##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 Commission File No. 000-33373
 COMMUNITY CENTRAL BANK CORPORATION
  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
 (Issuers telephone number)
 þ o
 o o
  Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  Class
    
    
    Outstanding at November 12, 2010Common Stock
    
    
    3,739,881 Shares




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TABLE OF CONTENTS  PART IItem 1.Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPART IIItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3b. Defaults upon Senior SecuritiesItem 4. ReservedItem 5. Other InformationItem 6. ExhibitsSIGNATURESEXHIBIT INDEXEX-11EX-31.1EX-31.2EX-32    Table of Contents  
 PART I
 
 Item 1.
    
    Financial Statements
 Consolidated Balance Sheet
 September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)(In thousands)AssetsCash and due from banks
    
    $
    35,052
    
    
    $
    33,115Federal funds sold
    
    
    5,680
    
    
    
    1,048Cash and Cash Equivalents
    
    
    40,732
    
    
    
    34,163Securities available for sale, at fair value
    
    
    46,931
    
    
    
    65,903Securities held to maturity, at amortized cost
    
    
    3,083
    
    
    
    3,467FHLB stock
    
    
    5,877
    
    
    
    5,877Residential mortgage loans held for sale
    
    
    6,449
    
    
    
    3,497LoansCommercial real estate
    
    
    271,074
    
    
    
    273,578Commercial and industrial
    
    
    44,121
    
    
    
    48,782Residential real estate
    
    
    46,630
    
    
    
    51,101Home equity lines of credit
    
    
    21,633
    
    
    
    21,889Consumer loans
    
    
    6,445
    
    
    
    6,961Credit card loans
    
    
    873
    
    
    
    856Total Loans
    
    
    390,776
    
    
    
    403,167Allowance for credit losses
    
    
    (19,566
    )
    
    
    (12,957
    )Net Loans
    
    
    371,210
    
    
    
    390,210Net property and equipment
    
    
    10,124
    
    
    
    9,106Accrued interest receivable
    
    
    1,807
    
    
    
    1,878Other real estate
    
    
    8,301
    
    
    
    9,300Goodwill
    
    
    638
    
    
    
    638Intangible assets, net of amortization
    
    
    40
    
    
    
    57Cash surrender value of Bank Owned Life Insurance
    
    
    11,451
    
    
    
    11,285Other assets
    
    
    7,092
    
    
    
    8,465Total Assets
    
    $
    513,735
    
    
    $
    543,846
 (continued)
 2




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##### Table of Contents



Consolidated Balance Sheet
 September 30,
    
    
    December 31,2010
    
    
    2009(Unaudited)(In thousands)LiabilitiesDepositsNoninterest bearing demand deposits
    
    $
    53,165
    
    
    $
    45,716NOW and money market accounts
    
    
    26,515
    
    
    
    41,872Savings deposits
    
    
    7,720
    
    
    
    8,800Time deposits
    
    
    308,855
    
    
    
    304,743Total Deposits
    
    
    396,255
    
    
    
    401,131Repurchase agreements
    
    
    36,299
    
    
    
    41,106Federal Home Loan Bank advances
    
    
    63,398
    
    
    
    65,700Accrued interest payable
    
    
    1,020
    
    
    
    618Other liabilities
    
    
    3,364
    
    
    
    2,937Subordinated debentures at fair value option
    
    
    1,250
    
    
    
    8,366Total Liabilities
    
    
    501,586
    
    
    
    519,858Stockholders EquityPreferred stock (1,000,000, no par value, shares authorized;
7,775 shares and 7,265 issued and outstanding at
September 30, 2010 and December 31, 2009, respectively)
    
    
    7,645
    
    
    
    7,146Common stock (No par value; 9,000,000 shares, authorized,
and 3,739,881 and 3,737,181 issued and outstanding at
September 30, 2010 and December 31, 2009, respectively)
    
    
    32,302
    
    
    
    32,214Retained deficit
    
    
    (28,035
    )
    
    
    (15,536
    )Accumulated other comprehensive gain
    
    
    237
    
    
    
    164Total Stockholders Equity
    
    
    12,149
    
    
    
    23,988Total Liabilities and Stockholders Equity
    
    $
    513,735
    
    
    $
    543,846
 3




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##### Table of Contents



Consolidated Statements of Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands, except per share data)Interest IncomeLoans (including fees)
    
    $
    5,998
    
    
    $
    6,510
    
    
    $
    17,855
    
    
    $
    19,423Taxable securities
    
    
    358
    
    
    
    645
    
    
    
    1,270
    
    
    
    2,304Tax exempt securities
    
    
    20
    
    
    
    74
    
    
    
    73
    
    
    
    272Federal funds sold and interest bearing balances
    
    
    25
    
    
    
    9
    
    
    
    81
    
    
    
    22Total Interest Income
    
    
    6,401
    
    
    
    7,238
    
    
    
    19,279
    
    
    
    22,021Interest ExpenseNOW and money market accounts
    
    
    31
    
    
    
    55
    
    
    
    124
    
    
    
    205Savings deposits
    
    
    10
    
    
    
    13
    
    
    
    36
    
    
    
    44Time deposits
    
    
    1,960
    
    
    
    2,297
    
    
    
    6,487
    
    
    
    7,472Repurchase agreements and fed funds purchased
    
    
    290
    
    
    
    327
    
    
    
    874
    
    
    
    959Federal Home Loan Bank advances
    
    
    542
    
    
    
    1,015
    
    
    
    1,978
    
    
    
    3,286Subordinated debentures
    
    
    311
    
    
    
    311
    
    
    
    934
    
    
    
    924Total Interest Expense
    
    
    3,144
    
    
    
    4,018
    
    
    
    10,433
    
    
    
    12,890Net Interest Income
    
    
    3,257
    
    
    
    3,220
    
    
    
    8,846
    
    
    
    9,131Provision for Credit Losses
    
    
    4,550
    
    
    
    4,400
    
    
    
    16,750
    
    
    
    9,650Net Interest Expense after Provision for Credit Losses
    
    
    (1,293
    )
    
    
    (1,180
    )
    
    
    (7,904
    )
    
    
    (519
    )Noninterest IncomeFiduciary income
    
    
    64
    
    
    
    80
    
    
    
    195
    
    
    
    245Deposit service charges
    
    
    97
    
    
    
    110
    
    
    
    288
    
    
    
    300Net realized security gain
    
    
    68
    
    
    
    80
    
    
    
    277
    
    
    
    436Change in fair value of assets/liabilities carried at
fair value under SFAS 159
    
    
    584
    
    
    
    1,313
    
    
    
    7,116
    
    
    
    2,383Mortgage banking income
    
    
    897
    
    
    
    623
    
    
    
    2,342
    
    
    
    2,384Other income
    
    
    309
    
    
    
    251
    
    
    
    1,057
    
    
    
    715Total Noninterest Income
    
    
    2,019
    
    
    
    2,457
    
    
    
    11,275
    
    
    
