UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995.
Commission file number 0-10669
C B & T, Inc.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1121054
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1O1 East Main Street
McMinnville, Tennessee 37110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (615) 473-2148
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
which registered
None
__
Securities registered pursuant to Section 12(g) of the Act:
Common Stock par value $2.50 per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 1O-K or any amendment to this Form 10-K. [X]
This filing contains 55 pages.
The aggregate market value of the voting stock held by non-
affiliates of C B & T, Inc. as of March 1, 1996 was $24,183,692.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of
March 1, 1996 -- 269,667 shares.
<PAGE> 1
DOCUMENTS INCORPORATED BY REFERENCE
1. Proxy statements for 1995 annual shareholders' meeting of
April 9, 1996 -- Part I and III
2. Annual Report to shareholders for year ended December 31,
1995 -- Parts I and II.
<PAGE> 2
PART I.
Item 1. Business
(a) General Development of Business
C B & T, Inc. ("C B & T") was incorporated in October, 1981 to
take advantage of the opportunities afforded bank holding
companies for expansion of banking operations and diversification
into activities closely related to banking. In September, 1982,
C B & T commenced operations as a registered bank holding company
and The City Bank and Trust Company became a wholly-owned
subsidiary of C B & T. C B & T engages and proposes to engage
in various business activities permitted bank holding companies,
either directly, through newly formed subsidiaries, or through
acquisitions. In 1983, the name of The City Bank and Trust
Company was changed to City Bank & Trust Company ("the Bank").
The Bank extended its services into DeKalb County, Tennessee,
with the July, 1983, acquisition of the assets of The First
Central Bank, Smithville, Tennessee, from the Federal Deposit
Insurance Corporation (the "FDIC"). The Bank subsequently
reopened the offices of The First Central Bank as the Bank's
Smithville Branch.
(b) Financial Information About Industry Segments
C B & T is a financial services organization incorporated in
Tennessee and registered under the Bank Holding Company Act of
1956, as amended (the "Bank Holding Company Act"). The Bank
which is a wholly-owned subsidiary of C B & T, services the
Warren County and DeKalb County, Tennessee trade area and
provides traditional banking services throughout the area.
(c) Narrative Description of Business
Supervision and Regulation
As a registered bank holding company within the meaning of the
Bank Holding Company Act, the financial condition and operations
of C B & T as well as those of its subsidiary are subject to
examination and supervision by the Board of Governors of the
Federal Reserve System (the "Board of Governors"). C B & T is
required to file with the Board of Governors an annual report and
such additional information as may be required. The Bank Holding
Company Act generally limits the business in which a bank holding
company may engage to banking, managing or controlling banks, and
furnishing or performing services for the banks controlled by it.
The major exception to this rule is that, pursuant to Section
4(c)(8) of the Bank Holding Company Act, a bank holding company
may engage in non-banking activities which, or may acquire shares
in any company the activities of which, the Board of Governors
has determined, by regulation or order, to be so closely related
to banking or managing or controlling banks as to be a proper
incident thereto. The non-banking activities of C B & T and the
Bank are so limited.
The Bank Holding Company Act requires that a bank holding company
obtain prior approval of the Board of Governors before (1)
acquiring directly or indirectly (except in certain limited
circumstances) ownership or control of more than 5% of the voting
stock of a bank, (2) acquiring substantially all of the assets of
a bank, or (3) merging or consolidated with another bank holding
company. The Bank Holding Company Act provides that the Board of
Governors shall not approve any such acquisition, merger, or
consolidation: (a) which would result in a monopoly, or which
would be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the
<PAGE> 3
Item 1. Business-Continued
business of banking in any part of the United States; or (b) the
effect of which, in any section of the country, may be to
substantially lessen competition, or to tend to create a
monopoly, or which in any other manner would be in restraint of
trade, unless the Board of Governors finds that the anti-
competitive effects of the proposed transaction are clearly
outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the community
to be served. In conducting its review of any application for
approval the Board of Governors is required to consider the
financial and managerial resources and future prospects of the
company or companies and the banks concerned, and the convenience
and needs of the community to be served. The Bank Holding
Company Act further requires that consummation of approved
acquisitions or mergers be delayed for a period of not less than
30 days following the date of such approval during which time
company parties may obtain a review of the Board of Governors'
order by filing a petition praying that the order be set aside in
the United States Court of Appeals for the District of Columbia
Circuit, or in the Court of Appeals for the circuit in which the
complaining party has his, her, or its principal place of
business. If no action based on the antitrust laws is commenced
before the termination of the thirty-day period, the acquisition
or merger may not thereafter be attacked in any judicial
proceeding on the ground that it alone and of itself constituted
a violation of any antitrust laws other than Section 2 of the
Sherman Antitrust Act.
Except in certain circumstances, the Bank Holding Company Act
also prohibits a bank holding company from acquiring a bank
outside the state where the bank holding company's banking
business is principally conducted, unless the laws of the state
where the bank is located specifically, and not merely by
implication, authorize such acquisitions by out-of-state bank
holding companies. The Tennessee General Assembly enacted a
national reciprocal interstate banking act permitting banking
combinations with banking institutions located anywhere in the
United States, which became effective January 1, 1991.
Effective September 29, 1995, the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 ("IBBEA") amends the Bank
Holding Company Act of 1956 to permit a bank holding company to
acquire a bank located in any state, provided that the
acquisition does not result in the bank holding company
controlling more than 10% of the deposits in the United States or
30% of deposits in the state in which the bank to be acquired is
located. A state may waive the 30% deposit limitation. IBBEA
also permits individual states to restrict the ability of an out-
of-state bank holding company or bank to acquire an instate bank
that has been in existence for less than five years and to
establish a state concentration limit of less than 30% if such
reduced limit does not discriminate against out-of-state bank
holding companies or banks.
Effective June 1, 1997, an "adequately capitalized" bank, with
the approval of the appropriate federal banking agency, may merge
with another adequately capitalized bank in any state that has
not opted out of interstate branching and operate the target's
offices as branches if certain conditions are satisfied. The
same national (10%) and state (30%) deposit concentration limits
and any applicable state minimum-existence restrictions (up to a
maximum of five years) apply to interstate mergers as to
interstate acquisitions. The applicant also must comply with any
nondiscriminatory host state filing and notice requirements and
demonstrate a record of compliance with applicable federal and
state community reinvestment laws. A state may opt out of
interstate branching by enacting a law before June 1, 1997,
expressly prohibiting interstate merger transactions.
<PAGE> 4
Item 1. Business-Continued
Under IBBEA, the resulting bank to an interstate merger may
establish or acquire additional branches at any location in a
state where any of the banks involved in the merger could have
established or acquired a branch. A bank also may acquire one or
more branches of an out-of-state bank if the law of the target's
home state permits such action. In addition, IBBEA permits a
bank to establish a de novo branch in another state if the host
state by statute expressly permits de novo interstate branching.
IBBEA also permits a bank subsidiary of a bank holding company to
act as agent for other depository institutions owned by the same
holding company for purposes of receiving deposits, renewing time
deposits, closing or servicing loans, and receiving loan payments
effective as of September 29, 1995. Under IBBEA, a savings
association may perform similar agency services for affiliated
banks to the extent that the savings association was affiliated
with a bank on July 1, 1994, and satisfies certain additional
requirements.
The foregoing provisions of IBBEA may increase competition,
within CB&T's existing market area. It is uncertain whether
IBBEA will make banks in predominantly rural markets like
McMinnville more or less attractive acquisition candidates of
larger banks and bank holding companies.
The Federal Reserve Act imposer strict limitations on investments
by subsidiary banks in the stock or other securities of their
parent bank holding company or any of its other subsidiaries and
on the taking of such stock or securities as collateral for loans
to any borrowers. In addition, the Federal Reserve Act imposes
strict limitations on extensions of credit and other transactions
by and between subsidiary banks and their parent bank holding
company or any of its other subsidiaries. The 1974 Amendments to
the Federal Reserve Act also granted the Board of Governors
discretionary authority to regulate interest rates on debt
obligations issued by bank holding company affiliates of banks
which are members of the Federal Reserve System. This authority
does not extend to commercial paper.
The Bank Holding Company Act, as amended, and regulations of the
Board of Governors thereunder prohibit a bank holding company and
its subsidiaries from engaging in certain tie-in arrangements in
connection with any extension of credit, lease, or sale of
property or the furnishing of services. The Bank Holding Company
Act requires that a corporation, partnership, trust, or other
specified entity obtain prior approval of the Board of Governors
before taking any action that causes the corporation to become a
bank holding company, which may occur if it acquires ownership,
control, or the power to vote 25% or more of any class of voting
securities of a bank, or if it otherwise controls the election of
a majority of the directors of the bank, or if the Board of
Governors determines that it exercises a controlling influence
over the management or policies of the bank. Although the Bank
Holding Company Act does not apply to the acquisition of a bank
by an individual, any individual or group of individuals acting
in concert that proposes to acquire control of a bank insured
under the Federal Deposit Insurance Act or the control of a bank
holding company that has control of any such insured bank, must
provide sixty days prior written notice to the appropriate
federal banking agency, which may disapprove the proposed action
under certain standards specified in the Change in Bank Control
Act. For purposes of the change in Bank Control Act, control
means the power to direct the management or policies of the bank
or to vote 25% or more of any class of voting securities of the
bank. Bank holding company acquisitions of banks and bank
holding companies pursuant to certain provisions of the Bank
Holding Company Act are exempt from the Change in Bank Control
Act.
