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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 period ended September 30, 1996
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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. 333-04113
COMMUNITY CENTRAL BANK CORPORATION
-----------------------------------
(Exact name of small business issuer as specified in its charter)
Michigan 38-3291744
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(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
100 North Main Street, Mount Clemens, MI 48043-5605
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(Address of principal executive offices)
(810) 783-4500
--------------------------
(Issuer's telephone number)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes No X
----- -----
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock as of the latest practicable date:
Class Outstanding at November 12, 1996
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Common Stock, No Par Value 1,150,000 Shares
Transitional Small Business Disclosure Format:
Yes No X
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Community Central Bank Corporation (the Corporation) completed its $11.5
million public stock offering on September 23, 1996. The offering consisted of
1.15 million shares at $10.00 per share. The net proceeds to the Corporation,
after deducting underwriting fees, were $10.8 million. The financial
statements of the Corporation include the consolidation of its subsidiary;
Community Central Bank (the Bank). As of September 30, 1996, the Corporation
and the Bank were in a development stage. The Bank received regulatory
approval to open in October, and subsequently commenced operations on October
28, 1996.
Following are the Corporation's Consolidated Balance Sheet as of September 30,
1996 and Consolidated Statements of Earnings and Cash Flow for the period ended
September 30, 1996:
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Consolidated Balance Sheet
(Unaudited)
September 30,
1996
-----------------------
Assets (in thousands, except share data)
Cash $ 212
Short-term investment 10,000
- ------------------------------------------ -------
Cash and Cash Equivalents 10,212
- ------------------------------------------ -------
Property and equipment 230
Other assets 211
- ------------------------------------------ -------
Total Assets $10,653
========================================== =======
Liabilities and Stockholders' Equity
Accounts Payable $ 305
- ------------------------------------------ -------
Total Liabilities 305
- ------------------------------------------ -------
Stockholders' Equity
Common stock -- No par value; 9,000,000 shares
authorized; 1,150,000 shares issued and outstanding 5,750
Additional paid-in capital 4,770
Retained earnings (deficit) (172)
- ------------------------------------------ -------
Total Stockholders' Equity 10,348
- ------------------------------------------ -------
Total Liabilities and Stockholders' Equity $10,653
========================================== =======
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Consolidated Statement of Earnings
(Unaudited)
Period from April 26, 1996 (inception)
to September 30, 1996
- ------------------------------ ---------------------
(in thousands, except per share data)
Interest income on short-term investment $ 6
Operating expenses 178
- ------------------------------ ------
Net Loss ($ 172)
============================== ======
Earnings (Loss) Per Share ($0.15)
============================== ======
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Consolidated Statement of Cash Flow Period from April 26, 1996 (inception)
(Unaudited) to September 30, 1996
- --------------------------------------------------- -------------
(in thousands)
Operating Activities:
Net loss $ (172)
Adjustments to reconcile net loss to net cash
used in operating activities:
Increase in other assets (49)
Increase in other liabilities 8
- --------------------------------------------------- -------
Net Cash Used in Operating Activities (213)
Investing Activities:
Purchases of property and equipment (230)
Organization costs (68)
- --------------------------------------------------- -------
Net Cash Used in Investing Activities (298)
Financing Activities:
Proceeds from stock offering 10,771
Related party loans 347
Repayment of related party loans (347)
Deferred offering costs (48)
- --------------------------------------------------- -------
Net Cash Provided by Financing Activities 10,723
- --------------------------------------------------- -------
Increase in Cash and Cash Equivalents 10,212
Cash and Cash Equivalents at Inception ----
- --------------------------------------------------- -------
Cash and Cash Equivalents at the End
of the Period $10,212
=================================================== =======
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Notes to Financial Statements
(Unaudited)
September 30, 1996
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Community Central Bank Corporation (the Corporation) was
incorporated on April 26, 1996 as a bank holding company to establish
and operate a new bank, Community Central Bank (the Bank) in Mount
Clemens, Michigan. Proceeds from the Corporation's public stock
offering will be used to capitalize the Bank, lease facilities and
provide working capital.
Basis of Presentation - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
NOTE 2 ORGANIZATION COSTS
Organization and certain pre-opening costs represent incorporation
costs, salaries, legal and accounting fees, and other costs
relating to the organization of the Corporation. These costs are
capitalized and are expected to approximate $160,000 through
commencement of operations.
NOTE 3 NOTES PAYABLE - RELATED PARTIES
Non-interest bearing demand loans in the amount of $347,000 were
made to the Corporation by its organizers. The loans were repaid
from the proceeds of the common stock offering.
NOTE 4 RELATED PARTY LEASE COMMITMENT
In May 1996 the Corporation entered into a fifteen year lease
commitment for an office from an entity that is owned by two of its
directors.
