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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
---
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file 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
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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 Section 12 (g) of the Act:
1,200,000 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 re- quired 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 stock held by nonaffiliates
of the registrant was $22,706,623.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of latest practicable date.
There are 593,236 shares of common stock ($5.00 par value) outstanding
as of December 31, 1996.
The following documents are incorporated into the 10-K by reference:
The Annual Report to Shareholders, December 31, 1996, Part I, Part II.
Proxy Statement dated March 19, 1997, Part III.
2
FORM 10K
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 shareholders,
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 shareholder 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 seven
locations. The main office is located at 83 W. Nepessing St., in downtown
Lapeer. A drive-in 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 south M-24. Attica Township is served by a full service Attica
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.
Two Automated Teller Machines are installed at offsite locations. One is
located inside Lapeer Regional Hospital, 1375 N. Main St., Lapeer, and the other
is located inside Lapeer Food Center, 873 S. Main St., Lapeer. The Bank opened
a full service branch located in a grocery store at Bryan's Market, 6002 N.
Lapeer 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 First of America Bank-Southeast, which has six branches throughout
the County. During 1993, Independent Bank Corp of Ionia, MI. acquired Pioneer
Bank and Kingston Bank which operate three locations in the Bank's market area.
NBD Bank, NA has a branch office north of the city limits of Lapeer. Citizens
Commercial and Savings Bank of Flint also has a branch in the County. Tri-County
Bank has offices in Imlay City and Almont. There are two offices of Citizen's
Federal Savings and Loan. The County is served by two credit unions, Lapeer
County School Employees Credit Union and the Lapeer County Community Credit
Union. 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 Corporation is regulated as a bank holding company 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
County Bank Corp 1996 10-K Page 1
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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 which 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 the regulations of the Federal Reserve Board
and the regulations of the Financial Institutions Bureau (FIB) of the State of
Michigan. The Financial Institutions Bureau of the State of Michigan has the
authority to examine and regulate the Bank and works closely with the Federal
Reserve Bank of Chicago coordinating alternate examinations of the Bank. The
FIB 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 Bank's deposits are insured by the Federal Deposit Insurance
Corporation.
The Federal Deposit Insurance Corporation Improvement 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 statutory 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 undercapitalized. 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
operating and management standards, review of executive compensation, increased
accounting principles, and increased independence of Audit committees. The
number of full time equivalent employees totaled 117 and 119 on December 31,
1996 and 1995 respectively.
County Bank Corp 1996 10-K Page 2
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Guide 3. Statistical Disclosures:
I. Distribution of Assets, Liabilities and Stockholder's Equity; Interest Rates
and Interest Differential.
Refer to Table I and Table II for a presentation of the information required by
this item.
II. Investment Portfolio
Refer to Footnote 3 of the accompanying financial statements on page 9 of the
Annual Report to shareholders for the information required by this item, except
for:
Weighted average yields on a tax equivalent basis:
Book Yield (%)
Value (000's)
US Government securities
Maturity distribution:
One year or less: $6,002 6.44
Over one year through five years: 7,110 6.99
Over five years through ten years: --
Over ten years: --
State and political subdivisions
Maturity distribution:
One year or less: 1,652 8.79
Over one year through five years: 5,937 6.46
Over five years through ten years: 5,650 8.01
Over ten years: 1,141 8.07
Corporate securities
