -- -- 2,000 2,000
Mortgage backed securities 1,375 1,400 1,579 1,579 1,691 1,658
Collateralized mortgage obligations 28 28 109 109 204 202
Other Securities 446 446 446 446 446 446
------- ------- ------- ------- ------- -------
Total Investment Securities 1,849 1,874 2,134 2,134 4,341 4,306
------- ------- ------- ------- ------- -------
Total Securities $40,326 $40,647 $20,533 $20,642 $14,422 $14,188
======= ======= ======= ======= ======= =======
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Total loans decreased by $2.8 million during the six months ended June 30, 2001,
as the Corporation experienced runoff in its residential loan portfolio.
Commercial loans grew by $2.0 million, while installment loans decreased
$800,000, and residential mortgage loans decreased $3.9 million.
The Corporation makes loans to customers primarily in Macomb County, Michigan.
Although the Corporation has a diversified loan portfolio, a substantial portion
of the local economy has traditionally been dependent on the automotive
industry. The Corporation had approximately $37.2 million in outstanding loans
at June 30, 2001 to commercial borrowers in the real estate rental and property
management industries.
The following table shows an analysis of the allowance for credit losses:
Six Months Ended June 30,
2001 2000
------- -------
(in thousands)
Allowance for credit losses at
beginning of period $2,654 $1,927
Provision charged to expense 175 300
Loans charged off (net) (161) (34)
------- -------
Allowance for credit losses at end of period $2,668 $2,193
======= =======
Allowance for credit losses as a percentage
of loans at period end 1.74% 1.40%
Loans are placed in nonaccrual status when, in the opinion of management,
uncertainty exists as to the ultimate collection of principal and interest. At
June 30, 2001, there was $937,000 of loans placed in nonaccrual status.
Commercial loans and lease financing receivables are to be reported as being in
nonaccrual status if: (a) they are maintained on a cash basis because of
deterioration in the financial position of the borrower, (b) payment in full of
interest or principal is not expected, or (c) principal or interest has been in
default for a period of 90 days or more. If it can be documented that the loan
obligation is both well secured and in the process of collection, the loan may
stay on accrual status. However, if the loan is not brought current before 120
days past due, the loan should be reported as nonaccrual. Any exceptions to
automatic nonaccrual status at 90 days must be approved in writing by the Loan
Committee, Credit Administration Officer, and the Chief Financial Officer. A
nonaccrual asset may be restored to an accrual status when none of its principal
or interest is due and unpaid, when it otherwise becomes well secured, and in
the process of collection.
The Corporation considers a loan impaired when it is probable that all interest
and principal will not be collected in accordance with the contractual terms of
the loan agreement. Consistent with this definition, all nonaccrual and
reduced-rate loans (with the exception of residential mortgages and consumer
loans) are considered impaired.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
A summary of nonperforming assets is as follows:
June 30, June 30,
2001 2000
---- ----
(in thousands)
Impaired loans:
Nonaccrual $937 $566
---- ----
Total impaired loans $937 $566
Other real estate -- 128
---- ----
Total nonperforming assets $937 $694
==== ====
Impaired loans as a percentage of
total loans 0.61% 0.36%
==== ====
Total nonperforming assets as a percentage
of total assets 0.43% 0.35%
==== ====
A summary of total loans past due 90-days and still accruing interest is as
follows:
June 30, June 30,
2001 2000
----- -----
(in thousands)
Commercial $---- $----
Residential real estate 105 76
Installment 34 46
----- -----
Total loans past due 90 days or more
and still accruing interest $ 139 $ 122
===== =====
In each accounting period, management evaluates the problems and potential
losses in the loan portfolio. Consideration is also given to off-balance sheet
items that may involve credit risk, such as commitments to extend credit and
financial guarantees. Management's evaluation of the allowance is further based
on consideration of actual loss experience, the present and prospective
financial condition of borrowers, adequacy of collateral, industry
concentrations within the portfolio, and general economic conditions. Management
believes that the present allowance is adequate, based on the broad range of
considerations listed above.