The lease will commence on November 1, 1996. The landlord will
remodel the facility up to a cost of $1 million, with the
Corporation responsible for costs in excess. Management estimates
that the total building improvement cost will approximate $1.35
million. The present value of the minimum lease payment under
the lease, which will be recorded as a capital lease when the
lease commences, will approximate $1 million.
The future minimum lease payments are as follows:
(in thousands)
1996 $ 24
1997 123
1998 138
1999 150
2000 150
2001 154
Thereafter 1,822
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$2,561
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
NOTE 5 DEFERRED OFFERING COSTS
Costs related to the Corporation's public stock offering; including
underwriting, legal, and other fees, are netted against equity.
The following is a summary of the amount capitalized in connection with
the initial stock offering:
(in thousands)
--------------
Proceeds from stock offering $11,500
Underwriting fees paid to a broker (744)
Legal, accounting, and other costs (236)
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Initial Capital $10,520
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Item 2. Management's Discussion and Analysis or Plan of Operation
(A) PLAN OF OPERATION
ORGANIZATION
The Corporation was incorporated on April 26, 1996 under Michigan law and
is a bank holding company which owns all of the common stock of the Bank.
The Bank is organized as a Michigan banking corporation with depository
accounts insured by the Bank Insurance Fund and the Federal Deposit Insurance
Corporation (the FDIC). The Bank intends to provide a range of commercial and
consumer banking services primarily in the communities of Macomb County,
Michigan, including Mount Clemens, Clinton Township, Harrison Township,
Chesterfield Township, and Macomb Township. Those services reflect the
Bank's intended strategy of serving small to medium size businesses, and
individual customers in its market area. The Bank's retail banking strategy
will initially focus on providing attractive products and services, including
computer home banking, telephone banking and automated bill paying services to
individuals in the Bank's market area. The Bank commenced operations on
October 28, 1996 in temporary facilities, and anticipates moving its business
to its permanent leased facilities in the fourth quarter of 1996.
REASON FOR STARTING COMMUNITY CENTRAL BANK
The liberalization in recent years of Michigan's branch banking laws,
together with the expansion of interstate banking, has led to substantial
consolidation of the banking industry in Michigan, and especially the
Metropolitan Detroit area in which the Bank is located. In many cases,
when these consolidations occurred, local boards of directors were dissolved
and local management relocated or in some cases terminated.
In the opinion of the Corporation's management, this situation has created
a favorable opportunity for a new commercial bank with local management and
local directors. Management believes that such a bank can be successful in
attracting small to medium sized businesses and individuals as customers who
wish to conduct business with a locally owned and managed institution that
demonstrates an active interest in their business and personal financial
affairs. The Bank will seek to take advantage of this opportunity by
emphasizing in its marketing plan the Bank's local management, their strong
ties and active commitment to the community.
MARKET AREA
The Bank's main office is located on a prominent corner at 100 North
Main Street in downtown Mount Clemens, Michigan. The Bank will be leasing a
building at the crossroads of North Main Street and Market Street that is being
renovated for the Bank.
Macomb County is one of the fastest growing communities in Michigan and
has a stable and diverse economic base. Macomb County, which is comprised of
27 cities, villages and townships, ranks third in population out of Michigan's
83 counties. With a current population of over 700,000, Macomb County covers
482 square miles and is home to over 15,000 businesses. Macomb County is also
an active boating center with 31 miles of coastline on Lake St. Clair and over
40,000 registered pleasure craft.
Macomb County is also a large banking market. According to available
industry data, as of June 30, 1995 total deposits in this market, including
banks, thrifts and credit unions, were approximately $10.2 billion.
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
BUSINESS FINANCIAL SERVICES
The Bank intends to offer products and services consistent with its goal
of attracting small to medium-sized business customers as well as a variety of
individuals. Commercial loans are offered on both a secured and unsecured
basis and are available for working capital purposes, the purchase of
equipment and machinery, financing of accounts receivable and inventory and for
the purchase of real estate, primarily owner occupied real estate. As part of
its banking business, the Bank may make loans to all types of borrowers secured
by first and junior mortgages on various types of real estate, including
without limitation, single-family residential, multi-family residential, mixed
use, commercial, developed, and undeveloped. In making such loans, the Bank
is subject to written policies, reviewed and approved at least annually by
the Bank's board of directors, pursuant to federal law and regulations. Such
policies address loan portfolio diversification and prudent underwriting
standards, loan administration procedures, and documentation, approval and
reporting requirements. In addition, Federal regulations impose supervisory
loan-to-value ratios applicable to each type of loan secured by real estate.
