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 March 31, 2005
Commission File No. 000-33373
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 and zip code)
(586) 783-4500
--------------
(Issuer's telephone number)
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 May 13, 2005
----- ---------------------------
Common Stock 3,277,750 Shares
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 [ ]
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
1
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART I
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2005 2004
(Unaudited)
----------- ------------
(In thousands)
Assets
Cash and due from banks $ 7,990 $ 4,183
Federal funds sold 6,800 3,000
----------- ------------
Cash and Cash Equivalents 14,790 7,183
----------- ------------
Securities available for sale, at fair value 62,223 51,425
Securities held to maturity, at amortized cost 1,149 1,161
FHLB stock 3,281 3,246
Residential mortgage loans held for sale 2,689 6,491
Loans
Commercial loans 211,261 207,300
Residential loans 84,278 83,104
Installment loans 14,531 15,035
----------- ------------
Total Loans 310,070 305,439
Allowance for credit losses (3,436) (3,377)
----------- ------------
Net Loans 306,634 302,062
----------- ------------
Net property and equipment 7,423 6,921
Accrued interest receivable 1,652 1,391
Other real estate owned 697 681
Goodwill 743 743
Core deposit intangible, net of amortization 114 134
Cash surrender value of Bank owned life insurance 7,600 7,519
Other assets 2,620 2,581
----------- ------------
Total Assets $ 411,615 $ 391,538
=========== ============
(continued)
2
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED BALANCE SHEETS
March 31,
2005 December 31,
(Unaudited) 2004
----------- ------------
(In thousands, except share data)
Liabilities
Deposits
Noninterest bearing demand deposits $ 36,805 $ 32,080
NOW and money market accounts 32,714 40,446
Savings deposits 23,288 20,539
Time deposits 200,830 185,791
----------- ------------
Total deposits 293,637 278,856
----------- ------------
Repurchase agreements 9,530 11,492
Federal Home Loan Bank advances 65,360 63,360
Accrued interest payable 780 780
Other liabilities 701 944
ESOP note payable 192 205
Subordinated debentures 10,310 10,310
----------- ------------
Total Liabilities 380,510 365,947
----------- ------------
Stockholders' Equity
Common stock -- 9,000,000 shares authorized;
3,275,050 shares issued and outstanding at
3-31-2005 and 2,864,907 at 12-31-2004 26,056 20,774
Retained earnings 5,701 5,111
Unearned employee benefit (192) (205)
Accumulated other comprehensive (loss) income (460) (89)
----------- ------------
Total Stockholders' Equity 31,105 25,591
----------- ------------
Total Liabilities and Stockholders' Equity $ 411,615 $ 391,538
=========== ============
3
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
2005 2004
------ ------
(In thousands, except
per share data)
Interest Income
Loans (including fees) $4,821 $4,147
Securities 560 499
Federal funds sold 46 22
------ ------
Total Interest Income 5,427 4,668
------ ------
Interest Expense
Deposits 1,554 1,301
Short term borrowings 39 24
Advances from FHLB 563 450
ESOP loan interest expense 3 3
Subordinated debentures 165 127
------ ------
Total Interest Expense 2,324 1,905
------ ------
Net Interest Income 3,103 2,763
Provision for credit losses 100 125
------ ------
Net Interest Income after Provision 3,003 2,638
------ ------
Noninterest Income
Deposit service charges 70 68
Net realized security gain 30 137
Mortgage banking income 702 1,254
Other income 144 139
------ ------
Total Noninterest Income 946 1,598
------ ------
Noninterest Expense
Salaries, benefits, and payroll taxes 1,754 1,859
Premises and fixed asset expense 356 361
Other operating expense 779 1,267
------ ------
Total Noninterest Expense 2,889 3,487
------ ------
Income Before Taxes 1,060 749
Provision for income taxes 308 201
------ ------
Net Income $ 752 $ 548
====== ======
(continued)
4
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Per share data:
Basic earnings $0.25 $0.19
Diluted earnings $0.24 $0.19
===== =====
Cash Dividends $0.05 $0.05
===== =====
* Per share data has been retroactively adjusted for 2004 stock dividend.
5
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
March 31,
2005 2004
----- -----
(In thousands)
Net Income as Reported $ 752 $ 548
Other Comprehensive Income, Net of Tax
Change in unrealized (loss) gain on securities
available for sale (371) 218
----- -----
Comprehensive Income $ 381 $ 766
===== =====
6
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Three Months Ended
March 31,
2005 2004
-------- --------
(In thousands)
Operating Activities
Net income $ 752 $ 548
Adjustments to reconcile net income to net cash flow from operating
activities:
Net amortization of security premium 86 80
Net gain on sales and call of securities (30) (137)
Provision for credit losses 100 125
Depreciation expense 107 117
Deferred income tax expense 308 200
ESOP compensation expense 13 18
Increase in accrued interest receivable (261) (164)
Increase in other assets (227) (43)
Increase in accrued interest payable -- 2
Decrease in other liabilities (243) (128)
Decrease in loans held for sale 3,802 1,635
-------- --------
Net Cash Provided by Operating Activities 4,407 2,253
Investing Activities
Maturities, calls, sales and prepayments of securities available for sale 6,208 28,512
Purchase of securities available for sale (17,629) (16,024)
Maturities, calls, and prepayments of held to maturity securities 11 37
Purchases of held to maturity securities (35) --
Increase in loans (4,672) (25,793)
Purchases of property and equipment (609) (251)
-------- --------
Net Cash Used in Investing Activities (16,726) (13,519)
Financing Activities
Net decrease increase in demand and savings deposits (258) (687)
Net increase in time deposits 15,039 17,351
Net decrease in short term borrowings (1,962) (1,318)
Increase (decrease) increase in FHLB advances 2,000 (2,000)
Rights/Public stock offering 5,275 --
Payment of ESOP debt (13) (18)
Stock option exercise/award 7 --
Cash dividends paid (162) (136)
-------- --------
Net Cash Provided by Financing Activities 19,926 13,192
-------- --------
Increase in Cash and Cash Equivalents 7,607 1,926
Cash and Cash Equivalents at the Beginning of the Year 7,183 6,227
-------- --------
Cash and Cash Equivalents at the End of the Period $ 14,790 $ 8,153
======== ========
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 2,324 $ 1,903
Federal Taxes Paid $ -- $ --
======== ========
7
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
COMMUNITY CENTRAL BANK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The financial statements of Community Central Bank Corporation (the
"Corporation") include the consolidation of its direct and indirect
subsidiaries: Community Central Bank (the "Bank") and Community Central
Mortgage Company, LLC (the "Mortgage Company").