<PAGE> 5
Item 1. Business-Continued
Tennessee Bank Holding Company Regulation
C B & T is prohibited under Tennessee law from acquiring a bank
outside the four major metropolitan areas (Shelby, Davidson,
Knox, and Hamilton Counties in which Memphis, Nashville,
Knoxville, and Chattanooga are located, respectively) unless the
bank has been incorporated more than five years or is in
financial difficulty as determined by the appropriate regulatory
agency and the regulatory agency approves the acquisition. A
bank holding company is prohibited from acquiring any Tennessee
bank if the holding company's banks control as much as 16 1/2% of
the total deposits in all federally insured financial
institutions in Tennessee. Tennessee banking laws permit a bank
to serve as the agent of another bank for the purposes of
accepting deposits, loan payments, or other payments of funds on
behalf of the bank without regard to the locations of the
respective banks. Under Tennessee law, banks may branch state-
wide, subject in certain instances to the approval by the
Tennessee Commissioner of Financial Institutions.
The Bank
The operations of the Bank are affected by various requirements
and restrictions imposed by the laws of the United States and the
State of Tennessee, including requirements to maintain reserves
against deposits, limitations on the interest rates that may be
paid on various types of deposits, and restrictions on the nature
and amount of loans that may be granted and on the types of
investments that may be made. The operations of the Bank are
also affected by various consumer laws and regulations, including
those relating to equal credit opportunity and regulation of
consumer lending practices. All subsidiary banks of a bank
holding company must become and remain insured banks under the
Federal Deposit Insurance Act.
The Bank is chartered under the banking laws of Tennessee and, as
such is subject to the applicable provisions of such loans.
Tennessee banks are required to maintain certain cash reserves
either directly or indirectly. As a member of the FDIC, the Bank
is subject to the provisions of the Federal Deposit Insurance
Act. The bank, as a state bank whose deposits are insured by the
FDIC, may not engage as principal in any type of activity that is
impermissible for a national bank, unless the FDIC has determined
that the activity would not pose a significant risk to the
deposit insurance fund and the Bank meets applicable capital
standards. The Bank is subject to supervision and regular
examination by the FDIC and by the Tennessee Department of
Financial Institutions. A Tennessee bank may declare dividends
not more than once in each calendar quarter from its undivided
profits account.
Community Investment
The Bank is subject to the provisions of the Community
Reinvestment Act ("CRA"). Under this Act, the Bank has a
continuing and affirmative obligation, consistent with safe and
sound operation, to help meet the credit needs of its entire
community, including low and moderate income neighborhoods. The
CRA does not establish specific lending requirements or programs
for financial institutions, nor does it limit an institution's
discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent
with the CRA. The CRA requires the FDIC, in connection with its
examination of the Bank, to assess the institution's record of
meeting the credit needs of its community and to take such record
into account in its evaluation of certain applications by the
Bank. Information concerning the Bank's CRA rating can be
obtained by contacting its main office at 101 East Main Street,
McMinnville, TN 37110.
<PAGE> 6
Item 1. Business-Continued
Restrictions on Dividends Paid by Subsidiary Banks
Substantially all of the funds available for the payment of
dividends by C B & T are derived from the Bank. Both federal and
state laws impose restrictions on the ability of the Bank to pay
dividends.
The Tennessee banking statutes provide that the directors of a
state bank, after making proper deduction for all expenditures,
expenses, taxes, losses, bad debts, and any write-offs or other
deductions required by the Department of Finance Institutions,
may credit net profits to the bank's undivided profits account,
and therefrom may quarterly, semi-annually, or annually declare a
dividend in such amount as they shall judge expedient after
deducting any net loss from the undivided profits account and
transferring to the bank's surplus account (1) the amount (if
any) required to raise the surplus to 50% of the capital stock
and (2) an amount, not less than 10% of net profits, until the
surplus equals the capital stock, provided that the bank has
adequately reserved against deposits and such reserve will not be
impaired by the declaration of the dividend. A state bank, with
the approval of the Department of Financial Institutions, may
transfer funds from its surplus account to the undivided profits
account or any part of its capital stock account.
The payment of dividends by any bank is, of course, dependent
upon its earnings and financial condition and, in addition to the
limitations referred to above, is subject to the statutory power
of certain federal and state regulatory agencies to act to
prevent unsafe or unsound banking practices.
Usury Provisions
The Constitution of the State of Tennessee requires the state
legislature to fix interest rates in the State of Tennessee. The
Tennessee General Assembly has adopted such statutes. The
general interest rate statutes currently in effect establish a
maximum rate of interest at 4% above the average prime loan rate
(or the average short-term business loan rate, however
denominated) for the most recent week for which such average rate
has been published by the Board of Governors or 24% per annum,
whichever is lower. In the event that the Board of Governors
fails to publish the average rate for four consecutive weeks or
the maximum rate of interest should be adjudicated or become
inapplicable for any reason whatsoever, the maximum rate of
interest is denied to be 24% until the Tennessee General Assembly
otherwise provides. As of December 31, 1995, the maximum
effective rate in the state of Tennessee was 12.5%.
Although the statutory maximum effective rate in the state of
Tennessee as of December 31, 1995, was 12.5%, decisions by
Federal District Courts have held that notwithstanding the
general interest rate statutes described above, the maximum rate
of interest that a state bank may charge is 24%, at least with
respect to the types of loans that a Tennessee industrial loan
and thrift company registered under the provisions of Tennessee
law would have been authorized to make. In general, a Tennessee
industrial loan and thrift company is authorized to charge
interest at a rate of 24% on loans of $100 or more. These
Federal District Court decisions have observed that under federal
law, a national bank can charge interest at the highest rate
allowed by state law in the state where the national bank is
located and held that a national bank in Tennessee can charge
interest at the same rate as a Tennessee industrial loan and
thrift company.
<PAGE> 7
Item 1. Business-Continued
Tennessee banking laws permit a state bank to make loans upon the
same terms and at the maximum effective interest rate as
authorized on credit extended by national banks in Tennessee.
These decisions held that a state bank in Tennessee therefore can
charge the same rate of interest as a Tennessee industrial loan
and thrift company.
The relative importance of the usury laws to the financial
operations of C B & T and the Bank varies from time, to time,
depending on a number of factors, including conditions in the
money markets, the cost and the availability of funds, and
prevailing interest rates. The management of C B & T is unable
to state whether existing usury laws have had or will have a
material adverse effect on the business or earnings of C B & T or
the Bank.
Competition
The banking business in the areas served by the Bank is highly
competitive. Competition exists with other area banks for
deposits, loans, and trust accounts, and with larger banks
located in some of the principal cities within Tennessee and
certain other states for commercial loans and trust services.
The Bank also competes for funds with savings and loan
associations and certain government agencies and in the open
money market. Competition also exists for loans from other
financial institutions, such as savings banks, savings and loan
associations, insurance companies, small loan companies, credit
unions, and certain governmental agencies.
Subsidiary
City Bank & Trust Company
The Bank commenced operations in 1912 as a state chartered bank
under the laws of the State of Tennessee. In September, 1982,
the Bank, pursuant to a corporate reorganization, became a wholly
owned subsidiary of C B & T, a one-bank holding company.
On July 8, 1983, the Bank acquired certain assets and assumed
certain liabilities of The First Central Bank, Smithville,
Tennessee, which commenced operations as the City Bank & Trust
Company, Smithville Branch, on July 11, 1983, which extended the
Banks services into DeKalb County in addition to Warren County.
The Bank conducts a full service banking and trust business in
Warren County and DeKalb County, Tennessee. The Bank's main
office is located in McMinnville, Warren County, Tennessee, and
the Bank operates a full service branch in Smithville, DeKalb
County, Tennessee. There are four banks, including the Bank, one
federal savings bank, one federal savings and loan association,
and one federal credit union within Warren County, which has a
population of approximately 33,000. DeKalb County has a
population of approximately 14,400 and is served by four banks,
including the Bank's Smithville Branch. Both counties are
centers of a diversified commercial, industrial, agricultural,
and tourism area.
The Bank offers such customary commercial banking services as
checking and savings accounts, certificates of deposit, safe
deposit facilities and money transfers. Its principal source of
income is from interest earned on personal, commercial,
agricultural, real estate, and installment loans.
<PAGE> 8
Item 1. Business-Continued
The Bank's Trust Department acts as trustee, executor, and
administrator under wills, and serves in trustee, conservator, VA
guardian, and agent capacities for individual and corporate
customers. It functions as trustee under bond indentures, as well
as trustee and administrator under pension, IRA, SEPP, and other
employee benefit plans for corporations and other organizations.
The Bank handles approximately 520 individual and corporate trust
accounts, and provides investment management and other related
services. The Bank's Trust Department had assets of
approximately $59,475,000 under management as of December 31,
1995. These assets are not included as assets in the balance
sheet of the Bank or C B & T.
Employees
C B & T, including the Bank, has approximately 117 employees,
which includes 2 part-time employees. Four of the Bank's
officers are also officers of C B & T. None of the Bank's
employees are covered by a collective-bargaining agreement.