    6,463Noninterest ExpenseSalaries, benefits and payroll taxes
    
    
    2,084
    
    
    
    2,050
    
    
    
    6,588
    
    
    
    6,231Net occupancy expense
    
    
    445
    
    
    
    424
    
    
    
    1,337
    
    
    
    1,304Other operating expense
    
    
    3,025
    
    
    
    2,439
    
    
    
    7,682
    
    
    
    5,708Total Noninterest Expense
    
    
    5,554
    
    
    
    4,913
    
    
    
    15,607
    
    
    
    13,243Loss Before Taxes
    
    
    (4,828
    )
    
    
    (3,636
    )
    
    
    (12,236
    )
    
    
    (7,299
    )Provision for Income Tax (Benefit)
    
    
    
    
    
    
    (1,271
    )
    
    
    
    
    
    
    (2,588
    )Net Loss
    
    $
    (4,828
    )
    
    $
    (2,365
    )
    
    $
    (12,236
    )
    
    $
    (4,711
    )Dividends declared on preferred shares
    
    
    53
    
    
    
    107
    
    
    
    253
    
    
    
    263Net Loss available on common shares
    
    $
    (4,881
    )
    
    $
    (2,472
    )
    
    $
    (12,489
    )
    
    $
    (4,974
    )Per share data:Basic loss
    
    $
    (1.31
    )
    
    $
    (0.66
    )
    
    $
    (3.34
    )
    
    $
    (1.33
    )Diluted loss
    
    $
    (1.31
    )
    
    $
    (0.66
    )
    
    $
    (3.34
    )
    
    $
    (1.33
    )Cash dividends
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 4




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Consolidated Statements of Comprehensive Income
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)
    
    
    (In thousands)Net Loss as Reported
    
    $
    (4,828
    )
    
    $
    (2,365
    )
    
    $
    (12,236
    )
    
    $
    (4,711
    )Other Comprehensive Income (Loss)Change in unrealized net gain (loss) on securities
available for sale
    
    
    (267
    )
    
    
    428
    
    
    
    73
    
    
    
    487Comprehensive Loss
    
    $
    (5,095
    )
    
    $
    (1,937
    )
    
    $
    (12,163
    )
    
    $
    (4,224
    )
 5




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##### Table of Contents



Consolidated Statements of Cash Flow
 Nine Months Ended September 30,2010
    
    
    2009(In thousands)Operating ActivitiesNet loss
    
    $
    (12,236
    )
    
    $
    (4,711
    )Adjustments to reconcile net income to net cash flow from operating activities:Net amortization of security premium
    
    
    603
    
    
    
    320Net loss on available for sale securities
    
    
    (277
    )
    
    
    (436
    )Net gain on instruments at fair value
    
    
    (7,116
    )
    
    
    (2,383
    )Provision for credit losses
    
    
    16,750
    
    
    
    9,650Depreciation expense
    
    
    527
    
    
    
    483Deferred income tax (benefit) expense
    
    
    
    
    
    
    (1,927
    )Fair value of employee stock option expense
    
    
    75
    
    
    
    67Decrease in accrued interest receivable
    
    
    70
    
    
    
    289(Increase) decrease in other assets
    
    
    (1,990
    )
    
    
    2,147Decrease (increase) in accrued interest payable
    
    
    401
    
    
    
    (302
    )Increase (decrease) in other liabilities
    
    
    505
    
    
    
    (1,163
    )(Increase) decrease in loans sold held for sale
    
    
    (2,952
    )
    
    
    677Decrease (increase) in other real estate
    
    
    999
    
    
    
    (3,615
    )Net Cash Used in Operating Activities
    
    
    (4,641
    )
    
    
    (904
    )Investing ActivitiesSales, maturities, calls and prepayments of securities available for sale
    
    
    61,434
    
    
    
    89,201Purchases of securities available for sale
    
    
    (42,640
    )
    
    
    (79,824
    )Maturities, calls, sales and prepayments of trading securities
    
    
    
    
    
    
    24,700Transfer and purchase of trading securities
    
    
    
    
    
    
    (7,237
    )Maturities, calls, and prepayments of held to maturity securities
    
    
    370
    
    
    
    143Purchases of held to maturity securities
    
    
    
    
    
    
    (2,088
    )Increase (decrease) in loans
    
    
    5,202
    
    
    
    (7,693
    )Purchases of property and equipment
    
    
    (1,545
    )
    
    
    (55
    )Net Cash Provided by Investing Activities
    
    
    22,821
    
    
    
    17,147Financing ActivitiesNet (decrease) increase in demand and savings deposits
    
    
    (8,977
    )
    
    
    24,506Net increase (decrease) in time deposits
    
    
    4,112
    
    
    
    (11,253
    )Net (increase) decrease in short term borrowings
    
    
    (4,807
    )
    
    
    5,377FHLB advances
    
    
    10,000FHLB advance repayments
    
    
    (12,302
    )
    
    
    (20,500
    )Preferred stock issuance
    
    
    499
    
    
    
    500Preferred Stock dividend paid
    
    
    (136
    )
    
    
    (263
    )Repurchase of stock
    
    
    
    
    
    
    623Net Cash Used in Financing Activities
    
    
    (11,611
    )
    
    
    (1,010
    )Increase in Cash and Cash Equivalents
    
    
    6,569
    
    
    
    15,233Cash and Cash Equivalents at the Beginning of the Period
    
    
    34,163
    
    
    
    16,162Cash and Cash Equivalents at the End of the Period
    
    $
    40,732
    
    
    $
    31,395Supplemental Disclosure of Cash Flow Information:Interest paid
    
    $
    10,031
    
    
    $
    13,192Federal taxes paid
    
    $
    0
    
    
    $
    0Supplemental Noncash Disclosure:Loans transferred to other real estate owned
    
    $
    2,033
    
    
    $
    5,746
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Notes to Consolidated Financial Statements
(unaudited)
 Principles of Consolidation:
    Critical Accounting Policies:
   Financial
Instruments Fair Value Option, Fair Value Measurements and Disclosures
    7




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##### Table of Contents



Subordinated Debenture:
  Fair Value Option for Financial Assets and Financial Liabilities:
  Fair Value Hierarchy
 Fair Value Measurements and Disclosures,
      Financial Instruments, Fair Value Option.
  Financial Instruments, Fair Value Option.
 8




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Fair Value Measurements and Disclosures, Financial
Instruments, Fair Value Option Fair Value Measurements and Disclosures, Fair Value
Measurements and Disclosures Fair Value Measurements and Disclosures Financial
Instruments, Fair Value Option,
  9




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Changes in fair value forFair Value Measurement at
    
    
    
    
    
    
    nine months ended SeptSeptember 30, 2010
    
    
    
    
    
    
    30, 2010, measured at fairSignificant Other
    
    
    Significant
    
    
    value pursuant to electionFair Value
    
    
    Observable
    
    
    Unobservable
    
    
    of the fair value optionMeasurements
    
    
    Inputs
    
    
    Inputs
    
    
    Other Gains or Losses inDescription
    
    09/30/10
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    pretax income(In thousands)AssetsSecurities available for saleU.S. agency mortgage backed securities
    