The Corporation's Consolidated Balance Sheets are presented as of March
31, 2005 and December 31, 2004, and Consolidated Statements of Income and
Comprehensive Income for the three month periods ended March 31, 2005 and
2004, and Consolidated Statements of Cash Flow for the three months ended
March 31, 2005 and 2004. 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, 2004.
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.
2. The accounting and reporting policies of the Corporation conform to
accounting principles generally accepted in the United States of America
and general practices within the banking industry. The following describes
the critical accounting policies, which are employed in the preparation of
financial statements.
Allowance for Credit Losses: The allowance for credit losses is maintained
at a level considered by management to be adequate to absorb losses
inherent in existing loans and loan commitments. The adequacy of the
allowance is based on evaluations that take into consideration such
factors as prior loss experience, changes in the nature and volume of the
portfolio, overall portfolio quality, loan concentrations, specific
impaired or problem loans and commitments, current and anticipated
economic conditions that may affect the borrower's ability to pay, and
other subjective factors. The determination of the allowance is also based
on regulatory guidance. This guidance includes, but is not limited to,
generally accepted accounting principles, and guidance issued from other
regulatory bodies such as the joint policy statement issued by the Federal
Financial Institutions Examination Council.
3. Community Central Capital Trust I, a business trust subsidiary of the
Corporation sold 10,000 shares of cumulative preferred securities ("trust
preferred securities") at $1,000.00 per trust preferred security in June
2002. The proceeds from the sale of the trust preferred securities were
used by the trust to purchase an equivalent amount of subordinated
debentures from the Corporation. The trust preferred securities carry a
variable rate of interest at the three month libor plus 365 basis points,
have a stated maturity of 30 years, and, in effect, are guaranteed by the
Corporation. The securities are redeemable at par after 5 years.
Distributions on the trust preferred securities are payable quarterly on
March 30, June 30, September 30 and December 30. The first distribution
was paid on September 30, 2002 and distributions have been made quarterly
ever since. Under certain circumstances, distributions may be deferred for
up to 20 calendar quarters. However, during any such deferrals, interest
accrues on any unpaid distributions at the rate of the three month libor
plus 365 basis points. The trust preferred securities are carried on the
Corporation's consolidated balance sheet as a liability and the interest
expense is recorded on the Corporation's consolidated statement of income.
The trust preferred securities may constitute up to 25% of tier I capital.
Any amount in excess of this limit may be included as tier 2 capital. At
March 31, 2005, the total allowable trust preferred issuance of $10
million was included in the Corporation's tier 1 capital. Prior to 2004,
the trust was consolidated in the Corporation's financial statements, with
the trust preferred securities issued by the trust reported in liabilities
as "Guaranteed Preferred Beneficial Interest in the Corporation's
Subordinated Debentures" and the subordinated debentures eliminated in
consolidation. Under new accounting guidance, FASB Interpretation No. 46,
as revised in December 2003, the trust is no longer consolidated with the
Corporation, accordingly, the Corporation does not report the securities
issued by the trust as liabilities, and instead reports as liabilities the
subordinated debentures issued by the Corporation and held by the trust,
as these are no longer eliminated in consolidation.
8
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Amounts previously reported as "Guaranteed preferred beneficial interest
in Corporation's subordinated debentures" in liabilities have been
recaptioned "subordinated debentures" and continue to be presented in
liabilities on the balance sheet. The effect of no longer consolidating
the trust does not significantly change the amounts reported as the
Corporation's assets, liabilities, equity, or interest expense.
4. The Corporation did not issue incentive options during the three months
ended March 31 2005 or 2004. If the Corporation had used the fair value
method of accounting, using the Black Scholes option pricing model and
recognizing compensation cost for the outstanding options based on the
fair market value of the grant date, net income and earnings per share on
a pro forma basis would have been as follows:
Three Months Ended
March 31,
2004 2003
------- -------
(In thousands, except
per share data)
Net income, as reported $ 752 $ 548
Deduct: Total stock-based employee and director
compensation expense under fair value based
methods of awards, net of related tax effects (31) (18)
------- -------
Pro forma net income $ 721 $ 530
======= =======
Earnings per share
Basic - as reported $ 0.25 $ 0.19
Basic - pro forma $ 0.24 $ 0.19
Diluted - as reported $ 0.24 $ 0.19
Diluted - pro forma $ 0.23 $ 0.18
The fair value of each option grant is estimated on the date of grant using the
Black Scholes option pricing model with the following weighted average
assumptions. The assumptions listed below were used in 2005 and 2004, with no
practical changes during each respective period.
Three Months Ended
March 31,
2005 2004
------ ---------
Dividend yield or expected dividends 1.36% 1.49%
Risk free interest rate 4.20% 4.00%
Expected life 10 yrs. 7-10 yrs.
Expected volatility 24.65% 9.60%
9
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 subsidiaries at March 31, 2005 and December 31, 2004 and the
results of operations for the three months ended March 31, 2005 and 2004. 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 accounting standards; 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; our ability
to successfully integrate acquisitions into our existing operations, and the
availability of new acquisition's that build shareholder value; and other
factors, including risk factors, referred to from time to time in filings made
by the Corporation with the Securities and Exchange Commission.
EXECUTIVE SUMMARY
Community Central Bank Corporation is the holding company for Community Central
Bank in Mount Clemens, Michigan. The Corporation opened for business in October
1996 and serves businesses and consumers across Macomb, Oakland and St. Clair
counties with a full range of lending, deposit, and Internet banking services.
