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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 10 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission files number 0-17482
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from _____ to ______
County Bank Corp
Michigan EIN 38-0746239
83 W. Nepessing St. Lapeer, MI 48446
(810) 664-2977
Securities registered pursuant to section 12(b) of the act: none
Securities registered pursuant to 12(g) of the Act:
3,000,000 shares, common stock, $5.00 par value
Indicate by check mark 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 X No
The aggregate market value of the voting shares of stock held by nonaffiliates
of the registrant was $40,519,882.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
There are 1,186,472 shares of common stock ($5.00 par value) outstanding as of
December 31, 2000.
The following documents are incorporated into the 10-K by reference:
The Annual Report to Shareholders, December 31, 2000, Part I, Part II.
Proxy statement dated March 30, 2001, Part III.
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FORM 10-K
ITEM 1. BUSINESS
County Bank Corp, a one bank holding company, was formed on January 3, 1989 by
converting and exchanging, except for the shares of dissenting stockholders,
each share of Lapeer County Bank & Trust Co. (the Bank) into one share of County
Bank Corp (the Corporation). As a result, the Corporation became the sole
stockholder and parent of the Bank.
The Bank was chartered in 1902, is headquartered in Lapeer, MI, and serves all
of Lapeer County (the County) and portions of surrounding counties. Lapeer has
an approximate population of 6,500 people while the County has in excess of
75,000 people. Lapeer is located 60 miles north of metropolitan Detroit, the
largest city in Michigan, 30 miles north of Pontiac, MI, and 20 miles east of
Flint, MI.
The Corporation serves the County through the subsidiary Bank at eight
locations. The main office is located at 83 W. Nepessing St., in downtown
Lapeer. A drive through location is located at the corner of Pine St. and Clay
St. across from the main office. A full service office is located in the south
end of Lapeer at 637 S. Main St. Attica Township is served by a full service
office located at 4515 Imlay City Rd. Full service offices are located in Elba
Township at 5508 Davison Road and in Metamora Township on M-24, south of Lapeer.
A full service office serves the City of Imlay City at 1875 S. Cedar St., Imlay
City, MI. One automated teller machine (ATM) is located in Lapeer Regional
Hospital, 1375 N. Main St., Lapeer. One cash dispensing machine is located in
the lobby of Lapeer Cinemas at 1650 Demille Rd., Lapeer, MI. A full service
branch is located in Bryan's Market, a grocery store, at 6002 N. Lapeer Rd.,
North Branch, MI. One automated teller machine is located in the Whistle Stop
Party Store at 3670 North Branch Rd., North Branch, MI.
The Corporation offers commercial banking services through the Bank at the main
office and the six branches throughout the County. The customer base extends to
all sections of the County and includes all segments of the population,
including individuals, retail businesses, farming operations, and industrial
plants. This locally-owned full service bank offers all traditional deposit and
loan services. The trust department, with full trust powers, is in its third
decade of providing customers with employee benefit plans, estate planning
services, and complete trust services.
The Corporation faces substantial competition for financial services. Our chief
competitor is National City Bank of Michigan/Illinois. National City operates
branches throughout the County. Independent Bank Corp. of Ionia, MI operates
three branch locations in the Bank's market area and a loan production office in
a Lapeer shopping center. NBD Bank operates an office north of the city limits
of Lapeer. Tri-County Bank has offices in Imlay City and Almont. CSB Bank of
Capac has an office in Imlay City and Almont. Oxford Bank operates a branch in
Dryden. There are two offices of Citizen's Federal Savings and Loan in the
County. Two credit unions, Lapeer County School Employees Credit Union and The
Lapeer County Community Credit Union, which operates offices in Lapeer and Imlay
City, serve the County. There are three securities brokers, First of Michigan
Corp., Paine Webber & Co. and Edward D. Jones & Co. A number of other securities
brokers serve the County through Flint offices. Comerica Bank operates a
Comerimart branch in a local grocery store. The local telephone book lists ten
financial planners, six investment brokers, and thirty-three mortgage brokers.