Distribution of Assets, Liabilities and Stockholder's Equity;
Interest Rate and Interest Differential
This table is incorporated herein by reference as a financial
table pages 35-38 which are attached to and made a part of the
Annual Report to Shareholders which is attached hereto as Exhibit
13.
Investment Portfolio
The investment portfolio is incorporated herein by reference to
Notes to Consolidated Financial Statements pages 20-21 which are
attached and made a part of the Annual Report to Shareholders
which is attached hereto as Exhibit 13.
Loan Portfolio
The loan portfolio is incorporated herein by reference to Notes
to Consolidated Financial Statements pages 22-23 which are
attached to and made a part of Annual Report to Shareholders
which is attached hereto as Exhibit 13.
Risk Element
The risk element is incorporated herein by reference to Notes to
Consolidated Financial Statements page 23 which is attached to
and made a part of Annual Report to Shareholders which is
attached hereto as Exhibit 13.
Summary of Loan Loss Experience
The summary of loan loss experience is incorporated by reference
as a financial table page 39 which is attached to and made a part
of Annual Report to Shareholders which is attached hereto as
Exhibit 13.
<PAGE> 9
Item 1. Business-Continued
Allocation of the Allowance for Possible Credit Losses
The allocation of the allowance for possible credit loss is
incorporated herein by reference to Management's Discussion and
Analysis of Financial Condition and Results of Operation pages 7-
11 which are attached to and made a part of Annual Report to
Shareholders which is attached hereto as Exhibit 13.
Deposits
The deposits are incorporated herein by reference to Notes to
Consolidated Financial Statements page 26 which is attached to
and made a part of Annual Report to Shareholders which is
attached hereto as Exhibit 13.
Financial Ratios
Financial ratios are incorporated by reference as a financial
table page 40 which is attached to and made a part of Annual
Report to Shareholders which is attached hereto as Exhibit 13.
Short-Term Borrowings
There were no short-term borrowings with an average balance
outstanding during the year as great as 30% of shareholders'
equity at December 31, 1995.
<PAGE> 10
Item 2. Properties
A discussion of the properties owned by the Corporation and the
Bank is incorporated herein by reference to Notes to Consolidated
Financial Statements page 24 which is attached to and made a part
of Annual Report to Shareholders which is attached hereto as
Exhibit 13.
Item 3. Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business known to
the Board of Directors to which C B & T or the Bank is a party or
of which any of their property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to the Shareholders during the fourth
quarter of the fiscal year ended December 31, 1995.
<>PAGE> 11
Item 4(b). Executive Officers of Registrant
The following is a list of February 29, 1996 showing the names
and ages of all executive officers of the registrant, the nature
of any family relationship between them, and all positions and
offices held by each of them:
Name Age Positions and Offices Held
Jeffrey A. Golden* 55 Chairman of the Corporation and the
Bank since October 1994. President
and Chief Executive Officer of
the Corporation since November, 1981
and the Bank since January, 1979.
M. Thomas Mullican* 74 Vice Chairman of Corporation since
April, 1983; Board of Directors of
Corporation since November, 1981.
Farmer and Investor.
Larry E. Brown* 49 Executive Vice President of the
Corporation and the Bank since April,
1987; Senior Vice President of the
Corporation and the Bank, 1986 - 1987.
Ann Martin 46 Secretary of Corporation since
November, 1986; Secretary to the
Board since January, 1995.
James H. Hillis 56 Treasurer of the Corporation since
October, 1983; Senior Vice President
of the Bank since March, 1983.
* Member of C B & T's Executive Committee
All of the officers of C B & T listed above are subject to re-
election at the Board of Directors meeting following the Annual
Meeting of Shareholders scheduled for April 9, 1996.
<PAGE> 12
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters
The market for C B & T's Common Stock and related shareholder
matters are incorporated herein by reference to Common Stock
Market Price Information on page 41 of the Annual Report to
Shareholders which is attached hereto as Exhibit 13.
Item 6. Selected Financial Data
The selected financial data is incorporated herein by reference
to Consolidated Selected Financial Data on page 41 of the Annual
Report to Shareholders which is attached hereto as Exhibit 13.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and
Results of Operations is incorporated herein by reference to
Management's Discussion and Analysis of Financial Condition and
Results of Operations on pages 7-11 of the Annual Report to
Shareholders which is attached hereto as Exhibit 13.
Item 8. Financial Statements and Supplementary Data
Financial statements and supplementary data are incorporated
herein by reference to the Consolidated Financial Statements on
pages 12-34 of the Annual Report to Shareholders which is
attached hereto as Exhibit 13.
Item 9. Disagreements with Accountants on Accounting and
Financial Disclosure
C B & T and its accountants have had no reportable disagreement
on any matter of accounting principles or practices or financial
statement disclosure.
<PAGE> 13
PART III
Item 10. Directors and Executive Officers of the Registrant
(a)Identification of Directors Information regarding
identification of directors is hereby incorporated from the
Election of Directors section of C B & T's definitive proxy
statement for use in connection with the Annual Meeting of
Shareholders to be held April 9, 1996 ("Current Proxy
Statement") on pages 2, 3, 4 and 5.
(b)Identification of Executive Officers Information regarding
identification of executive officers may be found in Item
4(b) of Part I of this Form 10-K.
(c)Section 16(a) Reporting Delinquencies Information regarding
Section 16(a) Reporting Delinquencies is hereby incorporated
from the Section 16(a) Reporting Delinquencies section of C B
& T's Current Proxy Statement on page 13.
Item 11. Executive Compensation
Information regarding management compensation is hereby
incorporated from the Executive Compensation section of C B & T's
Current Proxy Statement on pages 9, 10, and 11.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information regarding security ownership of certain beneficial
owners and management is hereby incorporated from the Information
Regarding Certain Beneficial Owners section of C B & T's Current
Proxy Statement on pages 3, 4, 5 and 6.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related
transactions is hereby incorporated from the Certain
Relationships and Related Transactions section of C B & T's
Current Proxy Statement on page 13.
<PAGE> 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K *
(a) (1) and (2) -The response to this
portion of Item 14 is submitted as a separate
section of this report.
(3) - The following exhibits are filed herewith:
(13) Annual report to security holders
(b) - Form 8-K was filed on July 19, 1995 to report
a change in accounting firms.
* Bylaws remain the same as those included in the Form 10-K
submitted for the fiscal year ended December 31, 1994.
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
C B & T, Inc.
By /s/ Jeffrey A. Golden
Jeffrey A. Golden, Chairman,
President, Chief Executive Officer
Date March 12, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Jeffrey A. Golden
Jeffrey A. Golden, Chairman
President, Chief Executive Officer
(Principal Executive and Financial Officer)
Date March 12, 1996
/s/ Susan M. Young
Susan M. Young, Vice President
City Bank & Trust Company
(Principal Accounting Officer)
Date March 12, 1996
<PAGE> 16
SIGNATURES -- Continued
/s/ Robert W. Boyd, Sr. /s/ James H. Hillis
Robert W. Boyd, Sr., Director James H. Hillis, Director
Date March 12, 1996 Date March 12, 1996
/s/ Larry E. Brown /s/ J. Paul Holder
Larry E. Brown, Director J. Paul Holder, Director
Date March 12, 1996 Date March 12, 1996
/s/ John R. Collier, Jr. /s/ M. Thomas Mullican
John R. Collier, Jr., Director M. Thomas Mullican, Director
Date March 12, 1996 Date March 12, 1996
/s/ James A. Dillon, Jr. /s/ James A. Puckett
James A. Dillon, Jr., Director James A. Puckett, Director
Date March 12, 1996 Date March 12, 1996
/s/ Jeffrey A. Golden /s/ Leon B. Stribling
Jeffrey A. Golden, Director Leon B. Stribling, Director
Date March 12, 1996 Date March 12, 1996
/s/ Charles D. Haston /s/ James E. Walling
Charles D. Haston, Director James E. Walling, Director
Date March 12, 1996 Date March 12, 1996
<PAGE> 17
Form 10-K -- Item 14(a)(1) and (2) and Item 14(d)
C B & T, Inc. and Subsidiary
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of C B & T, Inc.
and Subsidiary, included in the annual report of the registrant
to its shareholders for the year ended December 31, 1995, and
incorporated by reference in Item 8:
Independent Auditors' Report
Consolidated Balance Sheets -- December 31, 1995 and 1994
Consolidated Statements of Income -- Years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity -- Years
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows -- Years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements -- December 31,
1995, 1994 and 1993
All schedules to the consolidated financial statements required
by Article 9 of Regulation S-X are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
<PAGE> 18
EXHIBIT INDEX
C B & T, INC.
Exhibit Number Title or Description
(13) Annual report to security holders
<PAGE> 19
EXHIBIT 13
ANNUAL REPORT TO SHAREHOLDERS
C B & T, INC.
<PAGE> 20
Financial Discussion
The following discussion is presented to assist in understanding
the current financial condition and results of operations of C B
& T, Inc. and its subsidiary, City Bank & Trust Company. This
discussion should be read in conjunction with the consolidated
financial statements and related disclosures presented in other
sections of this annual report.