The Bank operates two full service facilities, one in Mount Clemens and the
other in Rochester Hills, Michigan. Community Central Mortgage Company, LLC a
subsidiary of the Corporation and Bank, operates locations in the Detroit
metropolitan area. The Corporation's common shares trade on the Nasdaq National
Market under the symbol "CCBD."
The results of operations depend largely on net interest income. Net interest
income is the difference in interest income the Corporation earns on
interest-earning assets, which comprise primarily commercial business and
commercial real estate loans and the interest the Corporation pays on our
interest-bearing liabilities, which are primarily certificates of deposit, money
market and demand deposits. Management strives to match the repricing
characteristics of the interest earning assets and interest bearing liabilities
to protect net interest income from changes in market interest rates and changes
in the shape of the yield curve.
The results of our operations may also be affected by local and general economic
conditions. The largest geographic segment of our customer base is in Macomb
County, Michigan. The economic base of the county continues to diversify from
the automotive service sector. This trend should lessen the impact on the County
of future economic downturns in the automotive sector of the economy. Macomb
County's proximity to major highways and affordable housing has continued to
spur economic growth in the area. Macomb County's outstanding debt has a current
credit rating of AAA from Moody's Investor Service as of April 2004. Changes in
the local economy may affect the demand for commercial loans and related small
to medium business related products. This could have a significant impact on how
the Corporation deploys earning assets. The competitive environment among other
financial institutions and financial service providers and the Bank in Macomb,
Oakland, and St. Clair counties of Michigan may affect the pricing levels of
various deposit products. The impact of competitive rates on deposit products
may increase the relative cost of funds for the Corporation and thus negatively
impact net interest income.
10
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The Corporation continued to grow its balance sheet consistent with a
traditional commercial banking model. The Corporation expanded its branching
base and assets and deposits in October 2003 through the acquisition of its
Rochester Hills, Michigan branch from North Oakland Community Bank. The
Corporation expects to continue growth through internal expansion primarily
through commercial banking practices.
The Corporation continues to see competitive deposit rates offered from local
financial institutions within the geographic proximity of the Bank which could
have the affect of increasing the costs of funds at a level higher than
management projects. The Corporation continues to utilize wholesale forms of
funding earning assets through the FHLB and brokered CDs to balance both
interest rate risk and the overall cost of funds. Brokered and internet CDs are
based on a nationwide interest rate structure, typically at what is considered
to be a premium interest rate. The local competition for CD products has
intensified and the Bank has found this type of wholesale funding to often
effectively compete with the rates offered for similar term retail CD products
of local community and regional banks.
Community Central Mortgage Company, LLC ("the Mortgage Company"), which is a
wholly owned mortgage-banking subsidiary of the Bank and the Corporation, has
felt the effect of the nationwide slowdown in residential mortgage volumes. The
mortgage company has scaled back both variable and fixed costs to match the
reduced revenue generated because of this origination slowdown.
On February 14, 2005, Community Central Bank Corporation completed a
subscription rights offering. The Corporation received gross proceeds of
approximately $5.4 million from the offering and will use the proceeds to fund
its growth strategy, for working capital and for general corporate purposes.
Community Central Bank Corporation ("the Corporation") recently entered into an
Agreement and Plan of Merger (the "Merger Agreement") by and among the
Corporation, Community Central Bank (the "Bank"), and River Place Financial
Corp., a Michigan-chartered bank ("River Place"), pursuant to which the
Corporation will acquire all of the outstanding equity interests of River Place.
River Place is a private bank wholly owned by the descendants of Julius Stroh,
founder of The Stroh Brewery Company. River Place was established in 1983 to
manage the private banking and trust needs of the Stroh family; and trusts
managed by its trust department owned and controlled Stroh Brewery until its
sale in 1999. Since the sale of Stroh Brewery, River Place's trust department
has continued to manage the financial assets of the Stroh family. William A.
Penner, CEO of River Place, will become the President of the Bank's newly
created trust division. After retiring as First Vice President and Business
Manager of Estate Settlement in a 30-year career for Comerica Bank, Mr. Penner
took over as President of River Place in 1994.
In accordance with the Merger Agreement, River Place will merge with and into
the Bank, with the Bank continuing as the surviving corporation. At least 80%,
and up to 100% of the consideration to be paid for all of the outstanding common
stock of River Place must be in restricted shares of common stock of the
Corporation ("Shares"). A maximum of 250,000 Shares will be issued. The Shares
to be delivered in connection with the Merger Agreement will be issued in a
transaction exempt from registration under the Securities Act of 1933, as
amended, by reason of Section 4(2) thereof, Regulation D, or other private
offering exemptions, and similar exemptions under applicable state securities
laws. The Shares will be issued with restricted security legends.
Consummation of the transaction is subject to certain conditions, including
approval of the transaction by River Place stockholders and bank regulatory
authorities. Closing of the transaction is expected to occur in the second
quarter of 2005.
The pro forma effects of the acquisition on the Corporation's financial
statements is insignificant.
11
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ASSETS
The largest segment of asset growth for the first quarter of 2005 occurred in
the security portfolio which increased $10.8 million and total loans which
increased $4.6 million.
The largest portion of loan growth occurred primarily in the commercial real
estate area consistent with the Corporation's commercial lending focus. During
the first quarter, some categories of loans within the commercial and commercial
real estate portfolio were reviewed to ensure the proper reporting of underlying
collateral and purpose of the loan. It was determined that approximately $12
million of commercial and industrial loans should be classified as commercial
real estate loans based on the underlying collateral. When both the commercial
real estate loans and commercial and industrial loans are combined, the net
increase from December 31, 2004 to the period ended March 31, 2005 is $4.0
million, representing the largest portion of total loan growth for the first
quarter of 2005. Total residential real estate loans increased $1.4 million
during the first quarter. The slower growth in the portfolio compared to prior
quarterly periods was tied to the overall decrease in volume this segment of the
lending market has experienced. The Corporation continues to focus on generation
of adjustable rate mortgages for its portfolio of residential mortgage loans.