The Corporation is regulated by the Board of Governors of the Federal Reserve
System pursuant to the terms of the Bank Holding Company Act of 1956. This act
requires the approval of the Federal Reserve Board before the Corporation may
acquire or merge with any other banking institution, limits the activities that
the Corporation may engage in to activities so closely related to banking or
managing or controlling banks as to be a proper incident thereto, and prohibits
the Corporation from acquiring an interest in a bank located outside the state
in which the operations of its subsidiaries are principally conducted, unless
such acquisition is specifically authorized by the state in which the acquired
bank is located. In November 1985, the State of Michigan passed legislation to
allow interstate banking with neighboring states that also have laws that permit
interstate banking. The Corporation is obligated to comply with the regulations
of the Securities and Exchange Commission. As a state member institution, the
Bank is obligated to comply with
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the regulations of the Federal Reserve Board and the regulations of the Office
of Financial and Insurance Services (OFIS) of the State of Michigan. The OFIS of
the State of Michigan has the authority to examine and regulated the Bank and
works closely with the Federal Reserve Bank of Chicago coordinating alternate
examinations of the Bank. The OFIS has the authority to issue cease and desist
orders against unsafe and unsound banking practices, and the authority to close
a bank in the event it should become insolvent. In addition, the Bank's business
is directly affected by the monetary policies of the Board of Governors of the
Federal Reserve System. The Federal Deposit Insurance Corporation insures the
Bank's deposits.
The Federal Deposit Insurance Corporation Act of 1991 creates a new statutory
framework that applies to every insured depository institution a system of
supervisory actions indexed to the capital level of the individual institution.
The purpose of the provision is to resolve the problems of insured depository
institutions at the least possible long term loss to the deposit insurance fund.
Five capital categories have been established from well capitalized to
critically under capitalized. Each category below well capitalized brings an
increasing number of supervisory actions intended to strengthen the institution.
These actions range from limitations on the acceptance of brokered deposits to
requiring dismissal of management, divestiture of institutions by the parent,
approval of capital distributions, and more. In addition, regulatory authority
is expanded by the development of operation and management standards, review of
executive compensation, increased accounting principles, and increased
dependence on audit committees.
The number of full time equivalent employees totaled 120 and 124 on December 31,
2000 and 1999, respectively.
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Guide 3. Statistical disclosures:
I. Distribution of Assets, Liabilities and Stockholders' Equity; Interest
Rates and Interest (000's)
Table I. Average Assets (000's) Income (000's) Yield (%)
2000 1999 1998 2000 1999 1998 2000 1999 1998
Assets
Securities:
US Gov't & agencies ....................... $ 28,247 $ 29,819 $ 27,786 $ 1,854 $ 1,788 $ 1,792 6.6% 6.0% 6.4%
State and political subdivisions* ......... 22,826 20,672 17,898 1,708 1,598 1,392 7.5% 7.7% 7.8%
Other securities .......................... 1,346 1,605 1,516 53 49 47 3.9% 3.1% 3.1%
-------- -------- -------- -------- -------- -------- ------ ------ -----
Total investment securities ............... 52,419 52,096 47,200 3,615 3,435 3,231 6.9% 6.6% 6.8%
Federal funds sold ........................ 6,748 8,512 8,160 430 419 429 6.4% 4.9% 5.3%
Loans:
Commercial loans* ......................... 79,365 65,578 55,943 7,280 5,668 5,071 9.2% 8.6% 9.1%
Real estate mortgages ..................... 30,003 32,994 35,845 2,361 2,435 2,972 7.9% 7.4% 8.3%
Consumer loans ............................ 28,345 28,843 29,969 2,550 2,703 2,653 9.0% 9.4% 8.9%
-------- -------- -------- -------- -------- -------- ------ ------ -----
Total loans ............................... 137,713 127,415 121,757 12,191 10,806 10,696 8.9% 8.5% 8.8%
-------- -------- -------- -------- -------- -------- ------ ------ -----
Total average earning assets .............. $196,880 $187,645 $177,117 16,236 14,660 14,356 8.2% 7.8% 8.1%
======== ======== ======== -------- -------- -------- ------ ------ -----
Total average assets ...................... $212,993 $202,995 $189,729
======== ======== ========
Interest bearing liabilities:
Deposits:
NOW account deposits ...................... 60,283 50,200 46,084 2,541 1,642 1,550 4.2% 3.3% 3.4%
Savings deposits .......................... 39,847 42,891 41,210 1,069 1,150 1,202 2.7% 2.7% 2.9%
Time deposits over $100,000 ............... 8,703 8,515 6,326 510 439 352 5.9% 5.2% 5.6%
Other time deposits ....................... 43,200 42,330 42,249 2,339 2,142 2,251 5.4% 5.1% 5.3%
-------- -------- -------- -------- -------- ------- ------ ------ -----
Total deposits ............................ 152,033 143,936 135,869 6,459 5,373 5,355 4.2% 3.7% 3.9%
Federal funds purchased ................... 12 0 35 1 0 2 0.0% 0.0% 5.7%
Long-term debt ............................ 0 0 0 0 0 0 0.0% 0.0% 0.0%
-------- -------- -------- -------- -------- ------- ------ ------ -----
Total interest bearing liabilities ........ 152,045 143,936 135,904 6,460 5,373 5,357 4.2% 3.7% 3.9%
-------- -------- ------- ------ ------ -----
Demand deposits 34,429 34,014 30,238
Other liabilities 1,585 1,805 1,888
Stockholders' equity 24,934 23,240 21,699
--------- ------- --------
Total liabilities and $212,993 $202,995 $189,729
stockholders' equity ========= ========= ========
Interest expense as a % of average earning 3.3% 3.3% 3.3%
assets ---- ---- ----
Net interest margin/net interest yield as $9,776 $9,287 $8,999 5.0% 4.9% 5.1%
a % of average earning assets ======= ======== ====== ==== ==== ====
Net interest yield as a % of average assets 4.6% 4.6% 4.7%
==== ==== ====
* A tax adjustment of $659, $653, and $514 has been added to 2000, 1999 and
1998 income respectively to reflect the impact of a 34% Federal income tax
rate in each year. Non accruing loans are reported in their related
categories and reduce the related yields.