PERFORMANCE OVERVIEW
Net income for 1995 was $4,067,000 or $15.00 per share, compared
to $4,260,000 or $14.37 per share in 1994 and $4,966,000 or
$15.58 per share in 1993. Two key measures of performance in
the banking industry are return on average equity (ROE) and
return on average assets (ROA). ROE is the ratio of income
earned to average shareholders' equity. ROE for 1995 was 14.37
percent compared to 15.12 percent in 1994 and 18.80 percent in
1993. ROA measures how effectively a corporation uses its assets
to produce earnings. For 1995, return on average assets was 1.64
percent. ROA was 1.68 percent in 1994 and 2.03 percent in 1993.
ROE and ROA have been negatively impacted by a downward trend in
the net interest margin. ROE and ROA decreases are the results
of increase in the cost of deposits.
NET INTEREST INCOME
The Corporation's primary source of earnings is net interest
income, which is the difference between revenue generated from
earning assets and the interest cost of funding those assets.
For discussion, net interest income is adjusted to reflect the
effect of the tax benefits of certain tax-exempt investments and
loans to compare with other sources of interest income. Net
interest income on a fully taxable-equivalent basis has declined
to $11,344,000 in 1995, from $12,073,000 in 1994 and $12,481,000
in 1993. Net interest margin, which is net interest income
divided by average earning assets, was 4.87 percent in 1995,
compared with 5.07 percent in 1994 and 5.43 percent for 1993.
Average earning assets, as a percentage of total assets,
increased slightly to 93.9 percent in 1995 compared to 93.8
percent in 1994 and 94.2 percent in 1993.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses is an operating expense
recorded to maintain the related balance sheet allowance account
that is provided to cover losses that may be incurred in the
normal course of lending. The total provision for loan and real
estate losses was $376,000 in 1995, $330,000 in 1994 and $431,000
in 1993. Management regularly monitors the allowance for
possible loan losses and considers it to be adequate.
NONINTEREST INCOME
Total noninterest income of $1,743,000 in 1995 increased $403,000
or 30.1 percent, when compared to 1994. This follows a decrease
of 22.7 percent during 1994 and an increase of 9.4 percent during
1993. Service charges on deposit accounts increased $71,000 in
1995 due, principally, to growth in transaction and savings
deposit accounts coupled with price increases. Gains and losses
on the sale of investment securities also impact comparisons.
Security transactions resulted in losses of $14,000 and $308,000
in 1995 and 1994 as compared to a gain of $93,000 in 1993.
<PAGE> 7
NONINTEREST EXPENSES
Noninterest expenses increased 3.2 percent in 1995, a
significantly slower rate of growth than the 6.5 percent in 1994
and 7.1 percent in 1993. The increase in 1995 can be attributed
to higher levels of expense relative to salaries. Salaries,
wages and benefits accounted for 56.0 percent of total
noninterest expense in 1995, compared to 54.1 percent in 1994 and
54.1 percent in 1993. These increases are primarily attributable
to the increased cost of benefits and merit raises. Federal
Deposit Insurance Corporation's insurance assessment decreased
$235,000 in 1995 as compared to an increase of $5,000 in 1994 and
$39,000 in 1993.
INCOME TAXES
One element of the Corporation's tax planning is the
implementation of various investment and loan strategies to
maximize after-tax profits. This planning is an ongoing process
which considers the levels of tax-exempt securities and loans,
investment securities gains or losses and allowable loan loss
deductions. The Corporation's effective income tax rate (income
tax expense divided by income before income taxes) is less than
the statutory rate primarily due to income on tax-exempt
securities and loans. It should be recognized that the yield on
these types of assets is considerably less than on other
investments of the same maturity and risk.
The income tax provision was $1,788,000 in 1995, compared with
$1,944,000 in 1994 and $2,159,000 in 1993. The Corporation's
effective tax rate was 30.5 percent in 1995, 31.3 percent in 1994
and 30.3 percent in 1993.
It has been determined that for the year ended December 31, 1995,
a valuation allowance is not required on any of the deferred tax
assets recorded due, primarily, to the earnings history of the
Corporation and the significant amount of federal income taxes
paid in prior years.
CREDIT QUALITY AND EXPERIENCE
Impaired Loans
Effective January 1, 1995, the Corporation and the Bank adopted
Statement of Financial Accounting Standards No. 114. (as amended
by No 118), "Accounting by Creditors for Impairment of a Loan".
SFAS 114 established the accounting by creditors for impairment
of a loan by specifying how allowances for possible loan losses
related to certain loans should be determined. This Statement
also addresses the accounting by creditors for certain loans that
are restructured in a troubled debt restructuring. A loan is
considered impaired when it is probable that an institution will
be unable to collect all amounts due (principal and interest)
according to the contractual terms of the loan agreement. The
management evaluates smaller balance homogeneous loans
collectively for impairment. Loans collateralized by one-to-four
family residential properties, consumer installment loans and
credit card loans are considered smaller-balance homogeneous
loans.
Loans that are ninety days past-due, loans on non-accrual status,
and loans that are included on the Bank's problem loan list are
evaluated for impairment. A loan on non-accrual status is a loan
on which interest accruals are discontinued. Interest accruals
are discontinued when management believes, after considering
economic and business conditions and collection efforts, that the
borrower's financial condition is such that it is not reasonable
to expect that such interest will be collected. Interest income
is subsequently recognized only to the extent of the excess of
cash payments received over the principal balance due.
When a loan is impaired, the amount of impairment is measured
based on the present value of expected future cash flows
discounted at the loan's effective interest rate. For collateral
dependent loans, impairment is measured based on a loan's
observable market price or the fair value of the collateral. The
Bank does not recognize interest income on impaired loans and the
entire change in the net carrying amount is reported as an
adjustment to the provision for possible loan losses, but in no
event are changes in the net present value used to justify having
a loan on the Bank's books at a value that exceeds its recorded
investment. Impaired loans are charged-off once management has
exhausted all efforts to collect the loan.
Inherent in the business of providing financial services is the
risk involved in extending credit. Management believes the
objective of a sound credit policy is to extend quality loans to
customers while reducing risk affecting shareholders' and
depositors' investments. Risk reduction is achieved through
diversity of the loan portfolio as to type, borrower, and
industry concentration as well as sound credit policy guidelines
and procedures.
Total nonperforming loans at December 31, 1995 were $398,000
compared to $1,825,000 at December 31, 1994 and $2,063,000 at
December 31, 1993. The ratio of nonperforming loans to the
allowance for loan losses at December 31, 1995, was 21.4 percent
compared to 105.3 percent and 128.9 percent at December 31, 1994
and 1993, respectively. Total nonperforming loans as a
percentage of total loans decreased to 0.3 percent at December
31, 1995, compared to 1.4 percent at December 31, 1994 and 1.8
percent at December 31, 1993
<PAGE> 8
Allowance for Possible Loan Losses and Loan Charge-Offs
The allowance for possible loan losses is the reserve maintained
to cover losses that may be incurred in the normal course of
lending. The allowance for possible loan losses is increased by
provisions charged against income and recoveries of loans
previously charged off. The allowance is decreased by loans that
are determined uncollectible by management and charged against
the allowance, net of recoveries.
In determining the adequacy of the allowance for possible loan
losses, management on a regular basis evaluates and gives
consideration to the following factors: estimated future losses
of significant loans including identified problem credits;
historical loss experience based on volume and types of loans;
trends in portfolio volume, maturity and composition; off-balance
sheet credit risk; volume and trends in delinquencies and non-
accruals; economic conditions in the market area; and any other
relevant factors that may be pertinent.
Potential problem loans are those loans which are on the
Corporation's "watch list". These loans exhibit characteristics
that could cause the loans to become nonperforming or require
restructuring in the future. Periodically, and at a minimum
monthly, this "watch list' is reviewed and adjusted for changing
conditions.
FINANCIAL CONDITION
The following discussions address key elements of financial
condition, including earning assets, the source of funds
supporting earning assets, capital adequacy and asset and
liability management.
EARNING ASSETS
Loans
At December 31, 1995, loans were $140.5 million, compared to
$129.5 million at December 31, 1994. This represents an increase
of 8.5 percent in 1995. In 1994 loans increased 10.3 percent,
from $117.4 million at December 31, 1993.
Loans comprise the majority of the Corporation's earning assets
representing 56.5 percent of average earning assets in 1995 and
49.2 percent in 1994. Average loans outstanding increased 12.5
percent in 1995 and 5.8 percent in 1994.
The largest category in the loan portfolio was real estate
mortgage loans, which comprised 63.8 percent of total loans at
the end of 1995. Installment loans totaled 21.9 percent of the
portfolio and commercial loans comprised 12.5 percent of the
portfolio. All other loans were 1.8 percent of the portfolio.
In 1994 real estate mortgages were 65.9 percent of the portfolio,
installment loans were 21.8 percent, commercial loans were 10.9
percent and other loans were 1.4 percent.
The mix within the commercial loan portfolio is diverse and
represents loans to a broad range of business interests located,
primarily, within the Bank's defined market area with
agribusiness industry being the only concentration. The
installment loan portfolio is composed, principally, of financing
to individuals for vehicles and consumer assets. The real estate
portfolio is primarily residential mortgages.