The consumer loan portfolio decreased $488,000 for the quarterly period ended
March 31, 2005. The decrease was due to runoff in the portfolio and slower
growth in certain segments of seasonal boat lending.
The total security portfolio at March 31, 2005 was $63.4 million, which was
comprised of $62.2 million in available for sale securities and $1.2 million in
held to maturity securities. The security portfolio consisted of primarily
federal agency securities and bank qualified tax-exempt municipal securities.
The total portfolio increased $10.8 million from December 31, 2004. A portion of
the increase in investment securities was attributable to funding from the
rights offering completed in February 2005. These funds were invested into
mortgage-backed securities with principal repayment characteristics that could
be used to fund loan advances at a later date. The net change was driven by
purchases of $17.6 million, with maturities, calls and sales comprising a
reduction of $6.8 million. During the three months ended March 31, 2005, the
federal agency debenture portfolio increased $4.7 million, which are partially
pledged against repurchase agreements. The federal agency mortgage backed
securities increased $5.2 million. The remaining increase in the total security
portfolio comprised bank qualified tax-exempt municipal bonds. At March 31,
2005, the available for sale portfolio had a net unrealized loss of $703,000,
compared to a $135,000 unrealized loss at December 31, 2004. Unrealized losses
on securities have not been recognized into income because the issuers' bonds
are of high credit qualify. We have the intent and ability to hold the
securities for the foreseeable future and the decline in the fair value is
primarily due to increased market interest rates.
Mortgage loans held for sale totaled $2.7 million at March 31, 2005 compared to
$6.5 million at December 31, 2004. The decrease in mortgages held for sale was
due to seasonality and an overall decrease in mortgage loan demand than in prior
periods. The mortgage loans were originated by the Bank's mortgage subsidiary.
Loans closed generally remain in loans held for sale for less than 30 days in
duration. Loans are normally committed for sale before funding takes place. 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. Accordingly, a downturn in the automotive industry could adversely
affect a borrower's ability to repay its loan. Additionally, the Corporation had
approximately $60.7 million in outstanding loans at March 31, 2005, to borrowers
in the real estate rental and property management industries, representing
approximately 33.4% of the total commercial real estate loan portfolio.
12
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The major components of the loan portfolio for loans held for sale and loans in
the portfolio are as follows:
March 31, Percentage December 31, Percentage Net Net
2005 of total loans 2004 of total loans Change Change %
--------- -------------- ------------ -------------- -------- --------
(in thousands, except percentages)
Loans held for sale:
Residential real estate $ 2,689 100.0% $ 6,491 100.0% ($ 3,802) (58.6%)
========= ===== ============ ===== ========= =====
Loans held in the portfolio:
Commercial real estate* $ 181,971 58.7% $ 166,686 54.6% $ 15,285 9.2%
Commercial and industrial* 29,290 9.4 40,614 13.3 (11,324) (27.9)
Residential real estate 65,721 21.2 64,240 21.0 1,481 2.3
Home equity lines 18,557 6.0 18,864 6.2 (307) (1.6)
Consumer loans 13,889 4.5 14,377 4.7 (488) (3.4)
Credit cards 642 0.2 658 0.2 (16) (2.4)
--------- ----- ------------ ----- --------- -----
$ 310,070 100.0% $ 305,439 100.0% $ 4,631 1.5%
========= ===== ============ ===== ========= =====
*Approximately $12 million of the commercial and industrial loan portfolio was
reclassified as commercial real estate loans as discussed above.
13
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
A summary of nonperforming assets is as follows:
March 31, December 31,
2005 2004
-------- -----------
(Dollars in thousands)
Nonaccrual loans:
Commercial real estate $ -- $ 220
Commercial and industrial 58 305
Residential real estate 246 16
Home equity lines -- --
Consumer loans -- --
Credit cards -- --
-------- -----------
Total nonaccrual loans 304 541
Accruing loans delinquent more than 90 days:
Commercial real estate $ -- $ --
Commercial and industrial -- --
Residential real estate 162 100
Home equity lines -- --
Consumer loans 28 124
Credit cards 1 10
-------- -----------
Total accruing loans delinquent more than 90 days 191 234
-------- -----------
Total nonperforming loans 495 775
Other real estate owned
Commercial real estate 681 681
Residential real estate 16 --
-------- -----------
Total other real estate owned 697 681
-------- -----------
Total nonperforming assets $ 1,192 $ 1,456
======== ===========
Total nonperforming loans as a percentage of
total loans 0.16% 0.25%
======== ===========
Total nonperforming assets as a percentage
of total assets 0.29% 0.37%
======== ===========
At March 31, 2005, nonperforming loans totaled $495,000 compared to $775,000 at
December 31, 2004, a decrease of $280,000. The largest portion of the decrease
was attributable to a decrease in nonaccrual loans of $237,000. This was due to
the payoffs of two commercial loans. Total nonperforming loans represented 0.16%
of the total portfolio loans as of March 31, 2005 which is a decrease from
December 31, 2004 at 0.25%. The balance of other real estate owned at March 31,
2005 was $697,000 relatively unchanged from December 31, 2004.