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Table II. The dollar amounts of changes in interest income and interest expense
are presented in the accompanying table. The change in volume is calculated by
multiplying the change in volume by the old rate. The change in rate is
calculated by multiplying the change in rate by the old volume. The change in
rate volume is calculated by multiplying the change in rate by the change in
volume.
Rate/volume variance
analysis
2000 vs 1999 1999 vs 1998
---------------------------------------- ----------------------------------------
Change Change Change Total Change Change Change Total
in in in in in in
Volume Rate Rate/volume Volume Rate Rate/volume
Assets
Securities:
US Gov't & agencies ($94) $169 ($9) $66 $131 ($126) ($9) ($4)
State and political subdivisions* 167 (51) (6) 110 216 (9) (1) 206
Other securities (8) 14 (2) 4 3 (1) 0 2
------- ------- ------- ------- ------- ------- ------- -------
Total investment securities 65 132 (17) 180 350 (136) (10) 204
Federal funds sold (87) 123 (25) 11 19 (27) (2) (10)
Loans:
Commercial loans* 1,192 347 73 1,612 873 (235) (41) 597
Real estate mortgages (221) 161 (14) (74) (236) (327) 26 (537)
Consumer loans (47) (108) 2 (153) (100) 156 (6) 50
------- ------- ------- ------- ------- ------- ------- -------
Total loans 924 400 61 1,385 537 (406) (21) 110
------- ------- ------- ------- ------- ------- ------- -------
Total average earning assets 902 655 19 1,576 906 (569) (33) 304
Interest bearing liabilities:
NOW account deposits 330 474 95 899 138 (43) (3) 92
Savings deposits (82) 1 0 (81) 49 (97) (4) (52)
Time deposits over $100,000 10 60 1 71 122 (26) (9) 87
Other time deposits 44 150 3 197 4 (113) 0 (109)
------- ------- ------- ------- ------- ------- ------- -------
Total deposits 302 685 99 1,086 313 (279) (16) 18
Federal funds purchased 0 0 1 1 (2) (2) 2 (2)
Long-term debt 0 0 0 0 0 0 0 0
------- ------- ------- ------- ------- ------- ------- -------
Total interest bearing liabilities 302 685 100 1,087 311 (281) (14) 16
------- ------- ------- ------- ------- ------- ------- -------
Net Interest Income $600 ($30) ($81) $489 $595 ($288) ($19) $288
======= ======= ======= ======= ======= ======= ======= =======
II. Investment Portfolio
A. Book values of the investment portfolio (000's)
2000 1999 1998
U.S. Treasury securities and obligations of
U.S. government corporations of agencies $18,789 $12,547 $11,042
Obligations of states and political subdivisions 25,260 21,600 19,392
Other securities 1,937 1,290 1,695
Mortgage backed securities 14,966 14,317 18,487
---------------------------
Total securities $60,952 $49,754 $50,616
===========================
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B. Maturity distribution of the Investment portfolio.
Book Value Yield (%)
(000's)
US Government securities
Maturity distribution:
One year or less $5,400 6.04
Over one year through five years 1,975 6.00
Over five years through ten years 11,414 7.11
Over ten years --
State and political subdivisions*
Maturity distribution:
One year or less 1,501 7.04
Over one year through five years 6,558 7.80
Over five years through ten years 10,574 7.42
Over ten years 6,627 7.51
Mortgage-backed securities 14,966 6.67
Other securities 1,396 2.73
III. Loan Portfolio
A. Types of loans
2000 1999 1998 1997 1996
Commercial $ 65,267 $ 64,547 $ 50,658 $ 54,069 $ 50,975
Real estate mortgage 28,184 31,502 35,457 39,332 32,696
Installment 27,561 27,625 28,322 27,141 30,968
Construction 15,963 10,977 5,738 3,062 2,835
-------- -------- -------- -------- --------
Total loans $136,975 $134,651 $120,175 $123,604 $117,474
======== ======== ======== ======== ========
B. Maturities and Sensitivities of Loans to Changes in Interest Rates as of
December 31, 2000 (000's).