Fixed rate loans maturing within one year and loans with
adjustable rates that reprice annually or more frequently
(exclusive of scheduled repayments) totaled $50,392,000, or 35.9
percent of the loan portfolio at December 31, 1995.
Investment Securities
The investment portfolio represented 41.3 percent of average
earning assets in 1995 and 50.1 percent in 1994. Average
investment securities decreased 19.5 percent in 1995 compared to
1994. The tax-equivalent yield on the entire portfolio was 7.01,
6.75 and 7.42 percent in 1995, 1994 and 1993, respectively.
These investments provide a stable yet diversified income stream
and serve useful roles in liquidity and interest-rate-sensitivity
management. In addition, they serve as a source of collateral
for low-cost funding. The decision to purchase securities is
based upon the assessment of current economic, tax status and
financial trends.
<PAGE> 9
The investment portfolio is comprised of U.S. Treasury and other
U.S. Government agency-backed securities, collateralized mortgage-
backed securities, tax-exempt obligations of states and political
subdivisions and certain other investments. The quality of
obligations of states and political subdivisions will be A, AA,
or AAA, the majority of which will be AA or AAA, as rated by a
nationally recognized service. As a matter of policy, in support
of our service area, we may purchase certain unrated bonds of
local municipalities provided they are of reasonable credit risk.
On November 15, 1995, the Financial Accounting Standards Board
issued a guide for the implementation of SFAS 115 which allows a
bank to reassess the appropriateness of the classification of all
securities held at November 15, 1995 and until December 31, 1995,
and account for any resulting changes in classifications as a
transfer. Changes in classification from the held-to-maturity
category that result from this one-time reassessment will not
call into question the intent of a bank to hold other debt
securities to maturity in the future. As a result of this one-
time reassessment, on November 30, 1995, the Bank transferred
securities with a book value of approximately $42.8 million and
related unrealized gains and losses of approximately $0.8 million
and $0.2 million, respectively (net unrealized gain of
approximately $0.6 million), from held-to-maturity to available-
for-sale.
As of December 31, 1995, all investment securities were
classified as available-for-sale. Management classified all
securities as available-for-sale so that securities may be sold
prior to their maturity for purposes of bank asset allocations,
rate sensitivity or liquidity and, hence, tend to be more liquid.
Federal Funds Sold
Short-term federal funds sold are used to manage interest rate
sensitivity and to meet liquidity needs. During 1995, 1994 and
1993, these funds represented approximately 2.2 percent, 0.7
percent and 1.3 percent, respectively, of average earning assets.
SOURCES OF FUNDS
Deposits
The Corporation's major source of investable funds is core
deposits from retail and business customers. Core deposits
consist of interest-bearing and noninterest-bearing deposits,
including certificates of deposit over $100,000. Average
interest-bearing core deposits, comprised of interest-bearing
checking accounts, savings, certificates of deposit, money market
and other time accounts, reduced 5.3 percent in 1995, compared to
1.1 percent growth in 1994 and 1.9 percent growth in 1993.
Average demand deposits (noninterest-bearing core deposits)
increased 10.3 percent in 1995, 9.5 percent in 1994 and 26.6
percent in 1993. These deposits represent approximately 13.1 and
11.4 percent of average core deposits in 1995 and 1994
respectively.
Federal Home Loan Bank Borrowings
In 1995 these borrowings increased slightly to 4.0 percent of
average assets compared to 3.1 percent in 1994.
Shareholders' Equity and Capital Adequacy
Shareholders' equity is a stable, noninterest-bearing source of
funds which provides support for asset growth. Capital adequacy
refers to the level of capital required to sustain growth over
time and to absorb unanticipated losses. Shareholders' equity at
December 31, 1995, was $30.7 million, or $113.92 per share,
compared with $26.6 million, or $97.61 per share at December 31,
1994 and $28.6 million, or $89.60 per share at December 31, 1993.
At December 31, 1995, the Corporation's leverage ratio was 11.6
percent. The Corporation's risk-based capital ratios based on
Federal Reserve Board guidelines were 21.0 percent for Tier 1, or
"core" capital, and 22.3 percent for total qualifying capital.
These ratios substantially exceed the Federal Reserve Board's
capital guidelines for a well-capitalized institution, which are
6.00 percent for Tier 1, 10.00 percent for total qualifying
capital, and 5.00 percent for leverage ratio. It is management's
intent to maintain a level of capitalization that allows the
flexibility to take advantage of opportunities that may arise in
the future.
<PAGE> 10
INTEREST RATE SENSITIVITY
Balance sheet structure and interest rate changes play important
roles in the growth of net interest income. The Bank's
Asset/Liability Committee manages the overall rate sensitivity
and mix of the balance sheet to anticipate and minimize the
effects of interest rate fluctuations and to maintain a
consistent net interest margin. Interest rate risk is monitored
through gap analysis to ensure proper positioning of the
Corporation in various interest rate scenarios.
LIQUIDITY
Liquidity management ensures that the cash flow requirements of
borrowers, depositors and the Corporation can be met. The funds
for short-term liquidity needs are provided through maturing
securities, the Bank's extensive core deposit base, payments
received on loans and the acquisition of new deposits. Long-term
funding needs can additionally be met, if required, through the
issuance of common stock. The Corporation's liquidity is
considered by management to be adequate to meet all current and
projected levels of need.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS ON THE
FINANCIAL STATEMENTS WHEN ADOPTED IN A FUTURE PERIOD
The Financial Accounting Standards Board (FASB) has issued two
standards that have not been adopted by C B & T, Inc. but will be
required to be adopted after December 31, 1995 as follows:
1. Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of
(a)Effective date - Financial statements for years beginning
after December 15, 1995.
(b) The statement establishes guidance on when to recognize
and how to measure impairment losses of long-lived assets
and certain identifiable intangibles and how to value long-
lived assets to be disposed of.
(c)An asset that an entity will hold and use should be
reviewed for impairment whenever events or changes in
circumstances indicate that its carrying amount may not be
recoverable. In such situations, an impairment loss is
recognized if the sum of undiscounted future cash flows
expected to be generated by the asset is less than the
carrying amount of the asset. Measurement of the
impairment loss, however, is based on the fair value of the
asset.
(d)Management does not believe this statement will have any
material effect on future income.
2. Statement of Financial Accounting No. 122, Accounting for
Certain Mortgage Banking Activities.
(a) Effective date - Financial statements for years
beginning after December 15, 1995; however, on adoption,
this statement requires impairment evaluation of all
capitalized mortgage servicing rights, regardless of when
capitalized.
(b) This statement requires mortgage banking enterprises
to recognize rights to service mortgage loans for others as
separate assets, regardless of how the servicing rights are
acquired. If the mortgage banking enterprise sells or
securitizes mortgage loans originated or purchased and
retains the mortgage servicing rights, the cost of the
mortgage loans is allocated to the mortgage servicing
rights and the mortgage loans without servicing rights
based on their fair values, if it is practicable to
estimate the fair values.
(c) Mortgage servicing rights are to be assessed for
impairment based on their fair value. Impairment is
recognized through a valuation allowance for each impaired
group of mortgage servicing rights. Rights capitalized
after adoption of this statement should be grouped based on
the risk characteristics of the underlying loans.
(d) Management does not believe this statement will have any
material effect on future income.
<PAGE> 11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
C B & T, Inc.
McMinnville, Tennessee
We have audited the accompanying consolidated balance sheet
of C B & T, Inc. (the "Corporation") and its wholly-owned
subsidiary, City Bank & Trust Company (the "Bank"), as of
December 31, 1995, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then
ended. These consolidated financial statements are the
responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audit. The consolidated
financial statements of C B & T, Inc. and subsidiary as of
December 31, 1994, and for each of the two years in the period
then ended, were audited by other auditors whose report dated
January 18, 1995, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of C B & T, Inc. and subsidiary as of December
31, 1995, and the consolidated results of their operations and
their cash flows for the year then ended in conformity with
generally accepted accounting principles.
As discussed in Notes 1 and 2 to the consolidated financial
statements, effective January 1, 1994, the Corporation and the
Bank changed their method of accounting for investments in debt
and equity securities. Also, as discussed in Notes 1 and 3,
effective January 1, 1995, the Corporation and the Bank adopted
the method of accounting for impaired loans prescribed by
Statement of Financial Accounting Standards No. 114, as amended
by No. 118.