    $
    37,870
    
    
    $
    37,870
    
    
    $
    
    
    
    $
    U.S. agency collateralized mortgage
obligations
    
    
    7,803
    
    
    
    7,803
    
    
    
    
    
    
    
    Municipal securities
    
    
    491
    
    
    
    491
    
    
    
    
    
    
    
    Mutual fund and trust preferred securities
    
    
    767
    
    
    
    767
    
    
    
    
    
    
    
    LiabilitiesSubordinated debentures
    
    
    1,250
    
    
    
    
    
    
    
    1,250
    
    
    
    7,116$
    7,116
 10




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##### Table of Contents



Changes in fair value forFair Value Measurement at
    
    
    
    
    
    
    nine months ended Sept 30,September 30, 2009
    
    
    
    
    
    
    2009, measured at fair valueSignificant Other
    
    
    Significant
    
    
    pursuant to election of theFair Value
    
    
    Observable
    
    
    Unobservable
    
    
    fair value optionMeasurements
    
    
    Inputs
    
    
    Inputs
    
    
    Other Gains or Losses inDescription
    
    09/30/09
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    pretax income(In thousands)AssetsTrading securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (132
    )Securities available for saleU.S. treasury notes
    
    
    3,000
    
    
    
    3,000U.S. agency mortgage backed securities
    
    
    35,414
    
    
    
    35,414
    
    
    
    
    
    
    
    U.S. agency collateralized mortgage
obligations
    
    
    21,354
    
    
    
    21,354
    
    
    
    
    
    
    
    Municipal securities
    
    
    4,489
    
    
    
    4,489
    
    
    
    
    
    
    
    Mutual fund and trust preferred securities
    
    
    718
    
    
    
    718
    
    
    
    
    
    
    
    Interest rate swap hedging securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )LiabilitiesSubordinated debentures
    
    
    9,842
    
    
    
    
    
    
    
    9,842
    
    
    
    2,915Interest rate swap hedging subordinated
debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (325
    )$
    2,383
  Changes in level 3 recurring fair value measurements
  11




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Changes in unrealizedgains and (losses) relatedTotal realized /
    
    Purchases,
    
    Transfers
    
    
    
    
    
    to financial instruments forFor the three months
    
    Fair Value
    
    unrealized
    
    issuances
    
    in and / or
    
    Fair Value
    
    the three months endedended Sept 30, 2010
    
    July 1, 2010
    
    gains / losses
    
    settlements, net
    
    out of Level 3
    
    September 30, 2010
    
    held at Sept 30, 2010(In thousands)Subordinated
Debentures
    
    $
    1,834
    
    
    $
    584
    
    
    $
    
    
    
    $
    
    
    
    $
    1,250
    
    
    $
    584
 Changes in unrealizedgains and (losses) relatedTotal realized /
    
    Purchases,
    
    Transfers
    
    
    
    
    
    to financial instruments forFor the nine months
    
    Fair Value
    
    unrealized
    
    issuances
    
    in and / or
    
    Fair Value
    
    the nine months ended heldended Sept 30, 2010
    
    January 1, 2010
    
    gains / losses
    
    settlements, net
    
    out of Level 3
    
    September 30, 2010
    
    at Sept 30, 2010(In thousands)Subordinated
Debentures
    
    $
    8,366
    
    
    $
    7,116
    
    
    $
    
    
    
    $
    
    
    
    $
    1,250
    
    
    $
    7,116
 Changes in unrealizedgains and (losses) relatedTotal realized /
    
    Purchases,
    
    Transfers
    
    
    
    
    
    to financial instruments forFor the three months
    
    Fair Value
    
    unrealized
    
    issuances
    
    in and / or
    
    Fair Value
    
    the three months endedended Sept 30, 2009
    
    July 1, 2009
    
    gains / losses
    
    settlements, net
    
    out of Level 3
    
    September 30, 2009
    
    held at Sept 30, 2009(In thousands)Subordinated
Debentures
    
    $
    11,155
    
    
    $
    1,313
    
    
    $
    
    
    
    $
    
    
    
    $
    9,842
    
    
    $
    1,313
 Changes in unrealizedgains and (losses) relatedTotal realized /
    
    Purchases,
    
    Transfers
    
    
    
    
    
    to financial instruments forFor the nine months
    
    Fair Value
    
    unrealized
    
    issuances
    
    in and / or
    
    Fair Value
    
    the nine months ended heldended Sept 30, 2009
    
    January 1, 2009
    
    gains / losses
    
    settlements, net
    
    out of Level 3
    
    September 30, 2009
    
    at Sept 30, 2009(In thousands)Subordinated
Debentures
    
    $
    12,757
    
    
    $
    2,915
    
    
    $
    
    
    
    $
    
    
    
    $
    9,842
    
    
    $
    2,915
 Assets Measured at Fair Value on a Nonrecurring Basis
 Residential Mortgages Held for Sale
  Impaired Loans
  12




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Accounting for
Creditors for Impairment of a Loan
 Other Real Estate Owned
  13




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Quoted Prices inActive Markets
    
    Significant Other
    
    Significantfor Identical Assets
    
    Observable Inputs
    
    Unobservable InputsAssets:
    
    Fair Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Total Losses for thethree months endedSeptember 30, 2010September 30, 2010Impaired loans
    
    $
    49,513
    
    
    $
    
    
    
    $
    
    
    
    $
    49,513
    
    
    $
    3,937Other real estate owned
    
    $
    8,301
    
    
    $
    
    
    
    $
    
    
    
    $
    8,301
    
    
    $
    530Total Losses for thenine months endedSeptember 30, 2010September 30, 2010Impaired loans
    
    $
    49,513
    
    
    $
    
    
    
    $
    
    
    
    $
    49,513
    
    
    $
    12,215Other real estate owned
    
    $
    8,301
    
    
    $
    
    
    
    $
    
    
    
    $
    8,301
    
    
    $
    1,632Total Losses for thethree months endedSeptember 30, 2009September 30, 2009Impaired loans
    
    $
    30,517
    
    
    $
    
    
    
    $
    
    
    
    $
    30,517
    
    
    $
    3,766Other real estate owned
    
    $
    6,528
    
    
    $
    
    
    
    $
    
    
    
    $
    6,528
    
    
    $
    691Total Losses for thenine months endedSeptember 30, 2009September 30, 2009Impaired loans
    
    $
    30,517
    
    
    $
    
    
    
    $
    
    
    
    $
    30,517
    
    
    $
    7,048Other real estate owned
    
    $
    6,528
    
    
    $
    
    
    
    $
    
    
    
    $
    6,528
    
    
    $
    1,127
 14




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##### Table of Contents



Financial Instruments, Fair Value Option
 September 30, 2010
    
    December 31, 2009Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAmount
    
    Fair Value
    
    Amount
    
    Fair Value(In thousands)Financial AssetsCash and cash equivalents
    
    $
    40,732
    
    
    $
    40,732
    
    
    $
    34,163
    
    
    $
    34,163Securities available for sale, at fair value
    
    
    46,931
    
    
    