The primary risk element considered by management regarding each installment and
residential real estate loan is lack of timely payment. Management has a
reporting system that monitors past due loans and has adopted policies to pursue
its creditor's rights in order to preserve the Bank's position. The primary risk
elements concerning commercial loans are the financial condition of the
borrower, the sufficiency of collateral, and lack of timely payment. Management
has a policy of requesting and reviewing financial statements from its
commercial loan customers, and periodically reviews existence of collateral and
its value.
Although management believes that the allowance for credit losses is adequate to
absorb losses as they arise, there can be no assurance that the Bank will not
sustain losses in any given period that could be substantial in relation to the
size of the allowance for credit losses. Management is not aware of any factors
that would cause future net loan charge-offs, in total or by loan category, to
differ significantly from those experienced by institutions of similar size.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
LIABILITIES
During the six months ended June 30, 2001, total deposits increased by $2.0
million, to $188.5 million.
Short term borrowings at June 30 consist of securities sold with an agreement to
repurchase them the following day. Following are details of short term
borrowings for the dates indicated:
June 30, June 30,
2001 2000
----------- -----------
(in thousands, except percentages)
Amount outstanding at end of period $6,556 $2,712
Weighted average interest rate on ending balance 2.99% 4.20%
Maximum amount outstanding at any month end
during the period $6,875 $2,712
FHLB ADVANCES
In June of 2001, the Corporation started to borrow long-term advances from the
Federal Home Loan Bank ("FHLB") to fund fixed rate instruments and to minimize
the interest rate risk associated with certain fixed rate commercial mortgage
loans and investment securities. These advances are secured under a blanket
security agreement by first mortgage loans.
FHLB advances outstanding at June 30, 2001 were as follows:
June 30, 2001
-------------
(in thousands, except percentages)
Ending Average rate
Balance at end of period
------- ----------------
Long-term FHLB advances $3,000 4.84%
Long-term advances comprised one advance with a maturity of June 16, 2003.
CAPITAL
Following are selected capital ratios for the Corporation as of the dates
indicated, along with the minimum regulatory requirement for each item. Capital
requirements for bank holding companies are set by the Federal Reserve Board. In
many cases, bank holding companies are expected to operate at capital levels
higher than the minimum requirement.
June 30, December 31, June 30, Minimum
2001 2000 2000 Requirement
-------- ---------- -------- ----------
Tier I capital to risk-weighted assets 12.20% 11.74% 11.53% 4%
Total capital to risk-weighted assets 13.45% 12.99% 12.78% 8%
Primary capital to assets 10.06% 9.94% 10.11% 5.5%
Total capital to assets 10.06% 9.94% 10.11% 6%
Tier I capital to quarterly average assets (leverage) 8.97% 8.93% 9.56% 4%
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
During the second quarter of 1999, the Corporation established an employee stock
ownership plan ("ESOP"). The ESOP subsequently borrowed $500,000 from an
unrelated bank to finance the purchase of the Corporation's stock. The ESOP loan
has been recorded as if it was long term debt of the Corporation, with a
corresponding reduction in equity. Repayment of the loan will be made solely
from contributions by the Corporation, which has guaranteed the loan.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows the changes in stockholders' equity for the six months
ended June 30, 2001:
Additional Unearned Accumulated Other
Common Paid-In Accumulated Employee Comprehensive Total
Stock Capital Earnings Benefits Income Equity
--------- ----------- -------- ---------- ---------------- ---------
Balance December 31, 2000 $13,309 $5,016 $742 ($421) $71 $18,717
Net income -- -- 789 -- -- 789
Release of ESOP shares -- -- -- 25 -- 25
Other comprehensive income -- -- -- -- 123 123
--------- ---------- ------- -------- -------------- --------
Balance June 30, 2001 $13,309 $5,016 $1,531 ($396) $194 $19,654
========= ========== ======= ======== ============== ========
NET INTEREST INCOME
The following table shows the dollar amount of changes in net interest income
for each major category of interest earning asset and interest bearing
liability, and the amount of change attributable to changes in average balances
(volume) or average rates for the periods shown. Variances that are jointly
attributable to BOTH volume and rate changes have been allocated to the volume
component.