The Bank will generally look to a borrower's business operations as the
principal source of repayment and will also seek, when appropriate, security
interests in the inventory, accounts receivable or other personal property of
the borrower, and personal guaranties. Although the Bank intends to be
aggressive in seeking new loan growth, it intends to stress high quality in its
loans. To promote such standards, the Board of Directors of the Bank has
established strict lending policies, including specified lending authorities,
loan review policies and lending committees. In establishing such policies,
the Board of Directors is required to conform to applicable bank
regulatory requirements.
The Bank will actively pursue business checking accounts by offering
competitive rates, computerized banking, and other convenient services to many
of its business customers. In some cases the Bank will require its business
borrowers to maintain minimum balances. Management of the Bank also intends to
establish relationships with one or more correspondent banks and other
independent financial institutions to provide other services requested by its
customers, including loan participations where the requested loan amount
exceeds the Bank's legal lending limit.
CONSUMER FINANCIAL SERVICES
The Bank's retail banking strategy will initially focus on providing attractive
products and services, including computer home banking, telephone banking and
automated bill payment services to individuals in the Bank's market area. The
Bank believes that by offering these technologically advanced banking products,
which will allow customers to bank 24 hours a day from any point at their
convenience, it can attract new deposits and loans without the necessity of
expensive brick and mortar branch operations.
In addition, the Bank will originate residential real estate loans in the
form of first mortgages and home equity loans. The Bank has applied to the
Federal National Mortgage Association for approval as a seller servicer of
residential mortgage loans and intends to sell most of its fixed rate mortgages
into the secondary market. Most of its adjustable rate loans and home equity
loans, which will also be primarily adjustable rate, are intended to be held in
the Bank's portfolio.
The Bank intends to offer other consumer lending services including credit
cards, auto loans, boat loans and other personal loan products on both a
secured and unsecured basis.
With an experienced staff to provide personalized service, management
believes it will be able to generate competitively priced loans and deposits.
This experienced staff will have access to current software and database
systems selected to deliver high-quality products and provide responsive
service to clients. The Bank has entered into agreements with third-party
service providers to provide customers with convenient electronic access to
their accounts and other bank products through debit cards, voice response and
home banking. The use of third-party service providers is intended to allow
the Bank to remain at the forefront of technology while minimizing the costs of
delivery.
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
PLAN OF OPERATION
The Corporation's plan of operation for the twelve months following the
completion of the offering does not contemplate the need to raise additional
funds during that period. Management has concluded, based on current
pre-opening growth projections, that the Bank is likely to have adequate funds
to meet its cash requirements for at least the next several years. Management
expects to pursue opportunities involving home banking services, but currently
has no specific plans for product research or development which would be
performed within the next twelve months. During the first twelve months of
operation, the Corporation does not anticipate requiring substantial additional
equipment. No significant changes in the number of employees is anticipated in
the first twelve months of operations after the Bank commences its business.
(B) ANALYSIS OF RESULTS OF OPERATIONS
LACK OF OPERATING HISTORY
Neither the Corporation nor the Bank has any operating history. The
business of the Corporation and the Bank is subject to the risks inherent in
the establishment of a new business enterprise. Because the Corporation and
the Bank are only recently formed and the Bank commenced banking operations on
October 28, 1996, no operating data is available. As a result of the
substantial start-up expenditures that must be incurred by a new bank, and the
time it will take to develop its deposit base and loan portfolio, it is
expected that the Bank, and thus the Corporation, will operate at a loss during
the start-up of the Bank. Accordingly, they are not expected to be profitable
for at least the first two years.
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Corporation's management believes that no litigation is threatened or
pending in which the Corporation, or its subsidiary, is likely to
experience loss or exposure that would materially affect the Corporation's
equity, 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.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Part I Exhibits
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
Part II Exhibits
(3)(i) Articles of Incorporation
(3)(ii) Bylaws
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
COMMUNITY CENTRAL BANK CORPORATION
By: S/ RICHARD J. MILLER
----------------------
Richard J. Miller
President and Chief Operating Officer
(Principle Executive Officer)
By: S/ PETER J. PRZYBOCKI
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Peter J. Przybocki, CPA
Corporate Treasurer
(Principle Financial and Accounting Officer)
DATE: November 12, 1996
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COMMUNITY CENTRAL BANK CORPORATION (a Company in the Development Stage)
FORM 10-QSB (continued)
EXHIBIT INDEX
The following constitute the exhibits to the Corporation's Quarterly
Report on Form 10-Q for the period ended September 30, 1996:
EXHIBIT
NUMBER EXHIBIT
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(3)(i) Articles of Incorporation are incorporated by
reference to the Corporation's Registration
Statement on Form SB-2 (Commission File No.
333-04113) which became effective September
23, 1996
(3)(ii) Bylaws of the Corporation are incorporated by
reference to the Corporation's Registration
Statement on Form SB-2 (Commission File No.
333-04113) which became effective September
23, 1996
(11) Computation of Per Share Earnings
(27) Financial Data Schedule
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