    46,931
    
    
    
    65,903
    
    
    
    65,903Securities held to maturity, at amortized cost
    
    
    3,083
    
    
    
    3,154
    
    
    
    3,467
    
    
    
    3,469FHLB stock
    
    
    5,877
    
    
    
    5,877
    
    
    
    5,877
    
    
    
    5,877Residential mortgages held for sale
    
    
    6,449
    
    
    
    6,449
    
    
    
    3,497
    
    
    
    3,497Loans, net of allowance
    
    
    371,210
    
    
    
    386,889
    
    
    
    390,210
    
    
    
    402,500Accrued interest receivable
    
    
    1,807
    
    
    
    1,807
    
    
    
    1,878
    
    
    
    1,878Financial LiabilitiesDemand and savings deposits
    
    
    87,400
    
    
    
    87,400
    
    
    
    96,388
    
    
    
    96,388Time deposits
    
    
    308,855
    
    
    
    316,135
    
    
    
    304,743
    
    
    
    311,102Repurchase agreements
    
    
    36,299
    
    
    
    36,299
    
    
    
    41,106
    
    
    
    41,106Federal Home Loan Bank advances
    
    
    63,398
    
    
    
    65,620
    
    
    
    65,700
    
    
    
    66,883Accrued interest payable
    
    
    1,020
    
    
    
    1,020
    
    
    
    618
    
    
    
    618Subordinated debentures (a)
    
    
    1,250
    
    
    
    1,250
    
    
    
    8,366
    
    
    
    8,366
 
 (a)
    
    Carried at fair value option under ASC 825, Financial Instruments, Fair Value Option for
Financial Assets and Liabilities, for the entire category.  Cash and cash equivalents:
 Securities, Federal Home Loan Bank stock:
 Loans:
 Residential mortgages held for sale:
 15




---



##### Table of Contents



Deposits:
 Federal Home Loan Bank advances:
 Repurchase agreements:
 Accrued interest:
 Subordinated debentures: Financial Instruments, Fair Value Option
 Commitments:
 Subsequent Events:
 David A. Widlak,
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  SAFE HARBOR REGARDING FORWARD-LOOKING STATEMENTS
   16




---



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EXECUTIVE SUMMARY
     17




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18




---



##### Table of Contents



19




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##### Table of Contents



Assets
  20




---



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September 30,
    
    
    Percentage
    
    
    December 31,
    
    
    Percentage
    
    
    Net
    
    
    Net2010
    
    
    of total loans
    
    
    2009
    
    
    of total loans
    
    
    Change
    
    
    Change %(In thousands, except percentages)Loans held for sale:Residential real estate
    
    $
    6,449
    
    
    
    
    
    
    $
    3,497
    
    
    
    
    
    
    $
    2,952
    
    
    
    84.4
    %Loans held in the portfolio:Commercial real estate
    
    $
    271,074
    
    
    
    69.4
    %
    
    $
    273,578
    
    
    
    67.9
    %
    
    $
    (2,504
    )
    
    
    (0.9
    %)Commercial and industrial
    
    
    44,121
    
    
    
    11.3
    %
    
    
    48,782
    
    
    
    12.1
    %
    
    
    (4,661
    )
    
    
    (9.6
    %)Residential real estate
    
    
    46,630
    
    
    
    11.9
    %
    
    
    51,101
    
    
    
    12.7
    %
    
    
    (4,471
    )
    
    
    (8.7
    %)Home equity lines
    
    
    21,633
    
    
    
    5.5
    %
    
    
    21,889
    
    
    
    5.4
    %
    
    
    (256
    )
    
    
    (1.2
    %)Consumer loans
    
    
    6,445
    
    
    
    1.7
    %
    
    
    6,961
    
    
    
    1.7
    %
    
    
    (516
    )
    
    
    (7.4
    %)Credit cards
    
    
    873
    
    
    
    0.2
    %
    
    
    856
    
    
    
    0.2
    %
    
    
    17
    
    
    
    2.0
    %Total loans
    
    $
    390,776
    
    
    
    100.0
    %
    
    $
    403,167
    
    
    
    100.0
    %
    
    $
    (12,391
    )
    
    
    (3.1
    %)
  21




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##### Table of Contents



September 30, 2010Amortized
    
    
    Unrealized
    
    
    
    
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)Securities Available for SaleU.S. agency mortgage backed securities
    
    $
    37,591
    
    
    $
    373
    
    
    $
    (94
    )
    
    $
    37,870U.S. agency collateralized mortgage obligations
    
    
    7,703
    
    
    
    109
    
    
    
    (9
    )
    
    
    7,803Municipal securities
    
    
    504
    
    
    
    4
    
    
    
    (17
    )
    
    
    491Mutual fund and Trust preferred securities
    
    
    750
    
    
    
    17
    
    
    
    
    
    
    
    767Total Securities Available for Sale
    
    
    46,548
    
    
    
    503
    
    
    
    (120
    )
    
    
    46,931Held to Maturity SecuritiesMunicipal securities
    
    
    460
    
    
    
    5
    
    
    
    (1
    )
    
    
    464Trust preferred securities
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    250U.S. agency mortgage backed securities
    
    
    2,373
    
    
    
    67
    
    
    
    
    
    
    
    2,440Total Held to Maturity Securities
    
    
    3,083
    
    
    
    72
    
    
    
    (1
    )
    
    
    3,154Total Securities
    
    $
    49,631
    
    
    $
    575
    
    
    $
    (121
    )
    
    $
    50,085
 December 31, 2009Amortized
    
    
    Unrealized
    
    
    
    
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)Securities Available for SaleU.S. agency mortgage backed securities
    
    $
    41,847
    
    
    $
    237
    
    
    $
    (168
    )
    
    $
    41,916U.S. agency collateralized mortgage obligations
    
    
    18,541
    
    
    
    321
    
    
    
    (23.00
    )
    
    
    18,839Municipal securities
    
    
    4,515
    
    
    
    24
    
    
    
    (105
    )
    
    
    4,434Mutual fund and Trust preferred securities
    
    
    750
    
    
    
    
    
    
    
    (36
    )
    
    
    714Total Securities Available for Sale
    
    
    65,653
    
    
    
    582
    
    
    
    (332
    )
    
    
    65,903Held to Maturity SecuritiesMunicipal securities
    
    
    560
    
    
    
    4
    
    
    
    (15
    )
    
    
    549Trust preferred securities
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    250U.S. agency mortgage backed securities
    
    
    2,657
    
    
    
    21
    
    
    
    (8
    )
    
    
    2,670Total Held to Maturity Securities
    
    
    3,467
    
    
    
    25
    
    
    
    (23
    )
    
    
    3,469Total Securities
    
    $
    69,120
    
    
    $
    607
    
    
    $
    (355
    )
    