Maturity distribution:
One year or less: 40 6.049
Over one year through five years: --
Over five years through ten years: --
Over ten years: --
Mortgage-backed securities 18,830 6.95
Other securities 1,046 4.14
County Bank Corp 1996 10-K Page 3
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TABLE I. AVERAGE ASSETS (000'S) INCOME (000'S) YIELD (%)
Interest margin analysis as a
% of average earning assets 1996 1995 1994 1996 1995 1994 1996 1995 1994
Assets
Securities:
US Gov't & agencies..................... 31,543 35,477 37,661 1,994 2,110 1,934 6.32% 5.95% 5.14%
State and political subdivisions*....... 14,167 14,886 11,913 1,159 1,255 1,027 8.18% 8.43% 8.62%
Corporate securities.................... 64 140 248 4 8 16 6.25% 5.71% 6.45%
Other securites......................... 854 579 477 35 32 28 4.10% 5.53% 5.87%
Total investment securities............. 46,628 51,082 50,299 3,192 3,405 3,005 6.85% 6.67% 5.97%
Bank time deposits...................... 0 0 0 0 0 0 0.00% 0.00% 0.00%
Federal funds sold...................... 4,657 3,053 4,828 248 179 195 5.33% 5.86% 4.04%
Loans:
Commercial loans*....................... 51,247 48,219 45,474 4,660 4,531 3,942 9.09% 9.40% 8.67%
Real estate mortgages................... 30,784 23,729 22,510 2,564 2,064 1,885 8.33% 8.70% 8.37%
Consumer loans.......................... 28,403 29,047 27,201 2,451 2,400 2,114 8.63% 8.26% 7.77%
Total loans............................. 110,434 100,995 95,185 9,675 8,995 7,941 8.76% 8.91% 8.34%
Total average earning assets............ 161,719 155,130 150,312 13,115 12,579 11,141 8.11% 8.11% 7.41%
Total average assets.................... 172,312 165,081 159,748
Interest bearing liabilities:
Deposits:
NOW account deposits.................... 37,176 29,383 22,369 1,206 866 496 3.24% 2.95% 2.22%
Savings deposits........................ 41,595 44,813 49,492 1,223 1,309 1,251 2.94% 2.92% 2.53%
Time deposits over $100,000............. 4,507 5,342 4,632 239 306 231 5.30% 5.73% 4.99%
Other time deposits..................... 41,683 42,835 43,931 2,153 2,165 1,880 5.17% 5.05% 4.28%
Total deposits.......................... 124,961 122,373 120,424 4,821 4,646 3,858 12.97% 3.80% 3.20%
Federal funds purchased................. 16 129 0 1 8 0 0.02% 6.20% 0.00%
Long-term debt.......................... 0 0 0 0 0 0.00% 0.00% 0.00%
Total interest bearing liabilities...... 124,977 122,502 120,424 4,822 4,654 3,858 3.86% 3.80% 3.20%
Demand deposits......................... 27,121 24,908 23,531
Other liabilities....................... 1,355 1,079 986
Stockholders' equity.................... 18,859 16,592 14,807
Total liabilities and
stockholders' equity.................... 172,312 165,081 159,748
Interest expense as a % of
average earning assets.................. 2.98% 3.00% 2.57%
Net interest margin/net interest
yield as a % of
average earning assets.................. 8,293 7,925 7,283 5.13% 5.11% 4.85%
Net interest yield as a % of
average assets.......................... 4.81% 4.80% 4.56%
* A tax adjustment of $449, $465, and $373 has been added to 1996, 1995 and 1994
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.
6
Rate/volume variance analysis 1996 vs 1995 1995 vs 1994
Change in Change in Change in Total Change in Change in Change in Total
Volume Rate Rate/volume Volume Rate Rate/volume
Assets
Securities:
US Gov't & agencies (234) 133 (15) (116) (112) 306 (18) 176
State and political subdivisions* (61) (38) 2 (97) 256 (22) (6) 228
Corporate securities (4) 1 (1) (4) (7) (2) 1 (8)
Other securites 15 (8) (4) 3 6 (2) 0 4
Total investment securities (284) 88 (18) (214) 143 280 (23) 400
Bank time deposits 0 0 0 0 0 0 0 0
Federal funds sold 94 (16) (9) 69 (72) 88 (32) (16)
Loans:
Commercial loans* 285 (146) (9) 130 238 331 20 589
Real estate mortgages 614 (88) (26) 500 102 73 4 179
Consumer loans (53) 107 (3) 51 143 133 10 286
Total loans 846 (127) (38) 681 483 537 34 1,054
Total average earning assets 656 (55) (65) 536 554 905 (21) 1,438
Interest bearing liabilities:
NOW account deposits 230 87 23 340 156 163 51 370
Savings deposits (94) 9 (1) (86) (118) 195 (19) 58
Time deposits over $100,000 (48) (23) 4 (67) 35 34 6 75
Other time deposits (58) 48 (2) (12) (47) 340 (8) 285
Total deposits (3,235) 11,223 (7,814) 175 26 732 30 788
Federal funds purchased 272 (8) (271) (7) 0 0 8 8
Long-term debt 0 0 0 0 0 0 0 0
Total interest bearing liabilities (2,963) 11,215 (8,085) 168 26 732 38 796
Net Interest Income 3,619 (11,270) 8,020 368 528 173 (59) 642
------ ------- ------ ---- ---- ---- --- ----
7
III. Loan Portfolio
A. Types of Loans
Refer to Footnote 4 of the accompanying financial statements on page 10 of
the Annual Report to shareholders for the information required by this item.