Six Months Ended
June 30, 2001 vs. 2000
---------------------------------------------
Increase (Decrease)
Due to Changes In
-----------------------
Total Volume Rate
and Both
---------- ---------- ----------
(in thousands)
Earning Assets - Interest Income
Federal funds sold $ 315 $ 384 ($ 69)
Securities 370 383 (13)
Loans (362) 69 (431)
----- ----- -----
Total 323 836 (513)
----- ----- -----
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts (52) 5 (57)
Savings deposits (28) (3) (25)
Time deposits 585 697 (112)
Short term borrowings 46 52 (6)
Lease and ESOP (6) (4) (2)
----- ----- -----
Total 545 747 (202)
----- ----- -----
Net Interest Income ($222) ($ 89) ($311)
===== ===== =====
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
For the six months ended June 30, 2001, net interest income decreased by 6%, or
$222,000 over the six months ended June 30, 2000. This was due to a significant
decrease in short term interest rates, as the Corporation had asset sensitivity
in immediate repricing intervals. The net interest margin in the second quarter
was 3.43%, compared with the first quarter of 3.50%, indicating minimal declines
in the second quarter. Continued emphasis on balance sheet management and the
repricing of certificates of deposits had helped to insulate margin from further
declines.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
AVERAGE BALANCE SHEET
The following tables show the Corporation's consolidated average balances of
assets, liabilities, and stockholders' equity; the amount of interest income or
interest expense and the average yield or rate for each major category of
interest earning asset and interest bearing liability, and the net interest
margin, for the three and six month periods ended June 30, 2001 and 2000.
Average loans are presented net of unearned income, gross of the allowance for
credit losses. Interest on loans includes loan fees. Average securities are
based on amortized cost.
Three Months Ended June 30,
----------------------------------- -----------------------------------
2001 2000
--------- --------- --------- --------- --------- ---------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- --------- ---------
(in thousands)
Assets
Federal funds sold $29,537 $328 4.44% $14,087 $221 6.28%
Securities 30,786 458 5.95 14,432 227 6.29
Loans 149,702 3,120 8.34 152,715 3,564 9.34
--------- --------- --------- -------- -------- -------
Total Earning Assets/
Total Interest Income 210,025 3,906 7.44% 181,234 4,012 8.85%
--------- --------- --------- -------- -------
Cash and due from banks 5,410 5,106
All other assets 1,506 1,670
--------- --------
Total Assets $216,941 $188,010
========= ========
Liabilities and Equity
NOW and money market accounts $18,251 58 1.27% $16,657 93 2.23%
Savings deposits 6,892 31 1.80 8,307 61 2.94
Time deposits 142,737 1,920 5.38 120,070 1,813 6.04
Short term borrowings 6,493 55 3.39 2,356 25 4.24
Capitalized lease obligation and
ESOP loan 1,400 42 12.00 1,463 46 12.58
--------- --------- --------- -------- -------- -------
Total Interest Bearing Liabilities/
Total Interest Expense 175,773 2,106 4.79% 148,853 2,038 5.48%
--------- --------- --------- -------- -------
Noninterest bearing demand deposits 20,726 20,553
All other liabilities 1,000 907
Stockholders' equity 19,442 17,697
--------- --------
Total Liabilities and Equity $216,941 $188,010
========= ========
Net Interest Income $1,800 $1,974
========= ========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.43% 4.36%
========= =======
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Six Months Ended June 30,
----------------------------------- -----------------------------------
2001 2000
--------- --------- --------- --------- --------- ---------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- --------- ---------
(in thousands)
Assets
Federal funds sold $29,439 $735 4.99% $14,047 $420 5.98%
Securities 26,856 815 6.07 14,225 445 6.26
Loans 152,261 6,576 8.64 150,673 6,938 9.21
---------- --------- --------- -------- -------- -------
Total Earning Assets/
Total Interest Income 208,556 8,126 7.79% 178,945 7,803 8.72%
---------- --------- --------- -------- -------
Cash and due from banks 5,238 5,063
All other assets 1,493 1,722
---------- -------
Total Assets $215,287 $185,730
========== ========
Liabilities and Equity
NOW and money market accounts $17,250 145 1.68% $16,648 197 2.37%
Savings deposits 8,342 101 2.42 8,625 129 2.99
Time deposits 143,285 4,095 5.72 118,898 3,510 5.90
Short term borrowings 5,039 91 3.61 2,157 45 4.17
Capitalized lease obligation and
ESOP loan 1,407 84 11.94 1,471 90 12.24
---------- --------- --------- -------- -------- -------
Total Interest Bearing Liabilities/
Total Interest Expense 175,323 4,516 5.15% 147,799 3,971 5.37%
---------- --------- --------- -------- -------
Noninterest bearing demand deposits 19,691 19,598
All other liabilities 1,033 831
Stockholders' equity 19,240 17,502
---------- --------
Total Liabilities and Equity $215,287 $185,730
========== ========
Net Interest Income $3,610 $3,832
========= ========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.46% 4.28%
========= =======
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
NONINTEREST INCOME
Noninterest income increased by 6.5%, for the first six months of 2001, when
ignoring security gains and nonrecurring items for the first six months of 2001.