Nashville, Tennessee
February 1, 1996
<PAGE> 12
C B & T, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(Dollars in Thousands, Except Share Data)
1995 1994
ASSETS
Cash and due from banks $ 8,596 $ 9,434
Federal funds sold 4,700 -
Investment securities - Note 2 97,643 110,319
Loans, net of unearned income and
allowance for possible loan losses
- Notes 3 and 4 136,539 126,137
Interest receivable 3,061 2,942
Bank premises and equipment, at cost
less allowances for depreciation - Note 5 2,131 2,372
Other assets - Notes 6 and 11 3,212 3,769
TOTAL ASSETS $255,882 $254,973
LIABILITIES
Deposits:
Noninterest-bearing deposits $ 28,174 $ 26,919
Interest-bearing deposits
(including certificates ofdeposit
over $100: 1995 - $27,287; 1994 $31,269) 185,083 185,902
213,257 212,821
Federal funds purchased - Note 7 - 5,700
Accounts payable and accrued liabilities 1,382 1,179
Interest payable 1,296 855
Federal Home Loan Bank borrowings - Note 8 9,226 7,821
TOTAL LIABILITIES 225,161 228,376
COMMITMENTS AND CONTINGENCIES - Notes
9, 10 and 16
SHAREHOLDERS' EQUITY - Note 13
Common stock, $2.50 par value,
authorized 1,000,000 shares; issued
331,814 shares, including 62,147
treasury shares in 1995 and 59,325
treasury shares in 1994 830 830
Additional paid-in capital 5,000 5,000
Retained earnings - Note 14 28,815 25,973
Net unrealized gains (losses) on
available-for-sale securities, net
of deferred income taxes of:
1995 - ($559); 1994 - $403 - Note 2 912 ( 657)
35,557 31,146
Less cost of treasury shares ( 4,836) ( 4,549)
TOTAL SHAREHOLDERS' EQUITY 30,721 26,597
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $255,882 $254,973
See accompanying notes to consolidated
financial statements.
<PAGE> 13
C B & T, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars in Thousands, Except Share Data)
1995 1994 1993
INTEREST INCOME
Interest and fees on loans $ 13,021 $ 11,196 $ 10,923
Interest on investment securities:
Taxable interest 5,025 5,857 5,965
Tax-exempt interest 1,180 1,460 1,751
6,205 7,317 7,716
Other interest income 301 59 91
TOTAL INTEREST INCOME 19,527 18,572 18,730
INTEREST EXPENSE
Interest on deposits 8,069 6,712 6,799
Interest on other borrowed funds - Note 7 56 64 -
Interest on long-term debt - Note 8 593 475 353
TOTAL INTEREST EXPENSE 8,718 7,251 7,152
NET INTEREST INCOME 10,809 11,321 11,578
Provision for possible loan
losses - Note 4 376 330 431
Net interest income after provision
for possible loan losses 10,433 10,991 11,147
NONINTEREST INCOME
Service charges on deposit accounts 1,064 993 961
Other service charges, commissions
and fees 310 214 250
Net realized gains (losses) on
investment securities ( 14)( 308) 93
Other income 383 441 429
TOTAL NONINTEREST INCOME 1,743 1,340 1,733
NONINTEREST EXPENSES
Salaries and employee benefits -
Notes 11 and 17 3,540 3,317 3,116
Net occupancy expense 283 275 295
Furniture and equipment expense 764 651 551
Deposit insurance premium 242 477 472
Other expenses 1,492 1,407 1,321
TOTAL NONINTEREST EXPENSES 6,321 6,127 5,755
INCOME BEFORE PROVISION FOR
INCOME TAXES 5,855 6,204 7,125
Provision for income taxes - Note 6 1,788 1,944 2,159
NET INCOME $ 4,067 $ 4,260 $ 4,966
Weighted average number of shares
outstanding 271,150 296,456 318,833
Per share of Common Stock:
Net income $ 15.00 $ 14.37 $ 15.58
Dividends - Note 14 4.50 4.10 3.95
See accompanying notes to consolidated financial statements.
<PAGE> 14
C B & T, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars in Thousands, Except Share Data)
Net Unrealized
Gains (Losses)
Additional on Available-
Common Stock Paid-in Retained For-Sale Treasury
Shares Amount Capital Earnings Securities Shares Total
BALANCE -
JANUARY 1, 1993 331,814 $830 $5,000 $19,245 $ ($ 210) $24,865
Net income for 1993 - - - 4,966 - - 4,966
Cash dividends - - - ( 1,259) - - ( 1,259)
Purchase of
outstanding
Common Stock - - - - - ( 7)( 7)
BALANCE -
DEC 31, 1993 331,814 830 5,000 22,952 - ( 217) 28,565
Cumulative effect
of change in
accounting principle,
net of $1,232
deferred income
taxes - Note 1 - - - - 2,011 - 2,011
Net income for 1994 - - - 4,260 - - 4,260
Cash dividends - - - ( 1,239) - - ( 1,239)
Purchase of
outstanding
Common Stock - - - - - ( 4,332) ( 4,332)
Net change in
unrealized gains
(losses)
on available-for-sale
securities,net of
$1,635 deferred
income taxes - - - -( 2,688) - (2,668)
BALANCE -
DEC 31, 1994 331,814 830 5,000 25,973( 657) ( 4,549) 26,597
Net income
for 1995 - - - 4,067 - - 4,067
Cash dividends - - -( 1,225) - - ( 1,225)
Purchase of
outstanding
Common Stock - - - - - ( 287) ( 287)
Adjustment to account
for transfer of
securities from
held-to-maturity
to available-for-sale,
net of deferred
income taxes - Note 1 - - - - 375 - 375
Net change in unrealized
gains (losses) on
available-for-sale
securities, net
of $732 deferred
income taxes - - - - 1,194 - 1,194
BALANCE -
DEC 31, 1995 331,814 $830 $5,000 $28,815 $ 912 ($4,836) $30,721
See accompanying notes to consolidated financial statements.
<PAGE> 15
C B & T, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars in Thousands, Except Share Data)
1995 1994 1993
OPERATING ACTIVITIES
Net income for the year $ 4,067 $ 4,260 $ 4,966
Adjustments to reconcile net income to net
cash provided by operating activities:
Stock dividend ( 79)( 52) ( 26)
Provision for loan losses 376 330 431
Provision for depreciation and amortization 481 415 376
Amortization of investment security premiums,
net of accretion of discounts 11 - -
Net realized (gains) losses on investment
securities 14 308 ( 93)
Net loss on the disposal of fixed assets 4 - -
Deferred income taxes ( 107)( 114) ( 135)
Decrease (increase) in interest receivable( 119)( 90) 167
Increase (decrease) in interest payable 441 146 ( 105)
Decrease (increase) in other assets ( 40)( 415) 305
Increase in other liabilities 203 57 32
Other, net - 251 ( 62)
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,252 5,096 5,856
INVESTING ACTIVITIES
Purchases of investment securities ( 23,970)( 36,893) (31,048)
Proceeds from sale of investment securities 22,537 21,346 3,839
Proceeds from maturities, calls and principal
collections of investment securities 16,615 18,680 24,064
Net increase in loans ( 10,778)( 12,304) ( 5,377)
Purchases of premises and equipment ( 245)( 654) ( 517)
Increase in cash value of life insurance ( 179)( 184) ( 183)
Other - - ( 247)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 3,980 ( 10,009) ( 9,469)
FINANCING ACTIVITIES
Net increase (decrease) in interest-bearing
and noninterest-bearing deposits 436 3,422 ( 3,109)
Net increase (decrease) in federal funds
purchased ( 5,700) 5,700 -
Cash dividends ( 1,225)( 1,239) ( 1,259)
Purchase of outstanding common stock ( 287)( 4,332) ( 7)
Proceeds from long-term debt 4,000 639 8,024
Repayments of long-term debt ( 2,594)( 547) ( 644)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ( 5,370) 3,643 3,005
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,862 ( 1,270) ( 608)
CASH AND CASH EQUIVALENTS -
BEGINNING OF YEAR 9,434 10,704 11,312
CASH AND CASH EQUIVALENTS -
END OF YEAR $13,296 $ 9,434 $10,704
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest expense $ 8,281 $ 7,105 $ 7,256
Income taxes 1,753 2,189 2,360
See accompanying notes to consolidated financial statements.
<PAGE> 16
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
C B & T, Inc. (the "Corporation") is a one-bank holding company
formed in 1981, with a wholly-owned subsidiary, City Bank &
Trust Company, McMinnville, Tennessee (the "Bank"). The Bank,
which is regulated by the Federal Deposit Insurance Corporation
and Tennessee Department of Financial Institutions, provides
deposit services and grants real estate, commercial,
agricultural and consumer loans to customers primarily in Warren
and DeKalb counties of Tennessee.
The accounting principles followed and the methods of applying
those principles conform with generally accepted accounting
principles and to general practices in the banking industry.
The significant policies are summarized as follow:
Principles of Consolidation
The accompanying consolidated financial statements present the
accounts and operations of the Corporation and the Bank.
Material intercompany accounts and transactions have been
eliminated in consolidation.
Cash and Due from Banks
Reserve requirements amounted to approximately $1.4 million at
December 31, 1995.
Cash Equivalents
Cash equivalents include amounts due from banks, interest-
bearing deposits in other banks and federal funds sold.
Generally, federal funds are purchased or sold for one-day
periods.
Investment Securities
Effective January 1, 1994, the Bank adopted and implemented
Statement of Financial Accounting Standards No.115 (SFAS 115),
"Accounting for Certain Investments in Debt and Equity
Securities", which requires that securities be categorized as
held-to-maturity, available-for-sale, and trading securities.
In accordance with the Statement, prior period financial
statements were not restated to reflect the change in accounting
principle. The cumulative effect as of January 1, 1994 of
adopting Statement 115 was an increase in shareholders' equity
of $2.011 million (net of $1.232 million in deferred income
taxes) to reflect the net unrealized gains on securities
classified as available for sale that were previously carried at
amortized cost.