B. Maturities and Sensitivities of Loans to Changes in Interest Rates as of
December 31, 1996.
(000's)
Commercial Loans
Fixed rate loans with a maturity of:
Three months or less $ 3,328
Over three months through twelve months 6,813
One year through five years 19,107
Over five years 435
-------
Total fixed rate loans 29,683
Floating rate loans
with a repricing frequency of:
Quarterly or more frequently 20,989
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Total Commercial loans $50,672
=======
Real-estate construction loans:
Fixed rate loans with a maturity of
over three months through twelve months: 2,835
C. Risk Elements.
1. Nonaccrual, Past Due and Restructured Loans. (000's)
12/31/96 12/31/95
Loans 90 days past due and still accruing
Commercial loans 12 37
Real estate loans 0 0
Installment loans 30 32
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Total loans 90 days past due 42 69
==== ====
Non-accruing loans
Commercial loans 302 381
Real estate loans 0 0
Installment loans 23 2
---- ----
Total non accruing loans 325 383
==== ====
There were no restructured loans.
For the year ended 1996, if the loans reported as nonaccrual loans had earned at
the contracted interest rate, $41,000 of interest income would have been
recorded. No interest income was recorded on these loans in 1996.
County BankCorp 1996 10-K Page 4
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It is the policy of the Corporation to place loans on a nonaccruing status when
management feels that a significant risk of non-repayment exists. Criteria for
evaluating repayment risk will include the borrowers payment history, 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, 1996 management identified eleven potential problem loans in
the commercial loan portfolio. The eleven loans totaled $513,000 and management
allocated $30,000 of the allowance for loan losses for these credits.
3. Foreign Outstandings
Not Applicable
4. Loan Concentrations
As of December 31, 1996 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, 1996, there was no other interest bearing assets that would
have been classified 90 days past due and still accruing if it were a loan.
IV. Summary of Loan Loss Experience
Analysis of Allowance for Loan Losses (000's)
12/31/96 12/31/95
Balance at beginning of period $1,687 $1,624
Charge offs:
Commercial 62 186
Real-estate 0 0
Installment 48 19
Construction 0 0
------ ------
Total charge offs 110 205
Recoveries:
Commercial 72 9
Real-estate 0 0
Installment 36 19
Construction 0 0
------ ------
Total Recoveries 108 28
Net Charge offs 2 177
------ ------
Provision charged to operations 120 240
Balance at end of period $1,805 $1,687
====== ======
Ratio of net charge offs during the period
to average loans during the period 0.03% 0.18%
County BankCorp 1996 10-K Page 5
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Net charged off loans totaled $3,000 in 1996. The Reserve for loan losses
totaled 1.53% of total loans on December 31, 1996. Management provided $120,000
from earnings to the reserve in order to maintain the high level of protection.
Loans have been growing aggressively, and management intends to maintain a high
quality portfolio with solid protection for the future.
Net charged off loans were $177,000 in 1995. The loan portfolio is growing as
demand stays high. Management allocated $240,000 of earnings to the reserve to
maintain a high level of protection.