    $
    69,372
 22




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##### Table of Contents



September 30, 2010Less than 12 Months
    
    
    Over 12 MonthsGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value(In thousands)Securities Available for SaleU.S. agency mortgage backed securities
    
    $
    (94
    )
    
    $
    15,206
    
    
    
    
    
    
    
    U.S. agency collateralized mortgage obligations
    
    
    (9
    )
    
    
    927
    
    
    
    
    
    
    
    Municipal securities
    
    
    (17
    )
    
    
    648
    
    
    
    
    
    
    
    Mutual fund and trust preferred securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Securities Available for Sale
    
    $
    (120
    )
    
    $
    16,781
    
    
    $
    
    
    
    $
    
  December 31, 2009Less than 12 Months
    
    
    Over 12 MonthsGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value(In thousands)Securities Available for SaleU.S. agency mortgage backed securities
    
    $
    (166
    )
    
    $
    19,707
    
    
    $
    (2
    )
    
    $
    76U.S. agency collateralized mortgage obligations
    
    
    (15
    )
    
    
    3,265
    
    
    
    (8
    )
    
    
    662Municipal securities
    
    
    (20
    )
    
    
    1,026
    
    
    
    (85
    )
    
    
    2,115Mutual fund and trust preferred securities
    
    
    (5
    )
    
    
    495
    
    
    
    (31
    )
    
    
    219Total Securities Available for Sale
    
    $
    (206
    )
    
    $
    24,493
    
    
    $
    (126
    )
    
    $
    3,072
 23




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##### Table of Contents



September 30,
    
    
    December 31,2010
    
    
    2009(In thousands)Nonaccrual loans:Commercial real estate
    
    $
    31,673
    
    
    $
    16,020Commercial and industrial
    
    
    2,718
    
    
    
    584Residential real estate
    
    
    4,687
    
    
    
    5,673Home equity lines
    
    
    433
    
    
    
    219Consumer loans
    
    
    308
    
    
    
    378Credit cards
    
    
    
    
    
    
    Total
    
    
    39,819
    
    
    
    22,874Accruing loans delinquent more than 90 days:Commercial real estate
    
    $
    
    
    
    $
    Commercial and industrial
    
    
    
    
    
    
    Residential real estate
    
    
    
    
    
    
    Home equity lines
    
    
    
    
    
    
    Consumer loans
    
    
    
    
    
    
    Credit cards
    
    
    2
    
    
    
    7Total
    
    
    2
    
    
    
    7Total nonperforming loans
    
    $
    39,821
    
    
    $
    22,881Troubled debt restructured loans in accrual statusCommercial real estate
    
    $
    20,512
    
    
    $
    20,341Commercial and industrial
    
    
    73
    
    
    
    83Residential real estate
    
    
    1,267
    
    
    
    Total
    
    
    21,852
    
    
    
    20,424Other real estate owned:Commercial real estate
    
    
    7,477
    
    
    
    8,881Residential real estate
    
    
    824
    
    
    
    419Total
    
    
    8,301
    
    
    
    9,300Other repossessed assets  boats
    
    
    94
    
    
    
    494Total nonperforming loans to total loans
    
    
    10.19
    %
    
    
    5.68
    %Allowance for loan losses to nonperforming loans
    
    
    49.13
    %
    
    
    56.62
    %
   24




---



##### Table of Contents



Nine Months Ended
    
    
    Year EndedSeptember 30,
    
    
    December 31,2010
    
    
    2009(In thousands)Balance at beginning of the period
    
    $
    12,957
    
    
    $
    7,315Charge-offs:Commercial real estate
    
    
    8,017
    
    
    
    7,257Commercial and industrial
    
    
    586
    
    
    
    1,205Residential real estate
    
    
    1,287
    
    
    
    486Home equity lines
    
    
    302
    
    
    
    538Consumer loans
    
    
    416
    
    
    
    237Credit cards
    
    
    75
    
    
    
    54Total charge-offs
    
    
    10,683
    
    
    
    9,777Recoveries:Commercial real estate
    
    
    110
    
    
    
    72Commercial and industrial
    
    
    221
    
    
    
    400Residential real estate
    
    
    21
    
    
    
    23Home equity lines
    
    
    9
    
    
    
    3Consumer loans
    
    
    179
    
    
    
    71Credit cards
    
    
    2
    
    
    
    Total recoveries
    
    
    542
    
    
    
    569Net charge-offs (recoveries)
    
    
    10,141
    
    
    
    9,208Provision charged to earnings
    
    
    16,750
    
    
    
    14,850Balance at the end of the period
    
    $
    19,566
    
    
    $
    12,957As a percentage of total portfolio loans
    
    
    5.01
    %
    
    
    3.21
    %Ratio of net charge-offs during the
period to average loans during
the period on an annualized basis
    
    
    3.41
    %
    
    
    2.22
    %
  25




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##### Table of Contents



Liabilities
   Percentage
    
    
    
    
    
    
    PercentageSeptember 30,
    
    
    of total
    
    
    December 31,
    
    
    of total
    
    
    Net
    
    
    Net2010
    
    
    deposits
    
    
    2009
    
    
    deposits
    
    
    Change
    
    
    Change %(In thousands, except percentages)Noninterest bearing demand
    
    $
    53,165
    
    
    
    13.4
    %
    
    $
    45,716
    
    
    
    11.4
    %
    
    $
    7,449
    
    
    
    16.3
    %NOW accounts
    
    
    15,989
    
    
    
    4.0
    %
    
    
    17,059
    
    
    
    4.3
    %
    
    
    (1,070
    )
    
    
    (6.3
    %)Money market accounts
    
    
    10,526
    
    
    
    2.7
    %
    
    
    24,813
    
    
    
    6.2
    %
    
    
    (14,287
    )
    
    
    (57.6
    %)Savings deposits
    
    
    7,720
    
    
    
    1.9
    %
    
    
    8,800
    
    
    
    2.2
    %
    
    
    (1,080
    )
    
    
    (12.3
    %)Time deposits under $100,000
    
    
    131,583
    
    
    
    33.2
    %
    
    
    77,769
    
    
    
    19.4
    %
    
    
    53,814
    
    
    
    69.2
    %Time deposits $100,000 and over
    
    
    177,272
    
    
    
    44.7
    %
    
    
    226,974
    
    
    
    56.6
    %
    
    
    (49,702
    )
    
    
    (21.9
    %)Total deposits
    
    $
    396,255
    
    
    
    100.0
    %
    
    $
    401,131
    
    
    
    100.0
    %
    
    $
    (4,876
    )
    
    
    (1.2
    %)
 26




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##### Table of Contents



At and for thenine months
    
    At and for theended
    
    year endedSeptember 30,
    
    December 31,2010
    
    2009(Dollars in thousands)Amount outstanding at end of period:Short-term repurchase agreements
    
    $
    17,299
    
    
    $
    22,106Short-term FHLB advances
    
    $
    25,198
    
    
    $
    22,000Weighted average interest rate on ending balance:Short-term repurchase agreements
    