The largest components of the increase were overdraft income and fees from
processing merchant credit card deposits.
NONINTEREST EXPENSE
Noninterest expense increased over the first half by 1.3%, to $2.6 million in
2001. Increases in salaries, benefits, and payroll taxes and premises and fixed
asset expense have been offset by decreases in other operating expenses as part
of cost control efforts.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998 Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133") was issued. SFAS 133
requires all derivative instruments to be recorded on the balance sheet at
estimated fair value. Changes in the fair value of derivative instruments are to
be recorded each period either in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction. SFAS 133 was adopted by the Corporation in 2000, and did not have a
material effect on the consolidated financial position or results of operations.
In November 2000, the FASB issued Statement No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" (FASB No.
140). This statement revises the standards for accounting for securitzations and
other transfers of financial assets and collateral and requires certain
disclosures. The impact of FASB No. 140 as of December 31, 2000 was not material
to the consolidated financial statements.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The liquidity of a bank allows it to provide funds to meet loan requests, to
accommodate possible outflows in deposits, and to take advantage of other
investment opportunities. Funding of loan requests, providing for liability
outflows, and managing interest rate margins require continuous analysis to
match the maturities of specific categories of loans and investments with
specific types of deposits and borrowings. Bank liquidity depends upon the mix
of the banking institution's potential sources and uses of funds. For the
Corporation, the major sources of liquidity have been deposit growth, federal
funds sold, loans and securities which mature within one year, and sales of
residential mortgage loans. Additional liquidity is provided by two facilities
totaling $5.0 million, unsecured federal funds borrowing facilities, and a $14.0
million secured line of credit with the FHLB. The Corporation's large deposit
balances which might fluctuate in response to interest rate changes are closely
monitored. These deposits consist mainly of jumbo time certificates of deposit.
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20
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The Corporation's Asset Liability Management Committee ("ALCO"), which meets at
least quarterly, is responsible for reviewing the interest rate sensitivity
position of the Corporation and establishing policies to monitor and limit
exposure to interest rate risk.
The Corporation currently utilizes two quantitative tools to measure and monitor
interest rate risk: static gap analysis and net interest income simulation
modeling. Each of these interest rate risk measurements has limitations, but
management believes when these tools are evaluated together, they provide a
balanced view of the exposure the Corporation has to interest rate risk.
The following table shows the maturity and repricing distribution of the
Corporation's interest earning assets and interest bearing liabilities as of
June 30, 2001. This table displays the interest rate sensitivity gap (interest
rate sensitive assets less interest rate sensitive liabilities), cumulative
interest rate sensitivity gap, the interest rate sensitivity gap ratio (interest
rate sensitive assets divided by interest rate sensitive liabilities), and
cumulative interest rate sensitivity gap ratio. Loans are presented net of
unearned income, gross of the allowance, while securities are shown at amortized
cost. Assumptions incorporated into the time table include decay assumptions on
Now, Money Market and savings accounts. Prepayment of loans and securities are
also included at current levels as of June 30, 2001. Additionally, many variable
rate loans have interest rate floors which are incorporated in this table.