Commercial Loans
Fixed rate loans with a maturity of:
Three months or less $493
Over three months through twelve months 7,603
One year through five years 28,331
Over five years 5,562
-------
Total fixed rate loans 41,989
Floating rate loans with a repricing frequency of:
Quarterly or more frequently 23,278
-------
Total commercial loans $65,267
=======
Real estate construction loans
Fixed rate loans with a maturity of:
Three months or less $666
Over three months through twelve months 5,979
One year through five years 908
-------
Total fixed rate loans 7,553
Floating rate loans with a repricing frequency of:
Quarterly or more frequently 8,410
-------
Total real estate construction loans $15,963
=======
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C. Risk Elements
1. Nonaccrual, Past Due, and Restructured Loans (000's)
12/31/00 12/31/99 12/31/98 12/31/97 12/31/96
Loans 90 days past due and still accruing
Commercial loans $ 5 $125 $174 $111 $12
Real estate loans 0 0 0 124 0
Installment loans 69 21 98 31 30
------- ------- ------- ---- ----
Total loans 90 days past due 74 146 272 266 42
======= ======= ======= ==== ====
Non accruing loans
Commercial loans 1,177 802 910 642 302
Real estate loans 163 87 45 170 0
Installment loans 225 128 197 82 23
------- ------- ------- ---- ----
Total non accruing loans $ 1,565 $ 1,017 $ 1,152 $894 $325
======= ======= ======= ==== ====
There were no restructured loans
For the year ended 2000, if the loans reported as nonaccrual had earned at the
contracted interest rate, $138,700 of interest income would have been recorded.
Interest income of $2,300 was recorded on these loans in 2000.
The Corporation places loans on a nonaccruing status when management feels that
a significant risk of non-repayment exists. Criteria for evaluating risk include
the borrowers' payment histories, past due status, and financial condition.
Loans on which the required payment of principal or interest has not been
received within 90 days of the due date are placed on nonaccrual status.
2. Potential Problem Loans
As of December 31, 2000, management identified three potential problem loans in
the commercial loan portfolio. The three loans totaled $362,000. Management
allocated $74,000 of the allowance for loan losses for these credits.
3. Foreign Outstandings
Not applicable
4. Loan concentrations
As of December 31, 2000, there were no loan concentrations other than those
categories already reported that exceed 10% of total loans.
D. Other Interest Bearing Assets
As of December 31, 2000, there was no other interest bearing asset that would
have been classified 90 days past due and still accruing if it were a loan.
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IV. Summary of Loan Loss Experience
A. Analysis of Allowance for Loan Losses (000's)
2000 1999 1998 1997 1996
Balance at beginning of the period $ 1,913 $ 1,881 $ 1,957 $ 1,805 $ 1,687
Charge offs:
Commercial 173 240 157 - 62
Real estate - - - - -
Installment 90 137 69 59 48
Construction - - - - -
--------------------------------------------------------------------
Total charge offs 263 377 226 59 110
Recoveries:
Commercial 42 68 10 63 72
Real estate - - - - -
Installment 19 21 20 28 36
Construction - - - - -
--------------------------------------------------------------------
Total recoveries 61 89 30 91 108
--------------------------------------------------------------------
Net charge offs 202 288 196 (32) 2
Provision charged to earnings 240 320 120 120 120
--------------------------------------------------------------------
Balance at the end of the period $ 1,951 $ 1,913 $ 1,881 $ 1,957 $ 1,805
====================================================================
Ratio of net charge offs during the 0.16% 0.23% 0.16% -0.03% 0.03%
period to average loans during the period
Net charged off loans totaled $202,000 for 2000. Two commercial loans accounted
for $112,000 of the net charged off loans. One loan was the result of the legal
resolution of a long standing collection effort and the second resulted from the
charge down of a loan to an appraised real estate value. Installment loans
charged off declined as a result of increased collection and underwriting
vigilance.
Net charged off loans totaled $288,000 for 1999. Charged off loans as a result
of consumer loan activity increased. Most losses resulted from deficiency
balances from repossessed collateral. One commercial loan resulted in a loss of
$150,000. The Bank expects to recover sum of this loss. The Bank allocated
$320,000 to the reserve for loan losses to replenish the reserve and maintain
the ratio of the reserve for loan losses to total loans in the face of strong
loan growth.