14
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows an analysis of the allowance for credit losses:
March 31, December 31,
2005 2004
--------- ------------
(Dollars in thousands)
Balance as beginning of the period $ 3,377 $ 3,573
Charge-offs:
Commercial real estate -- --
Commercial and industrial 47 2,040
Residential real estate 18 61
Home equity lines -- --
Consumer loans 28 71
Credit cards 1 44
-------- -----------
Total charge-offs $ 94 $ 2,216
-------- -----------
Recoveries:
Commercial real estate -- --
Commercial and industrial 47 1
Residential real estate -- --
Home equity lines -- --
Consumer loans 5 18
Credit cards 1 1
-------- -----------
Total recoveries $ 53 $ 20
-------- -----------
Net charge-offs 41 2,196
-------- -----------
Provision charged to earnings 100 2,000
-------- -----------
Balance at end of the period $ 3,436 $ 3,377
======== ===========
As a percentage of total portfolio loans 1.11% 1.11%
The allowance for credit losses as a percentage of total loans remaining
relatively unchanged at March 31, 2005, compared to December 31, 2004. The
allowance for credit losses as a percentage of nonperforming loans was 694.1% at
March 31, 2005. The loan portfolio has been reviewed and analyzed for the
purpose of estimating probable credit losses inherent in the loan portfolio. The
Corporation performs a detailed quarterly review of the allowance for credit
losses. The Corporation evaluates those loans classified as substandard, under
its internal risk rating system, on an individual basis for impairment under
SFAS 114. The level and allocation of the allowance is determined primarily on
management's evaluation of collateral value, less the cost of disposal, for
loans reviewed in this category. The remainder of the total loan portfolio is
segmented into homogeneous loan pools with similar risk characteristics for
evaluation under SFAS 5. The Corporation uses such factors such as, historical
portfolio losses, national and local economic trends and levels of delinquency
to determine the appropriate level and allocation of the allowance for loans in
this grouping. The Corporation's policy dictates that specifically identified
credit losses be recognized immediately by a charge to the allowance for credit
losses. Management believes that the present allowance is adequate, based on the
broad range of considerations listed above.
Although management believes that the allowance for credit losses is adequate to
absorb losses as they arise, there can be no assurance that the Corporation will
not sustain losses in any given period that could be substantial in relation to
the size of the allowance for credit losses.
15
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
LIABILITIES
During the three months ended March 31, 2005, total deposits increased $14.8
million to $293.7 million. The increase in deposits was attributable to
increases in certificates of deposit, which increased $15.0 million. Noninterest
bearing demand deposits and savings increased $4.7 million and $2.7 million,
respectively. This was offset by decreases in money market and NOW accounts of
$7.7 million. The decrease in money market balances was attributable to seasonal
factors and the current competitive rate environment.
The largest segment of deposit growth occurred in brokered certificates of
deposit, which increased $10.5 million during the first quarter. Brokered
certificates totaled $60.6 million at March 31, 2005. Internet certificates of
deposit totaled $28.2 million at March 31, 2005 increasing $594,000 from
December 31, 2004. Local municipal time deposits totaled $46.4 million at March
31, 2005, which was a decrease of $902,000 from December 31, 2004.
The major components of deposits are as follows:
March 31, Percentage December 31, Percentage Net Net
2005 of total deposits 2004 of total deposits Change Change %
--------- ----------------- ------------ ----------------- -------- --------
(Dollars in Thousands)
Noninterest bearing demand $ 36,805 12.5% $ 32,080 11.5% $ 4,725 14.7%
NOW accounts-interest
Bearing checking 11,910 4.1 12,575 4.5 (665) (5.3)
Money market 20,804 7.1 27,871 10.0 (7,067) (25.4)
Savings 23,288 7.9 20,539 7.4 2,749 13.4
Time deposits under $100,000 61,610 21.0 60,375 21.6 1,235 2.0
Time deposits $100,000 and
Over 139,220 47.4 125,416 45.0 13,804 11.0
--------- ------ ------------ ------ -------- ------
Total deposits 293,637 100.00% 278,856 100.0% 14,781 5.3%
========= ====== ============ ====== ======== ======
16
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
Short term borrowings at March 31, 2005 consisted of short term FHLB advances of
$24.0 million and securities sold with an agreement to repurchase them the
following day of $9.5 million. Following are details of our short term
borrowings for the dates indicated:
March 31, December 31,
2005 2004
--------- ------------
(Dollars in thousands)
Amount outstanding at end of period
Repurchase agreements $ 9,530 $ 11,492
Short-term FHLB advances $ 24,000 $ 17,000
Weighted average interest rate on ending balance
Repurchase agreements 1.50% 1.00%
Short-term FHLB advances 2.65% 2.23%
Maximum amount outstanding at any month end
during the period
Repurchase agreements $ 10,039 $ 24,995
Short-term FHLB advances $ 41,360 $ 17,000
In June 2001, the Corporation started to borrow long-term advances from the FHLB
to fund fixed rate instruments and to minimize the interest rate risk associated
with certain fixed rate mortgage instruments and investment securities. These
advances are secured under a blanket security agreement by first mortgage loans
and the pledging of certain securities. Long-term advances comprised twenty-six
advances with maturities from July 2006 to December 2012.
FHLB advances outstanding at March 31, 2005 were as follows:
Ending Average rate
Balance at end of period
-------- ----------------
(Dollars in thousands)
Short-term FHLB advances $ 24,000 2.65%
Long-term FHLB advances 41,360 4.09%
-------- ----
$ 65,360 3.56%
17
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
LIQUIDITY AND CAPITAL RESOURCES
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 risk 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. The major sources of
liquidity for the Bank 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 $22.5 million in available unsecured
federal funds borrowing facilities, and a $75.0 million secured line of credit
with the FHLB. 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. We anticipate that we will have sufficient
funds available to meet our future commitments. As of March 31, 2005, unused
commitments comprised $76.2 million. The Bank has $144.6 million in time
deposits coming due within the next twelve months from March 31, 2005. At March
31, 2005, the Bank had $60.6 million in brokered certificates of deposit, of
which $38.3 million is due within one year or less. Additionally, at March 31,
2005, municipal time deposits and internet time deposits were $45.4 million and
$46.3 million, respectively. Municipal time deposits typically have maturities
less than three months. $23.7 million of internet certificates of deposit mature
in one year or less. On February 15, 2005, the Corporation's Board of Directors
declared the Corporation's twelfth consecutive quarterly cash dividend of $0.05
per common share, payable April 1, 2005, to shareholders of record March 1,
2005.
Following are selected capital ratios for the Corporation and the Bank as of the
dates indicated, along with the minimum regulatory capital 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.