B. Allocation of the Allowance for Loan Losses (000's)
1996 1995
Balance at December 31, Applicable to:
Amount % of loans Amount % of loans
in category in category
to total to total
loans loans
Commercial 181 43.40% 124 44.30%
Real-estate mortgage 0 27.83% 10 23.30%
Installment 35 26.36% 14 29.10%
Construction -- 2.41% -- 3.30%
Unallocated 1,589 N/A 1,539 N/A
------ ------
$1,805 100.00% $1,687 100.00%
====== ======
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
Maturities of time certificates of deposits of $100,000 or more. (000's)
Three months or less $2,331
Over three months through six months 976
Over six months through twelve months 551
Over twelve months 1,072
------
$4,930
======
E. Not applicable
County Bank Corp 1996 10-K Page 6
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VI. Return on Equity and Assets. 1996 1995
Return on assets (%) 1.73 1.56
Return on equity (%) 15.80 15.51
Dividend payout ratio (%) 30.46 29.45
Equity to assets ratio (%) 10.94 10.05
VII. Short-Term Borrowings
Not applicable
ITEM 2. PROPERTY
The following is a tabulation of facilities owned by the Bank.
App. Building Date
Description/Location Square Feet Occupied
Main Office 34,948 09/15/02
83 W. Nepessing St.
Lapeer, MI
Elba Office 3,744 10/22/85
5508 Davison Rd
Lapeer, MI
Pine-Clay Office 528 01/05/68
305 Pine St.
Lapeer, MI
Southgate Office 1,700 11/02/70
637 S. Main St.
Lapeer, MI
Attica Office 4,158 6/27/79
4515 Imlay City Rd.
Attica, MI
Land directly east of 01/01/79
the Southgate office.
Metamora Office 2,668 09/18/89
3414 S. Lapeer Rd
Metamora, MI
County Bank Corp 1996 10-K Page 7
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ITEM 3. LEGAL PROCEEDINGS
No material legal proceeding is pending to which the Corporation or the Bank is
party, or of which any of their property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
The information called for by the items within this part is included in the
Corporation's Annual Report to shareholders for the year ended December 31,
1996, and is incorporated herein by reference, as follows:
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Page 16
ITEM 6. SELECTED FINANCIAL DATA.
Page 15, except for: (000's)
1996 1995 1994 1993 1992
Total Assets $177,786 $169,877 $166,666 $157,664 $154,159
Long Term Debt $ 0 $ 0 $ 0 $ 0 $ 0
County Bank Corp 1996 10-K Page 8
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
EARNINGS
Major components of the operating results of the Corporation for 1996, 1995, and
1994 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
1996 1995 1994 1993 1992
Interest income 12,666 12,114 10,768 10,492 11,329
Interest expense 4,823 4,654 3,858 4,023 5,081
------ ------ ------ ------ ------
Net interest income 7,843 7,460 6,910 6,469 6,248
Provision for possible loan losses 120 240 120 275 378
Net interest income after provision
------ ------ ------ ------ ------
for possible loan losses 7,723 7,220 6,790 6,194 5,870
Other income 2,216 1,971 1,800 1,666 1,450
Other expenses 5,739 5,669 5,624 5,507 5,602
------ ------ ------ ------ ------
Income before provision for
Federal income tax 4,199 3,522 2,966 2,353 1,718
Provision for Federal income taxes 1,220 948 848 596 388
------ ------ ------ ------ ------
Net income 2,980 2,574 2,118 1,757 1,330
====== ====== ====== ====== ======
Per Share
Net income 5.02 4.34 3.57 2.96 2.24
====== ====== ====== ====== ======
Dividends declared 1.53 1.27 1.04 0.87 0.72
====== ====== ====== ====== ======
Net Interest Income
The Bank experinced strong loan demand through the entire year in all categories
of loans. Total growth in loans was 11.7%, led by mortgage growth of 32.9%.
Deposit growth was a moderate 3.7%. Customers chose to utilize liquid accounts
tied to market rates. The Bank's Choice account that offers benefits
experienced growth of 60%. This growth was offset by declining balances in
regular savings, money market deposit accounts and time certificates of deposit.