Net charged off loans totaled $196,000 in 1998. One borrower accounted for
$150,000 of the total charged off loans. Management allocated $120,000 from
earnings to maintain a strong reserve for loan losses to total loans ratio of
1.57%
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B. Allocation of the Allowance for Loan Losses (000's)
Real estate
Balances: Commercial Mortgage Installment Construction Unallocated Total
December 31, 2000 $653 $ 30 $159 $124 $985 $ 1,951
% of loans in category 47.6% 20.6% 20.1% 11.7% 100.0%
December 31, 1999 $492 $ 5 $135 $ - $ 1,281 $ 1,913
% of loans in category 47.9% 23.4% 20.5% 8.2% 100.0%
December 31, 1998 $276 $ - $ 73 $ - $ 1,532 $ 1,881
% of loans in category 42.1% 29.5% 23.6% 4.8% 100.0%
December 31, 1997 $179 $ - $ 48 $ - $ 1,730 $ 1,957
% of loans in category 43.7% 31.8% 22.0% 2.5% 100.0%
December 31, 1996 $181 $ - $ 35 $ - $ 1,589 $ 1,805
% of loans in category 43.4% 27.8% 26.4% 2.4% 100.0%
V. Deposits
A. Refer to Item I of the Guide 3 statistical disclosures for a presentation
of the information required by this item.
B. Not applicable
C. Not applicable
D. Maturities of time certificates of deposits of $100,000 or more. (000's)
Three months or less $ 3,850
Over three through six months 1,440
Over six months through twelve months 1,659
Over twelve months 2,334
-------
$ 9,283
=======
E. Not applicable
VI. Return on Equity and Assets
2000 1999 1998
Return on assets (%) 1.55 1.61 1.70
Return on equity (%) 13.20 14.10 14.80
Dividend payout ratio (%) 37.24 33.84 106.63
Equity to assets ratio (%) 11.79 11.45 11.44
VI. Short-term Borrowings
Not applicable
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ITEM 2. PROPERTY
The following is a tabulation of facilities owned by the Bank
App.
Building Date
Description/location Square Occupied
footage
Main office 34,948 9/15/02
83 W. Nepessing St.
Lapeer, MI
Elba Office 3,744 10/22/85
5508 Davison Rd.
Lapeer, MI
Pine-Clay office 528 1/5/68
305 Pine St.
Lapeer, MI
Southgate Office 1,700 11/2/70
637 S. Main St.
Lapeer, MI
Attica Office 4,158 6/27/79
4515 Imlay City Rd.
Attica, MI
Metamora Office 2,668 9/18/89
3414 S Lapeer Rd.
Metamora, MI
Imlay City Office 2,668 8/11/99
1875 S Cedar St.
Imlay City, MI
ITEM 3. LEGAL PROCEEDINGS
No material legal proceeding is pending to which the Corporation or the Bank is
the party, or of which any of their property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Refer to Page 16 of the accompanying Annual Report to Shareholders
ITEM 6. SELECTED FINANCIAL DATA
Refer to Page 15 of the accompanying Annual Report to Shareholders, except for:
(000's)
2000 1999 1998 1997 1996
Total Assets $ 225,258 $ 207,397 $ 197,486 $ 186,841 $ 177,786
Long Term Debt - - - - -
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS.
EARNINGS
Major components of the operating result of the Corporation for 2000, 1999 and
1998 are presented in the accompanying table, Summary of Operations. A
discussion of these results is presented in greater detail in subsequent pages.