March 31, December 31, Minimum Ratio
2005 2004 for Capital
--------------- --------------- Adequacy Ratio to be
Capital Ratio Capital Ratio Purposes "Well Capitalized"
------- ------ ------- ------ ------------- ------------------
Total capital to risk-weighted assets
Consolidated $44,135 14.26% $38,177 12.58% 8% 10%
Bank only 37,113 12.02% 36,349 12.00% 8% 10%
Tier I capital to risk-weighted assets
Consolidated $40,699 13.15% $33,068 10.90% 4% 6%
Bank only 33,667 10.91% 32,972 10.89% 4% 6%
Tier I capital to average assets
Consolidated $40,699 10.18% $33,068 8.47% 4% NA
Bank only 33,667 8.45% 32,972 8.47% 4% 5%
Management believes that the current capital position as well as net income from
operations, loan repayments and other sources of funds will be adequate to meet
our short and long term liquidity needs.
18
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table shows the changes in stockholders' equity for the three
months ended March 31, 2005:
Unearned Accumulated Other
Common Retained Employee Comprehensive Total
Stock Earnings Benefits Income/(Loss) Equity
-------- -------- -------- ----------------- --------
Beginning balance, January 1 $ 20,774 $ 5,111 ($ 205) ($ 89) $ 25,591
Cash dividend -- (162) -- -- (162)
Stock option exercise/stock awards 7 -- -- -- 7
Rights offering 5,275 -- -- -- 5,275
Net income -- 752 -- -- 752
Release of ESOP shares -- -- 13 -- 13
Change in unrealized gain/loss -- -- -- (371) (371)
-------- -------- -------- -------- --------
Balance March 31, 2005 $ 26,056 $ 5,701 ($ 192) ($ 460) $ 31,105
======== ======== ======== ======== ========
NET INTEREST INCOME
For the quarter ended March 31, 2005, net interest income increased by 12.3%, or
$340,000, over the first quarter of 2004. This increase was primarily
attributable to an expanded interest earning asset base, which was aided by an
increased net interest margin. The net interest margin increased primarily from
the increase in short term market interest rates and the corresponding increase
in the yield on prime sensitive loans contained in the commercial real estate
and commercial and industrial portfolios, when comparing the quarterly period of
March 31, 2005 compared to the quarterly period March 31, 2004. The Corporation
had approximately $148.0 million in loans that could reprice within three months
as of March 31, 2005. The net interest margin on a fully taxable equivalent
basis increased for the first quarter of 2005 to 3.34% compared to the first
quarter of 2004 at 3.19%.
19
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
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.
Three Months Ended
March 31, 2005 vs. 2004
-------------------------
Increase (Decrease)
Due to Changes In
------------------
Volume
Total and Both Rate
----- -------- ------
(In thousands)
Earning Assets - Interest Income
Loans $ 674 $ 309 $ 365
Securities 61 41 20
Federal funds sold 24 1 23
----- ----- ------
Total 759 351 408
----- ----- ------
Deposits and Borrowed Funds - Interest Expense
NOW and money market accounts (1) (13) 12
Savings deposits 81 63 18
Time deposits 173 48 125
FHLB advances and repurchase agreements 128 46 82
ESOP loan interest expense -- (1) 1
Subordinated debentures 38 -- 38
----- ----- ------
Total 419 143 276
----- ----- ------
Net Interest Income $ 340 $ 208 $ 132
===== ===== ======
20
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 nine month periods ended March 31, 2005 and 2004.
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 March 31,
--------------------------------------------------------
2005 2004
--------------------------------------------------------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
-------- -------- ------- -------- -------- -------
(In thousands)
Assets
Loans $311,301 $ 4,821 6.19% $291,751 $ 4,147 5.69%
Securities 58,305 560 3.84 54,051 499 3.69
Federal funds sold 7,682 46 2.40 7,489 22 1.18
-------- -------- ---- -------- -------- ----
Total Earning Assets/
Total Interest Income 377,288 5,427 5.75 353,291 4,668 5.29
-------- -------- ---- -------- -------- ----
Cash and due from banks 6,758 6,756
All other assets 16,623 12,466
-------- --------
Total Assets $400,669 $372,513
======== ========
Liabilities and Equity
NOW and money market accounts $ 37,915 106 1.12 $ 42,527 107 1.01
Savings deposits 22,012 106 1.93 8,905 25 1.12
Time deposits 190,946 1,342 2.81 184,259 1,169 2.54
FHLB advances and repurchase agreements 74,317 602 3.24 68,564 474 2.77
ESOP loan 200 3 6.00 264 3 4.55
Subordinated debentures 10,310 165 6.40 10,000 127 5.08
-------- -------- ---- -------- -------- ----
Total Interest Bearing Liabilities/
Total Interest Expense / Interest Rate Spread 335,700 2,324 2.77 314,519 1,905 2.42
-------- -------- ---- -------- -------- ----
Noninterest bearing demand deposits 34,838 32,525
All other liabilities 1,617 1,386
Stockholders' equity 28,514 24,083
-------- --------
Total Liabilities and Stockholder's Equity $400,669 $372,513
======== ========
Net Interest Income $ 3,103 $ 2,763
======== ========
Net Interest Margin (Net Interest
Income/Total Earning Assets) 3.29% 3.13%
==== ====
Net Interest Margin
(fully taxable equivalent) 3.34% 3.19%
==== ====
21
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PROVISION FOR CREDIT LOSSES
The provision for credit losses for the three months ended March 31, 2005 was
$100,000, which was a decrease of $25,000 from the three months ended March 31,
2004 and was due in part to favorable trends in credit quality. The provision
was made based on the overall detailed quarterly review of the allowance for
credit losses. Net loan charge offs for the first quarter of 2005 were $41,000
and represented 1 basis point of the total loan portfolio on an annualized
basis.
NONINTEREST INCOME
Noninterest income of $946,000 for the three months ended March 31, 2005
decreased by $652,000, or 40.8%, compared to the first three months of 2004. The
largest component of noninterest income is mortgage banking income. Mortgage
banking income decreased $552,000, or 44.0%, for the first quarter of 2005
compared to the first quarter of 2004. The decrease in mortgage banking income
was the result of a decrease in gains on the sale of mortgage loans, which was
attributable to lower volumes of residential mortgage loan sales as compared to
the same period a year ago. Service charge income of $70,000, and other
noninterest income of $144,000 increased 2.9% and 3.6%, respectively from
quarter to quarter. Net security gains of $30,000 for the first quarter 2005
were the result of security restructuring activities and were down from the
$137,000 in net security gains from the first quarter of 2004, due in part to
the increase in overall market interest rates.