On November 15, 1995, the Financial Accounting Standards Board
issued a guide for the implementation of SFAS 115 which allows a
bank to reassess the appropriateness of the classification of
all securities held at November 15, 1995 and until December 31,
1995, and account for any resulting changes in classifications
as a transfer. Changes in classification from the held-to-
maturity category that result from this one-time reassessment
will not call into question the intent of a bank to hold other
debt securities to maturity in the future. As a result of this
one-time reassessment, on November 30, 1995, the Bank
transferred securities with a book value of approximately $42.8
million and related unrealized gains and losses of approximately
$0.8 million and $0.2 million, respectively (net unrealized gain
of approximately $0.6 million), from held-to-maturity to
available-for-sale.
Trading Securities
Debt and equity securities held principally for resale in the
near term are classified as trading account securities and
recorded at their fair values. Unrealized gains and losses on
trading account securities are recognized currently.
Securities Held-to-Maturity
Debt securities which the Bank has the positive intent and
ability to hold to maturity are reported at cost, adjusted for
premiums and discounts that are recognized in interest income
using the interest method over the period to maturity.
Securities Available-for-Sale
Available-for-sale securities not classified as trading or held-
to-maturity are classified as available for sale. Unrealized
holding gains and losses, net of deferred income taxes, on
available-for-sale securities are reported as a net amount in a
separate component of shareholders' equity until realized.
Realized gains and losses on the sale of available-for-sale
securities are determined using the specific-identification
method.
<PAGE> 17
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investment Securities (Continued)
Restricted Equity Securities
Federal Home Loan Bank stock is classified as a restricted equity
security and is included in other assets.
Declines in the fair value of individual available-for-sale and held-
to-maturity securities below their cost that are other than
temporary result in write-downs of the individual securities to
their fair value. The related write-downs are included in earnings
as realized losses.
Loans
Effective January 1, 1995, the Corporation and the Bank adopted
Statement of Financial Accounting Standards No. 114. (as amended by
No. 118), "Accounting by Creditors for Impairment of a Loan". SFAS
114 establishes the accounting by creditors for impairment of a loan
by specifying how allowances for credit losses related to certain
loans should be determined. This Statement also addresses the
accounting by creditors for certain loans that are restructured in a
troubled debt restructuring. A loan is considered impaired when it
is probable that an institution will be unable to collect all
amounts due (principal and interest) according to the contractual
terms of the loan agreement. The Bank evaluates smaller balance
homogeneous loans collectively for impairment. Loans collateralized
by one-to-four family residential properties, consumer installment
loans and credit card loans are considered smaller-balance
homogeneous loans.
Loans that are ninety days past-due, loans on non-accrual status,
and loans that are included on the Bank's problem loan list are
evaluated for impairment. A loan on non-accrual status is a loan on
which interest accruals are discontinued. Interest accruals are
discontinued when management believes, after considering economic
and business conditions and collection efforts, that the borrower's
financial condition is such that it is not reasonable to expect that
such interest will be collected. Interest income is subsequently
recognized only to the extent of the excess of cash payments
received over the principal balance due.
When a loan is impaired, the amount of impairment is measured based
on the present value of expected future cash flows discounted at the
loan's effective interest rate. For collateral dependent loans,
impairment is measured based on a loan's observable market price or
the fair value of the collateral. The Bank does not recognize
interest income on impaired loans and the entire change in the net
carrying amount is reported as an adjustment to the provision for
possible loan losses, but in no event are changes in the net present
value used to justify having a loan on the Bank's books at a value
that exceeds its recorded investment.
Loans receivable that management has the intent and ability to hold
for the foreseeable future or until maturity or payoff are reported
at their outstanding unpaid principal balances reduced by any charge-
offs or specific valuation accounts and net of any deferred fees or
costs on originated loans.
Loan origination fees and certain related direct costs are deferred
and recognized as an adjustment of the yield on the interest method.
Interest on commercial loans and real estate mortgage loans is
recognized as income based on the daily loan principal amounts
outstanding. Interest on direct and indirect installment loans is
recognized using the interest method or the Rule of 78's method
which provides substantially the same results as the interest
method.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as
of the date of the balance sheet and the revenues and expenses for
the period. Actual results could differ significantly from those
estimates. Material estimates that are particularly susceptible to
significant change in the near term relate to the determination of
the allowance for possible loan losses.
<PAGE> 18
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Allowance for Possible Loan Losses
The allowance for possible loan losses is established by charges to
operations and is maintained at an amount which management believes
adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of loan collectibility and on
prior loan loss experience. The evaluations consider such factors
as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current
economic conditions that may affect the borrower's ability to pay.
Uncollectible loans are charged to the allowance account in the
period such determination is made. Subsequent recoveries on loans
previously charged off are credited to the allowance account in the
period received.
While management uses available information to recognize losses on
loans, future losses may be accruable based on changes in economic
conditions. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the
Bank's allowance for possible loan losses. Such agencies may
require the Bank to recognize additional losses based on their
judgment of information available to them at the time of their
examination.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated
depreciation and amortization. The provision for depreciation is
computed substantially by the straight-line method over the
estimated useful lives of the assets, which are as follows:
buildings - up to 40 years; equipment - 5 to 10 years. Leasehold
improvements are amortized over the lesser of the lease terms or the
estimated lives of the improvements. Gains or losses from the
disposition of property are reflected in operations, and the asset
accounts and related allowance for depreciation are reduced.
Trust Department Income
Trust department income is recognized on the accrual basis in
accordance with generally accepted accounting principles.
Income Taxes
The Corporation and the Bank file a consolidated federal income tax
return. Effective January 1, 1993 the Companies adopted Statement
of Financial Accounting Standards No. 109 (SFAS 109), "Accounting
for Income Taxes". SFAS 109 requires an asset and liability
approach to financial accounting and reporting of income taxes.
Deferred income tax assets and liabilities are computed annually for
the differences between the financial statement and tax bases of
assets and liabilities. Such differences will result in taxable or
deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to
be realized. Income tax expense is the tax payable or refundable
for the period plus or minus the change during the period in
deferred tax assets and liabilities. The cumulative effect, as of
January 1, 1993, of this change in the method of accounting for
income taxes was not material.
Reclassification
Certain amounts have been reclassified in the 1994 and 1993
consolidated financial statements to conform to the 1995
presentation.
Other Real Estate
Other real estate, which is included in other assets, represents
real estate acquired through foreclosure and is stated at lower of
(i) fair value minus estimated costs to sell, or (ii) cost. If, at
the time of foreclosure, the fair market value of the real estate is
less than the Bank's carrying value of the related loan, a writedown
is recognized through a charge to the allowance for possible loan
losses, and the fair market value becomes the new cost for
subsequent accounting. If the Bank later determines that the cost
of the property cannot be recovered through sale or use, a writedown
is recognized by a charge to operations. When the property is not
in a condition suitable for sale or use at the time of foreclosure,
completion and holding costs, including such items as real estate
taxes, maintenance and insurance, are capitalized up to the
estimated net realizable value of the property. However, when the
property is in a condition for sale or use at the time of
foreclosure, or the property is already carried at its estimated net
realizable value, any subsequent holding costs are expensed. Legal
fees and any other direct costs relating to foreclosures are charged
to operations when incurred.
Net Income Per Share
Net income per share of common stock has been computed based on the
weighted average number of shares of common stock outstanding each
period.
<PAGE> 19
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
Effective January 1, 1994, the Corporation and the Bank adopted
Statement of Financial Accounting Standards No. 107 "Disclosure
about Fair Value of Financial Instruments." SFAS 107 requires
companies to disclose the fair value of their financial instruments,
whether or not recognized in the balance sheet, where it is
practical to estimate that value.
NOTE 2 - INVESTMENT SECURITIES
The following tables reflect the amortized cost, estimated fair
values and gross unrealized gains and losses of debt securities held
at December 31, 1995 and 1994:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(Dollars in Thousands)
1995
Available-for-sale securities:
U.S. Government and agency
securities $47,615 $ 809 $ 196 $48,228
Mortgage-backed securities 16,835 172 218 16,789
State and municipal securities 22,331 836 26 23,141
Corporate debt securities 9,391 97 3 9,485
$96,172 $1,914 $443 $97,643
1994
Available-for-sale securities:
U.S. Government and agency
securities $47,297 $132 $ 720 $46,709
Mortgage-backed securities 10,197 - 596 9,601
State and municipal securities 3,149 124 - 3,273
$60,643 $256 $1,316 $59,583
Held-to-maturity securities:
U.S. Government and agency
securities $19,943 $ - $ 790 $19,153
Mortgage-backed securities 8,950 60 208 8,802
State and municipal securities 20,330 95 333 20,092
Corporate debt securities 1,513 - 48 1,465
$50,736 $155 $1,379 $49,512
No investment securities were required to be written down pursuant
to any other than temporary declines in fair value in 1995, 1994 or
1993.
<PAGE> 20
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 2 - INVESTMENT SECURITIES (CONTINUED)
The amortized cost, estimated fair value and weighted yields of debt
securities at December 31, 1995, by contractual maturities, are
shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties. Mortgage-
backed securities are included in the schedule below based on the
final stated maturities which are consistent with the remaining
portfolio. For tax-exempt obligations, the yields are shown on a
fully taxable basis assuming a 34% tax rate.