Summary of Operations
2000 1999 1998 1997 1996
Interest income $ 15,578 $ 14,027 $ 13,826 $ 13,556 $ 12,666
Interest expense 6,460 5,373 5,355 5,162 4,823
-------- -------- -------- -------- --------
Net interest income 9,118 8,654 8,471 8,394 7,843
Provision for possible loan losses 240 320 120 120 120
-------- -------- -------- -------- --------
Net interest income after provision for
possible loan losses 8,878 8,334 8,351 8,274 7,723
Other income 2,245 2,597 2,283 2,166 2,216
Other expense 6,693 6,487 6,175 6,064 5,739
-------- -------- -------- -------- --------
Income before provision for Federal income tax 4,430 4,444 4,459 4,376 4,200
Provision for Federal income tax 1,129 1,166 1,239 1,215 1,220
-------- -------- -------- -------- --------
Net income $ 3,301 $ 3,278 $ 3,220 $ 3,161 $ 2,980
======== ======== ======== ======== ========
Per share:
Net income $ 2.78 $ 2.76 $ 2.71 $ 2.66 $ 2.51
======== ======== ======== ======== ========
Dividends declared $ 1.04 $ 0.94 $ 2.90 $ 0.85 $ 0.77
======== ======== ======== ======== ========
Summary of Operations 2000 by quarter
4th qtr 3rd qtr 2nd qtr 1st qtr
Interest income $ 4,116 $ 3,966 $ 3,828 $ 3,668
Interest expense 1,774 1,656 1,559 1,471
------- ------- ------- -------
Net interest income 2,342 2,310 2,269 2,197
Provision for possible loan losses 60 60 60 60
------- ------- ------- -------
Net interest income after provision for
possible loan losses 2,282 2,250 2,209 2,137
Other income 516 595 566 568
Other expense 1,611 1,686 1,723 1,673
------- ------- ------- -------
Income before provision for Federal income tax 1,187 1,159 1,052 1,032
Provision for Federal income tax 305 298 268 258
------- ------- ------- -------
Net income $882 $861 $784 $774
======= ======= ======= =======
Per share:
Net Income $ 0.74 $ 0.73 $ 0.66 $ 0.65
======= ======= ======= =======
Dividends declared $ 0.50 $ 0.18 $ 0.18 $ 0.18
======= ======= ======= =======
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Summary of Operations 1999 by quarter
4th qtr 3rd qtr 2nd qtr 1st qtr
Interest income $ 3,707 $ 3,528 $ 3,453 $ 3,339
Interest expense 1,414 1,365 1,303 1,291
------- ------- ------- -------
Net interest income 2,293 2,163 2,150 2,048
Provision for possible loan losses 230 30 30 30
------- ------- ------- -------
Net interest income after provision for
possible loan losses 2,063 2,133 2,120 2,018
Other income 752 601 659 585
Other expense 1,645 1,648 1,635 1,559
------- ------- ------- -------
Income before provision for Federal income tax 1,170 1,086 1,144 1,044
Provision for Federal income tax 305 282 306 273
------- ------- ------- -------
Net income $865 $804 $838 $771
======= ======= ======= =======
Per share:
Net Income $ 0.73 $ 0.68 $ 0.71 $ 0.65
======= ======= ======= =======
Dividends declared $ 0.46 $ 0.16 $ 0.16 $ 0.16
======= ======= ======= =======
Net interest income
The Bank experienced mild loan demand during 2000. Loans increased $2,526,000.
Growth was primarily in the commercial loan category. Increases in interest
bearing demand accounts totaled $15,119,000, while non-interest bearing demand
accounts totaled $1,207,000. The strong growth in interest bearing demand
accounts is attributed to customers keeping money in the Choice account, an
interest bearing demand account with a rate indexed to the thirteen week
Treasury Bill auction. This account was more attractive than many mutual funds
during 2000. Purchases of securities net of matured securities totaled
$10,265,000. Most securities were purchased in available for sale portfolio in
order to maintain liquidity and flexibility. The changes in the mix of assets
and liabilities resulted in the Corporation maintaining an interest margin on a
Federal tax equivalent (FTE) basis of 4.6%. The FTE adjustment in derived by
dividing the tax-exempt interest by .66 to reflect the Corporation's 34% tax
rate.
Rate sensitivity analysis (000's), December 31, 2000
Repricing period in days 0-30 31-90 91-180 181-365 0-365 Over 365
Rate sensitive assets (RSA):
Federal fund sold $9,950 $ - $ - $ - 9,950 $ -
Investment securities 9,919 210 1,615 17,494 29,238 31,713
Loans 36,479 1,398 4,332 8,530 50,739 86,237
--------- -------- -------- ------- -------- -------
Total rate sensitive assets 56,348 1,608 5,947 26,024 89,927 117,950
Rate sensitive liabilities (RSL):
Demand deposits 45,620 - 45,620 23,817
Savings deposits 19,503 - 19,503 18,683
Time deposits 5,331 8,061 9,877 9,800 33,069 19,928
--------- -------- -------- ------- -------- -------
Total rate sensitive liabilities 70,454 8,061 9,877 9,800 98,192 62,428
Repricing gap (RSA-RSL) ($14,106) ($6,453) ($3,930) $16,224 ($8,265) $55,522
========= ======== ======== ======= ======== =======
As a percent of capital -53.08% -24.28% -14.79% 61.05% -31.10% 208.93%
As a percent of total assets -6.26% -2.86% -1.74% 7.20% -3.67% 24.65%
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The preceding table represents management's analysis of repricing probabilities
for 2000. The Asset/liability management committee meets monthly to review the
impact of changes in rates and market pricing on the Corporation's interest
earning assets and interest paying liabilities. Customers' responses to interest
rates and deposit products are reviewed. Loan demand is discussed and methods to
answer customers needs are reviewed. The rate sensitivity of current production
of both loans and deposits are reviewed. Management's goal is to achieve a
balance between rate sensitive assets and rate sensitive liabilities in order to
maintain a reasonable interest margin in changing rate environments.