The strong loan growth coupled with moderate deposit growth increased the Bank's
loan to deposit ratio to 75.1%. Net interest yield on a Federal tax equivalent
(FTE) basis as a percent of average assets was 4.8%, 4.8% and 4.6% for 1996,
1995 and 1994, respectively. The FTE adjustment is derived by deviding tax
exempt interest income by .66 to reflect the Corporation's 34% tax rate. The
Corporation continues working to match rate sensitive assets and rate sensitive
liabilities to maintain margins in differing rate environments.
County Bank Corp 1996 10-K Page 9
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Rate sensitivity analysis (000's), December 31, 1996
Repricing period in days 0-30 31-90 91-180 181-365 0-365 Over 365
Rate sensitive assets (RSA)
Federal funds sold 1,200 0 0 0 1,200 0
Investment securities 10,173 1,000 2,049 1,730 14,952 32,457
Loans 33,487 2,858 7,215 10,078 53,638 63,836
------- ------ ------ ------ ------- -------
Total rate sensitive assets 44,860 3,858 9,264 11,808 69,790 96,293
Rate sensitive liabilities (RSL)
Demand deposits 31,666 0 0 0 31,666 9,514
Savings deposits 20,491 0 0 0 20,491 20,801
Time deposits 5,802 5,444 7,748 7,278 26,272 20,340
------- ------ ------ ------ ------- -------
Total rate sensitive liab. 57,959 5,444 7,748 7,278 78,429 50,655
Repricing gap (RSA-RSL) (13,099) (1,586) 1,516 4,530 (8,639) 45,638
As a percent of capital -66.0% -8.0% 7.6% 22.8% -43.5% 229.8%
As a percent of total assets -7.4% -0.9% 0.9% 2.5% -4.9% 25.7%
In the above table, scheduled payments on loans and securities are included at
the earlier of their next scheduled principal reduction or repricing
opportunity.
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 non-accrual, 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 is recorded as current expense and may be
greater or less than the actual net charged off loans.
Activity related to the reserve for possible loan losses resutled in net charged
off loans of $2,000 in 1996. Net charged off loans were $177,000 in 1995, and
recoveries of $32,000 were posted in 1994. Consequently, provisions for possible
loan losses were $120,000, $240,000, and $120,000 for the respective periods.
Management intends to maintain high levels of protection in the reserve through
this period of aggressive growth. The ratio of reserve for possible loan lossed
to gross loans was 1.5%, 1.6% and 1.7% on December 31, 1996, 1995 and 1994,
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. Service charges on deposit accounts grew 3.5%
in 1996 following a 4.2% increase in 1995. Other income increased 28.1% as a
resut of the repayment of two loans that were previously carried as nonaccrual
loans. The customers were on the way to working out their problems and the
loans were renewed on an accrual basis. Interest that was earned but not
reported as income during the period of nonaccrual
County Bank Corp 1996 10-K Page 10
14
was capitalized in the renewed loan. This interest was carried in the general
ledger as deferred credits until the customers fully established their improved
repayment capability. The deferred credits were recorded as income on an
interest basis as the new loans were repaid. Both properties were sold, and the
Bank recovered all of its investment. The deferred credits were booked directly
to other income rather than interest income so that comparative yield
calculations would not be distorted. The total amount of deferred credits posted
to other income total $242,000.
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, the largest component of non-interest expense, increased 4%
in 1996 after a 10.3% increase in 1995. The Bank's Board of Directors
instituted a bonus plan in 1995 based on the Bank's earnings. Full time
equivalent employees decreased from 119 at year end 1995 to 117 at year end
1996. Occupancy expenses increased 4.9% after a 7.9% decrease in 1995.
Depreciation expenses increased as a result of remodeling older areas of the
Bank's main office building and continued investment in current technology.
Other expenses decline 6% primarily due to the payment of the statutory minimum
FDIC premium in 1996. In addition, the intangibles tax for the State of
Michigan is being phased out over a period of years, and the Bank received a
refund of taxes paid in previous years.