NONINTEREST EXPENSE
Noninterest expense in the first quarter of 2005 was $2.9 million, a decrease of
$598,000 from the first quarter of 2004, or 17.1%. The total decrease in
noninterest expense was primarily associated with reductions in cost associated
with residential mortgage activity. Salaries, benefits, and payroll taxes for
the first quarter of 2005 were $1.8 million, which decreased 5.6% due to lower
commission expense associated with lower mortgage origination activity. Net
occupancy expense of $356,000 remained relatively unchanged, decreasing $5,000
or 1.4%. A decrease in occupancy expense was related to the closing of two
mortgage branch origination offices, but was partially offset by higher costs in
other branch locations and administrative offices primarily as a result of cost
of living adjustments. Other operating expense of $779,000 for the first quarter
of 2005, decreased $488,000 due to cost reductions associated with reduced level
of mortgage banking operations including marketing, promotional, office supplies
and other general and administrative costs.
PROVISION FOR INCOME TAXES
The provision of federal income taxes of $308,000 for the quarter ended March
31, 2005 increased $107,000, or 53.2% over the first quarter of 2004. The
increase in the federal income tax provision was due to a 41.5% increase in
pretax income, but also due to a higher effective tax rate over the respective
periods. The higher effective tax rate was attributable to comparative level
investments in bank qualified tax-exempt securities and bank owned life
insurance for the first quarter of 2005 compared to 2004, versus an increasing
taxable income base.
22
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
ASSET/LIABILITY MANAGEMENT
The Asset Liability Management Committee ("ALCO"), which meets at least
quarterly, is responsible for reviewing interest rate sensitivity position and
establishing policies to monitor and limit exposure to interest rate risk.
Currently two quantitative tools are used 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 our
exposure to interest rate risk.
Static gap analysis measures the difference between the assets and liabilities
repricing or maturing within specific time periods. An asset-sensitive position
indicates that there are more rate-sensitive assets than rate-sensitive
liabilities repricing or maturing within specific time periods, which would
generally imply a favorable impact on net interest income in periods of rising
interest rates and a negative impact in periods of falling rates. A
liability-sensitive position would generally imply a negative impact on net
interest income in periods of rising rates and a positive impact in periods of
falling rates.
Static gap analysis has limitations because it cannot measure precisely the
effect of interest rate movements and competitive pressures on the repricing and
maturity characteristics of interest-earning assets and interest-bearing
liabilities. In addition, a significant portion of our adjustable-rate assets
have limits on their maximum yield, whereas most of our interest-bearing
liabilities are not subject to these limitations. As a result, certain assets
and liabilities indicated as repricing within a stated period may in fact
reprice at different times and at different volumes, and certain adjustable-rate
assets may reach their yield limits and not reprice.
23
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
The following table presents an analysis of our interest-sensitivity static gap
position at March 31, 2005. All interest-earning assets and interest-bearing
liabilities are shown based on the earlier of their contractual maturity or
repricing date adjusted by forecasted repayment and decay rates. Asset
prepayment and liability decay rates are selected after considering the current
rate environment, industry prepayment and decay rates and our historical
experience. At March 31, 2005, we are considered asset sensitive in the time
interval of the first three months. We are also considered to be slightly
liability sensitive at the one year accumulated gap position.
After Three After One
Within Months But Year But After
Three Within One Within Five
Months Year Five Years Years Total
--------- ----------- ---------- --------- ---------
(Dollars in thousands)
Interest earning assets:
Federal funds sold $ 6,800 $ -- $ -- $ -- $ 6,800
Securities 14,074 12,610 23,609 13,782 64,075
FHLB stock -- -- -- 3,281 3,281
Portfolio loans and
held for resale 148,761 22,967 102,844 38,187 312,759
--------- ----------- ---------- --------- ---------
Total 169,635 35,577 126,453 55,250 $ 386,915
--------- ----------- ---------- --------- =========
Interest bearing liabilities:
NOW and money market
accounts 2,647 13,024 17,043 -- $ 32,714
Savings deposits 2,329 6,754 14,205 -- 23,288
Jumbo time deposits 47,981 57,760 30,730 2,749 139,220
Time deposits < $100,000 8,318 30,587 22,705 -- 61,610
Repurchase agreements 9,530 -- -- -- 9,530
FHLB 16,000 6,000 31,350 12,000 65,350
ESOP payable 192 -- -- -- 192
Subordinated debentures 10,310 -- -- -- 10,310
--------- ----------- ---------- --------- ---------
Total 97,307 114,125 116,033 14,749 $ 342,214
--------- ----------- ---------- --------- =========
Interest rate sensitivity gap $ 72,328 ($ 78,548) $ 10,420 $ 40,501
Cumulative interest rate
sensitivity gap ($ 6,220) $ 4,200 $ 44,701
Interest rate sensitivity gap
ratio 1.74 (0.31) 1.09 3.75
Cumulative interest rate
sensitivity gap ratio (0.97) 1.01 1.13
We also evaluates interest rate risk using a simulation model. The use of
simulation models to assess interest rate risk is an accepted industry practice,
and the results of the analysis are useful in assessing the vulnerability of our
net interest income to changes in interest rates. However, the assumptions used
in the model are oversimplifications and not necessarily representative of the
actual impact of interest rate changes. The simulation model assesses the
direction and magnitude of variations in net interest income resulting from
potential changes in market interest rates. Key assumptions in the model include
prepayment speeds of various loan and investment assets; cash flows and
maturities of interest-sensitive assets and liabilities, and changes in market
conditions impacting loan and deposit volumes and pricing. These assumptions are
inherently uncertain, and subject to fluctuation and revision in a dynamic
environment. Therefore, the model cannot precisely estimate future net interest
income or exactly predict the impact of higher or lower interest rates. Actual
results may differ from simulated results due to the timing, magnitude, and
frequency of interest rate changes, changes in market conditions, management's
pricing decisions, and customer reactions to those decisions, among other
factors.