Income rate shock analysis, December 31, 2000
The difference in projected income assuming the following basis point change in
rates:
Changes in rates (bp's) -300 -200 -100 100 200 300
Change in cash flow $439 $292 $146 $(146) $(292) $(439)
As a percent of net int income 4.5% 3.0% 1.5% -1.5% -3.0% -5.0%
As a percent of net income 12.2% 8.2% 4.1% -4.1% -8.2% -12.2%
As a percent of net int income(FTE) 3.0% 2.0% 1.0% -1.0% -2.0% -3.0%
As a percent of net income (FTE) 8.1% 5.4% 2.7% -2.7% -5.4% -8.1%
The preceding table presents the difference in net income in the event of a real
and immediate change in rates from +/- 300 basis points (bp). It is based on the
previous table and is management's calculation based on management's assessment
of the most likely scenario as a response to such an event.
Provision for Possible Loan Losses
Management realizes that loan losses cannot be predicted with absolute
certainty. The Corporation adheres to a loan review procedure that identifies
loans that may develop into problem credits. The adequacy of the reserve for
possible loan losses is evaluated against the listings that result from the
review procedure, historical net loan loss experience, current and projected
loan volumes, the level and composition of nonaccrual, past due and renegotiated
or reduced rate loans, current and anticipated economic conditions and an
evaluation of each borrower's credit worthiness. Based on these factors,
management determines the amount of the provision for possible loan losses
needed to maintain an adequate reserve for possible loan losses. The amount of
the provision for possible loan losses needed to maintain an adequate reserve
for possible loan losses. The amount of the provision for possible loan losses
is recorded as current expense and may be greater or less than the actual net
charged off loans.
Activity related to the reserve for loan losses resulted in net charged off
loans of $202,000 in 2000. Net charged off loans recorded in 1999 were $288,000.
Provisions for possible loan losses were $240,000 in 2000 and $320,000 for 1999.
The ratio of reserve for possible loan losses to gross loans equaled 1.4%, 1.4%
and 1.6% in 2000, 1999 and 1998, respectively.
Non-interest income
Non-interest income is composed of trust department income, service charges on
deposit accounts, fees for providing other services to customers, gains on
securities sales and other income. Non-interest income decreased 13.5% during
2000. Trust income fell 2.5% as a result of declining market values in trust
accounts where fees are based on asset values. Gains on securities sold declined
$258,000 from an opportunity the Bank exercised in 1999. The Bank gained $80,000
on the sale of Other real estate in 1999, gains form the sale of Other real
estate total $3,000 in 2000.
Non-interest expense
Major components of non-interest expense are salaries and employee benefits,
occupancy and equipment expenses and other operating expenses. Salaries and
employee benefits increased 2.1% during 2000.
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Occupancy and equipment expenses declined 3.7% as a result of declines in
depreciation expenses on the data processing equipment and remodeling investment
made in 1997. Other expenses increased 10.4%. The Bank incurred one time
expenses for consultant and increased data processing costs as it researches and
prepares for Internet banking services.
FINANCIAL CONDITION
Average assets for the Corporation totaled $212,993,000, $202,995,000 and
$189,729,000 in 2000, 1999, and 1998 respectively. The 4.9% growth in average
assets follows a 7.0% growth in 1999 and a 4.7% average growth in 1998. Average
loans grew 8.0% while average interest bearing deposits grew 5.6%. Average
earning assets grew 4.9% compared to total deposit growth of 4.7%.
Liquidity
The anticipated requirements of the Corporation can be met by upstreaming
dividends from the subsidiary Bank. Refer to footnote 10 of the accompanying
financial statements for a discussion of the restrictions on undivided profits
of the subsidiary. The anticipated cash needs of the Corporation are for the
payment of annual dividends to current stockholders. Dividends upstreamed to the
Corporation were $1,234,000 in 2000 and $1,109,000 in 1999.
The estimated market value of U.S. Government securities and U.S. Agency
securities totaled 17.1% of total deposits on December 31, 2000. The percentage
for 1999 was 14.6%. The Corporation is able to meet normal demands for liquidity
through loan repayments, securities payments and deposit growth.
CAPITAL
The Corporation's return on average equity totaled 13.2% in 2000 and 14.1% in
1999. Effective December 31, 1992, the Corporation is required to maintain
capital in excess of 8% of risk-weighted assets as defined by the Federal
Reserve Board. The Corporation's capital to risk-weighted asset ratio was 19.0%
on December 31, 2000 and was 19.7% on December 31, 1999. Refer to footnote 13 of
the accompanying financial statements for a tabular presentation of the
Corporation's capital adequacy. At its March 17, 1999 meeting, the Board of
Directors declared a 100% stock dividend to stockholders of record March 28,
1999, payable April 20, 1999.