    
    0.88
    %
    
    
    1.49
    %Short-term FHLB advances
    
    
    2.09
    %
    
    
    4.56
    %Maximum amount outstanding at any month end
during the period:Short-term repurchase agreements
    
    $
    17,407
    
    
    $
    25,771Short-term FHLB advances
    
    $
    32,000
    
    
    $
    29,000Average amount outstanding during the period:Short-term repurchase agreements
    
    $
    18,902
    
    
    $
    20,863Short-term FHLB advances
    
    $
    22,399
    
    
    $
    31,000Weighted average interest rate:Short-term repurchase agreements
    
    
    1.14
    %
    
    
    1.55
    %Short-term FHLB advances
    
    
    2.92
    %
    
    
    4.03
    %
    Fair Value
    
    
    Average rateat end of period
    
    
    at end of period(In thousands, except percentages)Short-term FHLB advances
    
    $
    25,198
    
    
    
    2.09
    %Long-term FHLB advances
    
    $
    38,200
    
    
    
    4.52
    %$
    63,398
    
    
    
    3.55
    %
 27




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##### Table of Contents



Liquidity and Capital Resources
     28




---



##### Table of Contents



September 30,
    
    December 31,
    
    Minimum Ratio
    
    Ratio2010
    
    2009
    
    for Capital
    
    to beCapital
    
    Ratio
    
    Capital
    
    Ratio
    
    Adequacy Purposes
    
    Well Capitalized(In thousands, except percentages)Tier I capital to risk-weighted assetsConsolidated
    
    $
    3,336
    
    
    
    0.88
    %
    
    $
    24,584
    
    
    
    6.31
    %
    
    
    4
    %
    
    NABank only
    
    
    13,399
    
    
    
    3.53
    %
    
    
    31,133
    
    
    
    7.99
    %
    
    
    4
    %
    
    
    6
    %Total capital to risk-weighted assetsConsolidated
    
    $
    6,672
    
    
    
    1.76
    %
    
    $
    44,619
    
    
    
    11.44
    %
    
    
    8
    %
    
    NABank only
    
    
    18,321
    
    
    
    4.83
    %
    
    
    36,102
    
    
    
    9.27
    %
    
    
    8
    %
    
    
    10
    %Tier I capital to average assetsConsolidated
    
    $
    3,336
    
    
    
    0.64
    %
    
    $
    24,584
    
    
    
    4.47
    %
    
    
    4
    %
    
    NABank only
    
    
    13,399
    
    
    
    2.56
    %
    
    
    31,133
    
    
    
    5.67
    %
    
    
    4
    %
    
    
    5
    %
  29




---



##### Table of Contents



AccumulatedOtherPreferred
    
    
    Common
    
    
    Retained
    
    
    Comprehensive
    
    
    TotalStock
    
    
    Stock
    
    
    Deficit
    
    
    Income
    
    
    EquityBeginning balance, January 1, 2010
    
    $
    7,146
    
    
    $
    32,214
    
    
    $
    (15,536
    )
    
    $
    164
    
    
    $
    23,988Issuance of Preferred Stock
    
    
    499
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    499Cash dividend
    
    
    
    
    
    
    
    
    
    
    (253
    )
    
    
    
    
    
    
    (253
    )Stock awards
    
    
    
    
    
    
    13
    
    
    
    (10
    )
    
    
    
    
    
    
    3Share based compensation
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Net loss
    
    
    
    
    
    
    
    
    
    
    (12,236
    )
    
    
    
    
    
    
    (12,236
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    73Ending balance, September 30, 2010
    
    $
    7,645
    
    
    $
    32,302
    
    
    $
    (28,035
    )
    
    $
    237
    
    
    $
    12,149
  Preferred Stock Issuance
   30




---



##### Table of Contents



Net Interest Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2010 vs. 2009
    
    
    September 30, 2010 vs. 2009Increase (Decrease)
    
    
    
    
    
    
    Increase (Decrease)Due to Changes In
    
    
    
    
    
    
    Due to Changes InVolume
    
    
    
    
    
    
    
    
    
    
    VolumeTotal
    
    
    and Both
    
    
    Rate
    
    
    Total
    
    
    and Both
    
    
    Rate(In thousands)Earning Assets  Interest Income:Loans
    
    $
    (512
    )
    
    $
    (258
    )
    
    $
    (254
    )
    
    $
    (1,568
    )
    
    $
    (1,015
    )
    
    $
    (553
    )Securities, including trading
    
    
    (341
    )
    
    
    (115
    )
    
    
    (226
    )
    
    
    (1,233
    )
    
    
    (495
    )
    
    
    (738
    )Federal funds sold
    
    
    16
    
    
    
    13
    
    
    
    3
    
    
    
    59
    
    
    
    63
    
    
    
    (4
    )Total
    
    
    (837
    )
    
    
    (360
    )
    
    
    (477
    )
    
    
    (2,742
    )
    
    
    (1,447
    )
    
    
    (1,295
    )Deposits and Borrowed Funds  Interest Expense:NOW and money market accounts
    
    
    (24
    )
    
    
    (2
    )
    
    
    (22
    )
    
    
    (81
    )
    
    
    5
    
    
    
    (86
    )Savings deposits
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )
    
    
    (8
    )
    
    
    1
    
    
    
    (9
    )Time deposits
    
    
    (337
    )
    
    
    257
    
    
    
    (594
    )
    
    
    (985
    )
    
    
    897
    
    
    
    (1,882
    )FHLB advances and
repurchase agreements
    
    
    (510
    )
    
    
    (353
    )
    
    
    (157
    )
    
    
    (1,393
    )
    
    
    (1,195
    )
    
    
    (198
    )Subordinated debentures
    
    
    
    
    
    
    (1,728
    )
    
    
    1,728
    
    
    
    10
    
    
    
    (911
    )
    
    
    921Total
    
    
    (874
    )
    
    
    (1,826
    )
    
    
    952
    
    
    
    (2,457
    )
    
    
    (1,203
    )
    
    
    (1,254
    )Net Interest Income
    
    $
    37
    
    
    $
    1,466
    
    
    $
    (1,429
    )
    
    $
    (285
    )
    
    $
    (244
    )
    
    $
    (41
    )
   31




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##### Table of Contents



32




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##### Table of Contents



Average Balance Sheet
  Three Months Ended September 30,2010
    
    
    2009Average
    
    
    
    
    
    
    
    
    
    
    AverageInterest
    
    
    Rate
    
    
    
    
    
    
    Interest
    
    
    RateAverage
    
    
    Income/
    
    
    Earned/
    
    
    Average
    
    
    Income/
    
    
    Earned/Balance
    
    
    Expense
    
    
    Paid
    
    
    Balance
     
    
    Expense
    
    
    Paid(In thousands)AssetsLoans
    
    $
    399,070
    
    
    
    5,998
    
    
    
    6.03
    %
    
    $
    416,713
    
    
    
    6,510
    
    
    