24
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
On a quarterly basis, the net interest income simulation model is used to
quantify the effects of hypothetical changes in interest rates on the Bank'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 December 31, 2004 the table below, based on the most recent and available
analysis, reflects the impact the various instantaneous parallel shifts in the
yield curve would have on net interest income over a twelve month period of time
from the base forecast.
Percentage Change
Interest Rate Scenario In Net Interest Income
---------------------- ----------------------
Interest rates up 300 basis points 3.24%
Interest rates up 200 basis points 2.70%
Interest rates up 100 basis points 1.64%
Base case --
Interest rates down 100 basis points (2.00%)
Interest rates down 200 basis points (1.76%)
Interest rates down 300 basis points (3.46%)
ITEM 3. CONTROLS AND PROCEDURES
An evaluation of the Corporation's disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Securities and Exchange Act of 1934 ("Act")) as
of March 31, 2005, was carried out under the supervision and with the
participation of the Corporation's Chief Executive Officer, Chief Financial
Officer and several other members of the Corporation's senior management. The
Corporation's Chief Executive Officer and Chief Financial Officer concluded that
the Corporation's disclosure controls and procedures as currently in effect are
effective in ensuring that the information required to be disclosed by the
Corporation in the reports it files or submits under the Act is (i) accumulated
and communicated to the Corporation's management (including the Chief Executive
Officer and Chief Financial Officer) in a timely manner, and (ii) recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms.
There have been no changes in our internal control over financial reporting (as
defined in Rule 13a -- 15(f) of the Act) that occurred during the quarter ended
March 31, 2005, that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
The Corporation intends to continually review and evaluate the design and
effectiveness of its disclosure controls and procedures and to improve its
controls and procedures over time and to correct any deficiencies that it may
discover in the future. The goal is to ensure that senior management has timely
access to all material non-financial information concerning the Corporation's
business. While the Corporation believes the present design of its disclosure
controls and procedures is effective to achieve its goal, future events
affecting its business may cause the Corporation to modify its disclosures and
procedures.
25
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
PART II
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY 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.
Cash Dividend - On February 15, 2005, the Corporation's Board of Directors
declared the Corporation's twelfth quarterly cash dividend of $0.05 per common
share, payable April 1, 2005, to shareholders of record March 1, 2005.
Stock Dividend - On April 19, 2005, the Corporation's Board of Directors
declared a 5% stock dividend payable June 1, 2005, to shareholder of record May
2, 2005.
ITEM 6. EXHIBITS.
See Exhibit Index attached.
26
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 May 13, 2005.
COMMUNITY CENTRAL BANK CORPORATION
By: /S/ DAVID A. WIDLAK
----------------------------------------
David A. Widlak;
President and CEO
(Principal Executive Officer)
By: /S/ RAY T. COLONIUS
----------------------------------------
Ray T. Colonius;
Treasurer
(Principal Financial and Accounting Officer)
27
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 (SEC
File No. 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 Quarterly Report on Form 10-QSB filed with
the SEC for the quarter ended June 30, 2004 (SEC File No. 000-33373)
4.1 Specimen of Stock Certificate of Community Central Bank Corporation
is incorporated by reference to Exhibit 4.2 of the Corporation's
Registration Statement on Form SB-2 (SEC File No. 333-04113) which
became effective on September 23, 1996
10.1 1996 Employee Stock Option Plan is incorporated by reference to
Exhibit 10.1 of the Corporation's Registration Statement on Form
SB-2 (SEC File No. 333-04113) which became effective September 23,
1996
10.2 1996 Stock Option Plan for Nonemployee Directors is incorporated by
reference to Exhibit 10.2 of the Corporation's Registration
Statement on Form SB-2 (SEC File No. 333-04113) which became
effective September 23, 1996
10.3 1999 Stock Option Plan for Directors in incorporated by reference to
Exhibit 10.5 of the Corporation's Annual Report filed with the SEC
on Form 10-KSB for the year ended December 31, 1999 (SEC File No.
000-33373)
10.4 2000 Employee Stock Option Plan is incorporated by reference to
Exhibit 10.6 of the Corporation's Annual Report filed with the SEC
on Form 10-KSB for the year ended December 31, 2000 (SEC File No.
000-33373)
10.5 2002 Incentive Plan is incorporated by reference to Exhibit 10.7 of
the Corporation's Annual Report filed with the SEC on Form 10-KSB
for the year ended December 31, 2001 (SEC File No. 000-33373)
10.6 Community Central Bank Supplemental Executive Retirement Plan is
incorporated by reference to Exhibit 10.6 of the Corporation's
Quarterly Report on Form 10-QSB filed with the SEC for the quarter
ended June 20, 3003 (SEC File No. 000-33373)
10.7 Community Central Bank Death Benefit Plan is incorporated by
reference to Exhibit 10.7 of the Corporation's Quarterly Report on
Form 10-QSB filed with the SEC for the quarter ended June 20, 3003
(SEC File No. 000-33373)
10.8 Form of Incentive Stock Option Agreement incorporated by reference
to Exhibit 99.1 of the Corporation's Current Report on Form 8-K
filed with the SEC on March 25, 2005. (SEC File No. 000-33373)
10.9 Summary of Named Executive Officer Salary and Bonus Arrangements is
incorporated by reference to Exhibit 10.9 of the Corporation's
Annual Report filed with the SEC on Form 10-KSB for the year ended
December 31, 2004. (SEC File No. 000-33373)
28
COMMUNITY CENTRAL BANK CORPORATION
FORM 10-QSB (continued)
10.10 Summary of Current Director Fee Arrangements is incorporated by
reference to Exhibit 10.10 of the Corporation's Annual Report filed
with the SEC on Form 10-KSB for the year ended December 31, 2004.
(SEC File No. 000-33373)
11 Computation of Per Share Earnings
31.1 Rule 13a - 14(a) Certification (Chief Executive Officer)
31.2 Rule 13a - 14(a) Certification (Chief Financial Officer)
32 Rule 1350 Certifications
29