After Three After One
Within Months But Year But After
Three Within One Within Five
Months Year Five Years Years Total
--------- ------------ ------------ ---------- ---------
(in thousands)
Interest earning assets:
Federal funds sold $18,500 $ -- $ -- $ -- $18,500
Securities 9,934 15,490 7,854 7,049 40,326
Loans 48,920 24,564 63,344 16,675 153,503
-------- ------- ------- ------- ---------
Total 77,354 40,054 71,198 23,724 $212,329
-------- ------- ------- ------- =========
Interest bearing liabilities:
NOW and money market
accounts 2,177 6,635 12,302 -- $21,114
Savings deposits 567 1,771 4,744 -- 7,082
Jumbo time deposits 63,659 10,879 4,591 -- 79,129
Time deposits < $100,000 21,754 13,946 20,328 -- 56,028
FHLB and repo sweeps 6,556 -- 3,000 -- 9,556
Capitalized lease obligation
and ESOP payable 400 28 217 755 1,400
-------- ------- ------- ------- ---------
Total 95,113 33,259 45,182 755 $174,309
-------- ------- ------- ------- =========
Interest rate sensitivity gap ($17,759) 6,795 26,016 22,969
Cumulative interest rate
sensitivity gap ($10,964) $15,052 $38,021
Interest rate sensitivity gap
ratio 0.81 1.20 1.58 31.42
Cumulative interest rate
sensitivity gap ratio 0.91 1.09 1.22
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The table above indicates the time periods in which interest earning assets and
interest bearing liabilities will mature or may be repriced, generally according
to their contractual terms. However, this table does not necessarily indicate
the impact that general interest rate movements would have on the Corporation's
net interest margin, because the repricing of various categories of assets and
liabilities is discretionary, and is subject to competitive and other pressures.
As a result, various assets and liabilities indicated as repricing within the
same period may, in fact, reprice at different times and at different rate
levels.
At June 30, 2001, the Corporation is considered somewhat "liability sensitive"
according to the preceding table. In a rising rate environment, the Corporation
might not be able to increase prices on interest earning assets faster than the
increase in rates on interest bearing liabilities.
On a quarterly basis, the net interest income simulation model is used to
quantify the effects of hypothetical changes in interest rates on the
Corporation's net interest income over a projected twelve-month period. The
model permits management to evaluate the effects of shifts in the Treasury Yield
curve, upward and downward, on net interest income expected in a stable interest
rate environment.
As of March 31, 2001, the most recent and available analysis, the simulation
model projects net interest income would remain stable or flat compared to the
base net interest income, assuming an instantaneous parallel shift upward in the
yield curve by 200 basis points. Conversely, if the yield curve were to decrease
by 200 basis points, the model projects net interest income would increase by
8.9% of the base net interest income.
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22
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART II
ITEM 1. LEGAL PROCEEDINGS
As a depository of funds, the Bank is occasionally named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the ownership of
funds in particular accounts. Such litigation is incidental to the Bank's
business. Management is not aware of any threatened or pending litigation in
which the Corporation or the Bank is likely to experience loss or exposure which
would materially affect the Corporation's capital resources, results of
operations, or liquidity as presented herein.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
3.1 Articles of Incorporation are incorporated by
reference to exhibit 3.1 of the Corporation's
Registration Statement on Form SB-2 (Commission
File Number 333-04113) which became effective on
September 23, 1996
3.2 Bylaws of the Corporation are incorporated by
reference to exhibit 3.2 of the Corporation's
Registration Statement on Form SB-2 (Commission
File Number 333-04113) which became effective on
September 23, 1996
11 Computation of Per Share Earnings
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on August 9, 2001.
COMMUNITY CENTRAL BANK CORPORATION
By: S/ DAVID A. WIDLAK
------------------
David A. Widlak;
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
By: S/ RAY T. COLONIUS
------------------
Ray T. Colonius;
Treasurer
(Principal Financial and Accounting Officer)
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COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
3.1 Articles of Incorporation are incorporated by
reference to exhibit 3.1 of the Corporation's
Registration Statement on Form SB-2 (Commission
File Number 333-04113) which became effective on
September 23, 1996
3.2 Bylaws of the Corporation are incorporated by
reference to exhibit 3.2 of the Corporation's
Registration Statement on Form SB-2 (Commission
File Number 333-04113) which became effective on
September 23, 1996
11 Computation of Per Share Earnings
25