    6.27
    %Securities
    
    
    56,052
    
    
    
    378
    
    
    
    2.70
    %
    
    
    73,247
    
    
    
    719
    
    
    
    3.93
    %Federal funds sold
    
    
    46,062
    
    
    
    25
    
    
    
    0.22
    %
    
    
    20,840
    
    
    
    9
    
    
    
    0.17
    %Total Earning Assets /
Total Interest Income / Average Yield
    
    
    501,184
    
    
    
    6,401
    
    
    
    5.12
    %
    
    
    510,800
    
    
    
    7,238
    
    
    
    5.68
    %Cash and due from banks
    
    
    1,614
    
    
    
    
    
    
    
    
    
    
    
    10,807All other assets
    
    
    21,641
    
    
    
    
    
    
    
    
    
    
    
    25,483Total Assets
    
    $
    524,439
    
    
    
    
    
    
    
    
    
    
    $
    547,090Liabilities & Stockholders EquityNOW and money market accounts
    
    $
    36,043
    
    
    
    31
    
    
    
    0.34
    %
    
    $
    38,961
    
    
    
    55
    
    
    
    0.57
    %Savings deposits
    
    
    9,366
    
    
    
    10
    
    
    
    0.43
    %
    
    
    8,941
    
    
    
    13
    
    
    
    0.58
    %Time deposits
    
    
    306,290
    
    
    
    1,960
    
    
    
    2.57
    %
    
    
    266,745
    
    
    
    2,297
    
    
    
    3.45
    %FHLB advances and repurchase agreements
    
    
    92,490
    
    
    
    832
    
    
    
    3.61
    %
    
    
    132,010
    
    
    
    1,342
    
    
    
    4.08
    %ESOP Loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subordinated debentures
    
    
    1,828
    
    
    
    311
    
    
    
    68.24
    %
    
    
    11,140
    
    
    
    311
    
    
    
    6.71
    %Total Interest Bearing Liabilities/
Total Interest Expense / Average
Interest Rate Spread
    
    
    446,017
    
    
    
    3,144
    
    
    
    2.83
    %
    
    
    457,797
    
    
    
    4,018
    
    
    
    3.52
    %Noninterest bearing deposits
    
    
    58,437
    
    
    
    
    
    
    
    
    
    
    
    52,903All other liabilities
    
    
    4,081
    
    
    
    
    
    
    
    
    
    
    
    3,681Stockholders equity
    
    
    15,904
    
    
    
    
    
    
    
    
    
    
    
    32,709Total Liabilities & Equity
    
    $
    524,439
    
    
    
    
    
    
    
    
    
    
    $
    547,090Net Interest Income
    
    
    
    
    
    $
    3,257
    
    
    
    
    
    
    
    
    
    
    $
    3,220Net Interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.29
    %
    
    
    
    
    
    
    
    
    
    
    2.16
    %Net Interest Margin (Net Interest Income /
Total Earning Assets)
    
    
    
    
    
    
    
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    2.53
    %Net Interest Margin (fully taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    2.56
    %
 33




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##### Table of Contents



Nine Months Ended September 30,2010
    
    
    2009Average
    
    
    
    
    
    
    
    
    
    
    AverageInterest
    
    
    Rate
    
    
    
    
    
    
    Interest
    
    
    RateAverage
    
    
    Income/
    
    
    Earned/
    
    
    Average
    
    
    Income/
    
    
    Earned/Balance
    
    
    Expense
    
    
    Paid
    
    
    Balance
    
    
    Expense
    
    
    Paid(In thousands)AssetsLoans
    
    $
    401,495
    
    
    
    17,855
    
    
    
    5.95
    %
    
    $
    424,447
    
    
    
    19,423
    
    
    
    6.12
    %Securities
    
    
    59,222
    
    
    
    1,343
    
    
    
    3.02
    %
    
    
    80,920
    
    
    
    2,576
    
    
    
    4.24
    %Federal funds sold
    
    
    59,890
    
    
    
    81
    
    
    
    0.18
    %
    
    
    13,246
    
    
    
    22
    
    
    
    0.22
    %Total Earning Assets /
Total Interest Income / Average Yield
    
    
    520,607
    
    
    
    19,279
    
    
    
    4.95
    %
    
    
    518,613
    
    
    
    22,021
    
    
    
    5.68
    %Cash and due from banks
    
    
    1,924
    
    
    
    
    
    
    
    
    
    
    
    11,290All other assets
    
    
    24,131
    
    
    
    
    
    
    
    
    
    
    
    26,008Total Assets
    
    $
    546,662
    
    
    
    
    
    
    
    
    
    
    $
    555,911Liabilities & Stockholders EquityNOW and money market accounts
    
    $
    39,744
    
    
    
    124
    
    
    
    0.42
    %
    
    $
    37,873
    
    
    
    205
    
    
    
    0.72
    %Savings deposits
    
    
    9,358
    
    
    
    36
    
    
    
    0.51
    %
    
    
    9,056
    
    
    
    44
    
    
    
    0.65
    %Time deposits
    
    
    315,800
    
    
    
    6,487
    
    
    
    2.75
    %
    
    
    272,388
    
    
    
    7,472
    
    
    
    3.67
    %FHLB advances and repurchase agreements
    
    
    97,792
    
    
    
    2,852
    
    
    
    3.90
    %
    
    
    138,794
    
    
    
    4,245
    
    
    
    4.09
    %ESOP Loan
    
    
    
    
    
    
    
    
    
    
    0.00
    %
    
    
    
    
    
    
    
    
    
    
    Subordinated debentures
    
    
    5,971
    
    
    
    934
    
    
    
    20.91
    %
    
    
    11,796
    
    
    
    924
    
    
    
    10.47
    %Total Interest Bearing Liabilities/
Total Interest Expense / Average
Interest Rate Spread
    
    
    468,665
    
    
    
    10,433
    
    
    
    2.98
    %
    
    
    469,907
    
    
    
    12,890
    
    
    
    3.67
    %Noninterest bearing deposits
    
    
    56,191
    
    
    
    
    
    
    
    
    
    
    
    48,647All other liabilities
    
    
    3,706
    
    
    
    
    
    
    
    
    
    
    
    3,512Stockholders equity
    
    
    18,100
    
    
    
    
    
    
    
    
    
    
    
    33,845Total Liabilities & Equity
    
    $
    546,662
    
    
    
    
    
    
    
    
    
    
    $
    555,911Net Interest Income
    
    
    
    
    
    $
    8,846
    
    
    
    
    
    
    
    
    
    
    $
    9,131Net Interest rate spread
    
    
    
    
    
    
    
    
    
    
    1.97
    %
    
    
    
    
    
    
    
    
    
    
    2.01
    %Net Interest Margin (Net Interest Income /
Total Earning Assets)
    
    
    
    
    
    
    
    
    
    
    2.27
    %
    
    
    
    
    
    
    
    
    
    
    2.20
    %Net Interest Margin (fully taxable equivalent)
    
    
    
    
    