RISK FACTORS
The Federal Reserve Bank evaluates the Corporation on its management of risk
factors effecting the organization. These risks include credit, liquidity,
market, operational, fiduciary, legal and reputational. Credit, liquidity, and
market risk were discussed in earlier sections of this narrative. Legal matters
are discussed in ITEM 13. The Board of Directors discusses matters relating to
its reputation and performance in the community at its regular meetings and two
planning meetings held during the year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to Pages 3-13 of the accompanying Annual Report to Shareholders.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
The information called for the items within this part is included in County Bank
Corp's 2000 Proxy Statement and is incorporated herein by reference, as follows:
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
PAGE 3 EXCEPT FOR:
Executive Officers Ages Office Service
Curt Carter 56 Employee 34 years
Officer President 12 years
Present term 12 years
Bruce J. Cady 48 Employee 1 years
Officer Vice 1 years
President
Present term 1 years
Laird A. Kellie 56 Employee 18 years
Officer Secretary 12 years
Present term 12 years
Joseph H. Black 51 Employee 11 years
Officer Treasurer 11 years
Present term 11 years
ITEM 11. EXECUTIVE COMPENSATION
Pages 5 & 6
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Page 2
Director Number Percentage of
of shares outstanding
stock
Dr. David H. Bush 46,300 3.90
Michael H. Blazo 20,012 1.69
Curt Carter 7,772 0.66
Patrick A. Cronin 2,308 0.19
Thomas K. Butterfield 29,400 2.48
James A. Harrington 19,987 1.68
Ernest W. Lefever 800 0.07
Tim Oesch 3,682 0.31
Charles Scheidegger 10,926 0.92
Executive Officers and Directors, as a group, own 141,787 shares or 11.95% of
1,186,472 total outstanding shares of common stock of Corporation as of December
31, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Page 6
PART IV
Item 14. EXHIBITS FINANCIAL STATEMENT SCHEDULES, AND REPORTS OF FORM 8-K.
(a)(1) The following financial statement schedules of the Corporation and Bank
are included in the Annual Report to its stockholders for the year ended 2000
and are incorporated herein by reference in Item 8:
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Balance Sheets--December 31, 2000 and 1999 Page 3
Statements of Income--years ended December 31, 2000, 1999 and 1998 Page 5
Statements of Changes in Stockholders' equity--years ended December 31, 2000, 1999 and 1998 Page 4
Statements of Cash Flows--years ended December 31, 2000, 1999 and 1998 Page 6
Notes to Financial Statements Pages 7-13
Report of Independent Public Accountants dated January 17, 2001 Page 14
(a)(2) Not applicable
(a)(3) The following exhibits are required to be filed with this report by item
14(c):
(3) Articles of Incorporation and By-laws (previously filed as Exhibits to the
Corporation's registration statement on form 8-A, filed January 24, 1989 and
incorporated herein by reference).
(13) Annual Report to Stockholders for the year ended December 31, 2000 (filed
herewith)
(21) Subsidiary of the Registrant: Lapeer County Bank & Trust Co., a Michigan
Corporation
(23) Consent of Experts and Counsel: Letter of consent form Plante & Moran, LLP
dated March 23, 2001
(b) No reports on form 8-K were filed during the last quarter of the year
covered by this report.
(c) See (a) (3)
(d) Not applicable
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized, on March 30, 2001
County Bank Corp
/s/ Curt Carter
--------------------------
Curt Carter, President
/s/ Joseph H. Black
--------------------------
Joseph H. Black, Treasurer
/s/ Michael H. Blazo /s/ Timothy Oesch
------------------- --------------------------
Michael H. Blazo Timothy Oesch
/s/ James Harrington /s/ Charles Schiedegger
------------------- --------------------------
James Harrington Charles Schiedegger
/s/ Ernest W. Lefever /s/ Patrick A. Cronin
------------------- --------------------------
Ernest W. Lefever Patrick A. Cronin
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EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
- ----------- -----------
(3) Articles of Incorporation and By-laws (previously filed as Exhibits to the Corporation's registration
statement on forms 8-A, filed January 24, 1989 and incorporated herein by reference).
(13) Annual Report to Stockholders for the year ended December 31, 2000 (filed herewith)
(21) Subsidiary of the Registrant: Lapeer County Bank & Trust Co., a Michigan Corporation
(23) Consent of Experts and Counsel: Letter of consent from Plante & Moran, LLP dated March 23, 2000