FINANCIAL CONDITION
Average assets for the Corporation totaled $172,312,000, $165,081,000 and
$159,748,000, for 1996, 1995, and 1994, respectively. This 4.4% growth in
average assets improved from 3.3% in 1995. The increase was supported by 3.3%
growth in average deposits. Average loans grew 9.3% in 1996. The Corporation
continues to increas the loans to deposits ratio resulting in increased interest
margins and net income.
Liquidity
The anticipated liquidity requirements of the Corporation can be met by
upstreaming dividends from the subsidiary Bank. Refer to footnote 11 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 dividends to current stockholders. Dividends
upstreamed to the Coproration were $908,000 in 1996 and $750,000 in 1995.
The estimated value of U.S. Government and U.S. Government Agency securities
totaled 20.4% of total deposits on December 31, 1996. This percentage for 1995
was 22.1. The Corporation is able to meet normal demands for liquidity through
loan repayments, securities payments and deposit growth.
CAPITAL
The Corporation's return on equity reached 15.8% in 1996, an improvement on the
15.5% return achieved in 1995 and the 14.3% return earned in 1994. Effective
December 31, 1992 the Bank is required to maintain capital in excess of 8.0% of
risk-based assets as defined by the Federal reserve Board. Refer to footnote 13
of the accompanying financial statements for a tabular presentation of the
Coporations capital adequacy.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pages 3-13
County Bank Corp 1996 10-K Page 11
15
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
PART III
The information called for by the items within this part is included in County
Bank Corp's 1996 Proxy Statement and is incorporated herein by reference, as
follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pages 3-4 except for:
Executive Officers Ages Office Service
Curt Carter 53 Employee 31 Years
Officer President 8 Years
Present Term 8 Years
Patrick F. Brown 49 Employee 10 Years
Officer Vice President 8 Years
Present Term 8 Years
Laird A. Kellie 51 Employee 14 Years
Officer Secretary 8 Years
Present Term 8 Years
Joseph H. Black 47 Employee 7 Years
Officer Treasurer 7 Years
Present Term 7 Years
11. EXECUTIVE COMPENSATION.
Page 6
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Page 2.
Number of Percentage of
Director Shares Outstanding Stock
Dr. David H. Bush 22,028 3.61
Micheal H. Blazo 10,006 1.69
Curt Carter 3,224 0.54
Thomas K. Butterfield 14,700 2.48
A. Edward LaClair 5,854 0.99
Tim Oesch 1,216 0.21
Charles G. Scheidegger 3,893 0.66
Patrick A. Cronin 432 0.07
Ernest W. LeFever 100
Executive Officers and Directors, as a group, own 62,003 shares or 10.33% of the
593,236 total outstanding shares of common stock of the Corporation as of
December 31, 1996.
County Bank Corp 1996 10-K Page 12
16
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Page 6
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)
(1) The following financial statements of the Corporation and the Bank are
included in the Annual Report to its shareholders for the year ended 1996 and
are incorporated herein by reference in Item 8:
Balance sheets--December 31, 1996 and 1995 Page 3
Statements of income--years ended
December 31, 1996, 1995, and 1994 Page 5
Statements of changes in shareholder's equity
years ended December 31, 1996, 1995 and 1994 Page 4
Statements of cash flows
years ended December 31, 1996, 1995 and 1994 Page 6
Notes to financial statements Pages 7-13
Report of Independent Public Accountants,
dated January 22, 1997 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 Shareholders for the year ended December 31, 1996
(filed herewith)
(21) Subsidiary of Registrant: Lapeer County Bank & Trust Co., a Michigan
corporation.
(23) Consent
(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.
County Bank Corp 1996 10-K Page 13
17
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.
County Bank Corp
/s/ Curt Carter
---------------------
President
/s/ Joseph H. Black
---------------------------
Treasurer
/s/ Thomas K. Butterfield /s/ Timothy Lee Oesch
- ----------------------------- ---------------------------
/s/ David H. Bush, O.D /s/ Ernest W. Lefever, DPM
- ----------------------------- ---------------------------
/s/ Michael H. Blazo /s/ Patarick A. Cronin
- ----------------------------- ---------------------------
18
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
13 Annual Report
21 Subsidiary
23 Consent
27 Financial Data Schedule