    
    
    
    
    
    2.28
    %
    
    
    
    
    
    
    
    
    
    
    2.27
    %
 Provision for Loan Losses
  34




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##### Table of Contents



Noninterest Income
   Noninterest Expense
   Provision for Income Taxes
  35




---



##### Table of Contents



Asset/Liability Management
     36




---



##### Table of Contents



After Three
    
    
    After OneWithin
    
    
    Months But
    
    
    Year But
    
    
    AfterThree
    
    
    Within
    
    
    Within
    
    
    FiveMonths
    
    
    One Year
    
    
    Five Years
    
    
    Years
    
    
    Total(In thousands)Interest earning assets:Excess cash and fed funds sold
    
    $
    24,732
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    24,732Securities, at amortized cost
    
    
    3,000
    
    
    
    10,441
    
    
    
    23,258
    
    
    
    12,932
    
    
    
    49,631FHLB stock
    
    
    
    
    
    
    5,877
    
    
    
    
    
    
    
    
    
    
    
    5,877Loans (including held for sale)
    
    
    110,656
    
    
    
    82,953
    
    
    
    158,155
    
    
    
    45,461
    
    
    
    397,225Total
    
    
    138,388
    
    
    
    99,271
    
    
    
    181,413
    
    
    
    58,393
    
    
    $
    477,465Interest bearing liabilitiesNOW and money market accounts
    
    
    9,380
    
    
    
    5,210
    
    
    
    11,399
    
    
    
    526
    
    
    
    26,515Savings deposits
    
    
    463
    
    
    
    2,007
    
    
    
    5,250
    
    
    
    
    
    
    
    7,720Jumbo time deposits
    
    
    38,099
    
    
    
    28,654
    
    
    
    110,519
    
    
    
    
    
    
    
    177,272Time deposits < $100,000
    
    
    15,384
    
    
    
    44,195
    
    
    
    72,004
    
    
    
    
    
    
    
    131,583Repurchase agreements
    
    
    20,341
    
    
    
    
    
    
    
    19,000
    
    
    
    
    
    
    
    39,341FHLB
    
    
    10,000
    
    
    
    15,198
    
    
    
    22,500
    
    
    
    15,700
    
    
    
    63,398Subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,557
    
    
    
    18,557Total
    
    
    93,667
    
    
    
    95,264
    
    
    
    240,672
    
    
    
    34,783
    
    
    $
    464,386Rate sensitivity gap
    
    $
    44,721
    
    
    $
    4,007
    
    
    $
    (59,259
    )
    
    $
    23,610Cumulative rate sensitivity gap
    
    
    
    
    
    $
    48,728
    
    
    $
    (10,531
    )
    
    $
    13,079Rate sensitivity gap ratio
    
    
    1.48x
    
    
    
    1.04x
    
    
    
    0.75x
    
    
    
    1.68xCumulative rate sensitivity gap ratio
    
    
    
    
    
    
    1.26x
    
    
    
    0.98x
    
    
    
    1.03x
  37




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##### Table of Contents



Percentage ChangeInterest Rate Scenario
    
    In Net Interest IncomeInterest rates up 400 basis points
    
    
    11.9
    %Interest rates up 300 basis points
    
    
    10.2
    %Interest rates up 200 basis points
    
    
    7.4
    %Interest rates up 100 basis points
    
    
    3.5
    %Base Case
    
    
    Interest rates down 100 basis points
    
    
    (6.97
    %)Interest rates down 200 basis points
    
    
    (15.53
    %)Interest rates down 300 basis points
    
    
    (24.72
    %)
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
    38




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##### Table of Contents



PART II
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 See Item 1A. Risk Factors in our Form 10-K for a discussion of certain risks inherent in our
business. In addition, the following risk factors should also be considered.
 We are subject to additional requirements and restrictions on our operations as a result of the Banks significantly undercapitalized status.
  There is substantial doubt about our ability to continue as a going concern.
  We may be subjected to negative publicity that may adversely affect our business, financial
condition, liquidity and results of operations.
  We are subject to restrictions on the amount of interest that we can pay our customers, which could
cause our deposits to decrease. Because we depend on deposits as a source of liquidity, a decrease
in deposits would adversely affect our ability to continue as a going concern.
  It is unlikely that we will be able to return to the business of originating new loans or offering
new products.
  39




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##### Table of Contents



We have deferred payment of interest on our subordinated debentures in connection with the issuance
of our trust preferred securities and suspended dividend payments on our Series A and Series B
preferred stock.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3b. Defaults upon Senior Securities.
  
 Item 4. Reserved.
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
 See Exhibit Index attached.
 
   COMMUNITY CENTRAL BANK CORPORATIONBy:
    
    S/ RAY T. COLONIUSRay T. Colonius;Interim President and CEO(Principal Executive Officer)By:
    
    S/ RAY T. COLONIUSRay T. Colonius;Treasurer(Principal Financial and Accounting Officer)
 40




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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT DESCRIPTION3.1
    
    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).3.2
    
    Bylaws, as amended, of the Corporation are incorporated by reference to
Exhibit 3 of the Corporations Current Quarterly Report on Form 8-K filed on
September 19, 2007 (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).4.2
    
    Certificate of Designation of Community Central Bank Corporation filed on
December 30, 2008 with the State of Michigan designating the preferences,
limitations, voting powers and relative rights of the Series A Preferred Stock, is
incorporated by reference to Exhibit 4.1 of the Corporations Current Report on Form
8-K filed on January 6, 2009. (SEC File No. 000-33373)4.3
    
    Certificate of Designation of Community Central Bank Corporation filed on
October 2, 2009 with the State of Michigan designating the preferences, limitations,
voting powers and relative rights of the Series B Preferred Stock, is incorporated
by reference to Exhibit 4.1 of the Corporations Current Report on Form 8-K filed on
October 5, 2009. (SEC File No. 000-33373)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).10.2
    
    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).10.3
    
    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).10.4
    
    Community Central Bank Supplemental Executive Retirement Plan, as
amended, and Individual Participant Agreements are incorporated by reference to
Exhibit 10.6 of the Corporations Annual Report on Form 10-K filed with the SEC for
the year ended December 31, 2006 (SEC File No. 000-33373).10.5
    
    Community Central Bank Death Benefit Plan, as amended, is incorporated by
reference to Exhibit 10.7 of the Corporations Annual Report on Form 10-K for the
year ended December 31, 2006 (SEC File No. 000-33373).10.6
    
    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).10.7
    
    Form of Non-qualified Stock Option Agreement is incorporated by reference
to the Corporations Current Report on Form 8-K filed on January 17, 2006 (SEC File
No. 000-33373).
 41




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##### Table of Contents



EXHIBITNUMBER
    
    EXHIBIT DESCRIPTION10.8
    
    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 Earnings31.1
    
    Rule 13a  14(a) Certification (Chief Executive Officer)31.2
    
    Rule 13a  14(a) Certification (Chief Financial Officer)32
    
    Rule 1350 Certifications
 42