Amortized Fair Yield
Cost Value (unaudited)
(Dollars in Thousands)
U.S. Government and agency securities:
Within one year $12,926 $12,997 6.56%
After one but within five years 29,259 29,669 6.91%
After five but within ten years 5,430 5,562 7.22%
Mortgage-backed securities:
Within one year 106 108 7.10%
After one but within five years 3,544 3,584 6.87%
After five but within ten years 7,637 7,698 7.21%
After ten years 5,548 5,399 6.00%
States and political subdivisions:
Within one year 1,407 1,407 5.83%
After one but within five years 9,653 10,026 8.12%
After five but within ten years 7,998 8,422 8.76%
After ten years 3,273 3,286 7.71%
Other investments:
Within one year 2,512 2,516 5.28%
After one but within five years 6,879 6,969 6.29%
$96,172 $97,643
1995 1994 1993
(Dollars in Thousands)
Proceeds from sales of investment
securities $22,537 $21,346 $3,839
Gross realized gains $ 70 $ 47 $ 93
Gross realized losses 84 355 -
Investment securities gain
(losses), net ($ 14) ($ 308) $ 93
Securities carried at $21 million and $39 million at December 31,
1995 and 1994, respectively (fair value: 1995 - $21.4 million;
1994 - $38.1 million), were pledged to secure deposits or for
other purposes as required or permitted by law.
At December 31, 1995, the Corporation did not hold securities of
any single issuer, other than obligations of the U.S. Treasury
and other U.S. Government agencies, whose aggregate book value
exceeded ten percent of shareholders' equity.
<PAGE> 21
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 3 - LOANS
The following is a summary by category of loans outstanding as of
December 31, 1995 and 1994:
1995 1994
(Dollars in Thousands)
Commercial, financial and agricultural $ 17,558$ 14,114
Real estate - construction 2,552 1,712
Real estate - mortgage 89,566 85,288
Installment 30,717 28,248
Lease financing 84 101
140,477 129,463
Less:
Unearned income ( 2,074) ( 1,593)
Allowance for possible loan losses ( 1,864) ( 1,733)
$136,539 $126,137
A summary of loan maturities as of December 31, 1995 follows:
Fixed Rate Loans
Due in one year or less $ 33,365
Due after one year 76,616
Due after five years 8,111
$118,092
Floating Rate Loans
Due in one year or less $ 17,027
Due after one year 5,064
Due after five years 294
$ 22,385
Directors, executive officers or principal holders of equity
securities (and their associates, including organizations of which
such person is a general partner or in which such person holds a
ten percent or more ownership) of the Corporation and/or the Bank
were customers of, and had loans and other transactions with, the
Bank in the ordinary course of business. The following is a
summary of the changes in related party loans in 1995 and 1994.
1995 1994
(Dollars in Thousands)
Balance - beginning of year $3,580 $3,465
New loans made or additions
to existing loans 1,710 2,109
Repayments ( 1,766) ( 1,580)
Other changes, net - ( 414)
Balance - end of year $3,524 $3,580
These loan transactions were made on substantially the same terms
as those prevailing at the time for comparable loans to other
persons. They did not involve more than the normal risk of
collectibility or present other unfavorable features.
<PAGE> 22
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 3 - LOANS (CONTINUED)
The following loans have been identified as impaired as of
December 31, 1995 in accordance with the provisions of FASB
Statement No. 114.
(Dollars in Thousands)
Loans accounted for on a nonaccrual basis $ 19
Commercial loans contractually past due
ninety days or more as to interest or
principal payments 379
$ 398
Based on the Bank's evaluation of these loans and the fair value
of collateral securing them, no allowance for possible loan
losses has been provided. Interest income on impaired loans of
$19,024 was recognized for cash payments received in 1995.
The following table presents nonaccrual, past due, restructured
and other doubtful loans at December 31, 1994:
(Dollars in Thousands)
Loans accounted for on a nonaccrual basis $ 96
Loans contractually past due ninety days
or more as to interest or principal payments 436
Loans restructured in a troubled debt
restructuring 954
Loans, not included above, where management
has doubt as to the ability of the
borrowers to comply with the present loan
payment terms 339
$1,825
Certain information concerning interest income on nonaccrual
loans for the years ended December 31, 1994 and 1993 follows:
1994 1993
(Dollars in Thousands)
Gross interest income that would have
been recorded during the year if the
loans had been current in accordance
with their original terms $36 $56
Interest income on the loans that was
included in net income for the year 6 11
<PAGE> 23
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 4 - ALLOWANCE FOR POSSIBLE LOAN LOSSES
Changes in the allowance for possible loan losses follows:
1995 1994 1993
(Dollars in Thousands)
Balance - beginning of year $1,733 $1,601 $1,453
Provision charged to operating
expenses 376 330 431
2,109 1,931 1,884
Amount charged off ( 339)( 343)( 371)
Recoveries 94 145 88
Net loans charged off ( 245)( 198)( 283)
Balance - end of year $1,864 $1,733 $1,601
It is management's opinion that the allowance was adequate at
December 31, 1995, based on conditions reasonably known to
management. However, the allowance may be increased or decreased
based on loan growth, changes in credit quality, and changes in
general economic conditions.
For federal income tax purposes, the allowance for possible loan
losses is maintained at the maximum amount allowable by the Internal
Revenue Code.
NOTE 5 - PREMISES AND EQUIPMENT
Premises and equipment consist of the following at December 31:
1995 1994
(Dollars in Thousands)
Land $ 208 $ 208
Buildings 1,489 1,469
Fixtures and equipment 3,352 3,400
5,049 5,077
Less allowances for depreciation ( 2,918) ( 2,705)
$2,131 $2,372
The provision for depreciation of premises and equipment amounted to
$481,000 for 1995, $415,000 for 1994, and $361,000 for 1993.
<PAGE> 24
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 6 - INCOME TAXES
The provisions for income taxes consist of the following:
1995 1994 1993
(Dollars in Thousands)
Current:
Federal $1,422 $1,756 $1,815
State 259 425 441
Total current 1,681 1,181 2,256
Deferred:
Federal 91( 204)( 107)
State 16( 33) 10
Total deferred 107( 237)( 97)
Total provision for income tax $1,788 $1,944 $2,159
The deferred tax effects of principal temporary differences are
shown in the following table:
1995 1994
(Dollars in Thousands)
Deferred tax assets:
Deferred benefit plan liability $ 315 $ 265
Allowance for possible loan losses 309 264
Leases 3 6
Premises and equipment 7 -
Net unrealized loss on
available-for-sale securities - 403
Total deferred tax assets 634 938
Deferred tax liabilities:
Premises and equipment - 31
Stock dividends received 53 30
Net unrealized gain on
available-for-sale securities 559 -
Total deferred tax liabilities 612 61
Net deferred tax asset $ 22 $ 877
A reconciliation of total income taxes reported with the amount
of income taxes computed at the federal statutory rate (34%
each year) follows:
1995 1994 1993
(Dollars in Thousands)
Tax expense at statutory rates $1,991 $2,109 $2,422
Increase (decrease) in taxes resulting from:
Nondeductible interest expense 54 55 55
Tax-exempt income ( 413)( 509)( 603)
Tax effect of state income taxes 177 259 298
Other - net ( 21) 30 ( 13)
$1,788 $1,944 $2,159
<PAGE> 25
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 7 - DEPOSITS
The following is a detail of the maturity ranges of certificates of
deposit of $100,000 or more as of December 31, 1995 and 1994:
1995 1994
(Dollars in Millions)
Under 3 months $ 6.0 $14.9
3 to 6 months 7.8 7.2
6 to 12 months 6.9 4.6
Over 12 months 6.6 4.5
$27.3 $31.2
Deposits from related parties amounted to $4.5 million at December
31, 1995 and $4.9 million at December 31, 1994.
NOTE 7 - FEDERAL FUNDS PURCHASED
For the year ended December 31, 1995, the average balance of
federal funds purchased was $800,000 ($1,300,000 in 1994), and the
average interest rate charged was 6.5% (4.7% in 1994). Unused
lines of credit for short-term financing totaled $9 million at
December 31, 1995.
NOTE 8 - FEDERAL HOME LOAN BANK BORROWINGS
The Bank has a line-of-credit under an agreement with the Federal
Home Loan Bank of Cincinnati (FHLB). The purpose of the line is to
hedge the interest rate on long-term lending. The Bank applied for
and received various commitments under the agreement, with respect
to which borrowings outstanding amounted to $7,226,000 at December
31, 1995 ($7,821,000 at December 31, 1994). Such borrowings mature
in level monthly installments through 2013. All remaining
commitments under this arrangement expired on January 11, 1995.
The advances accrue interest at a fixed rate which is determined
when the advance is made. The weighted average rate on all such
borrowings drawn to date is 6.31%.
In March, 1995, pursuant to its Blanket Agreement for advances and
security agreement with the Federal Home Loan Bank, the Bank
obtained an additional advance in the amount of $4,000,000 with the
interest rate based on the London Inter-Bank Offering Rate ("LIBOR-
Based Advance"). The Bank made one prepayment during the year
against this borrowing in the amount of $2,000,000. The balance of
$2,000,000 will mature in March, 1996.
The FHLB requires the Bank to maintain FHLB stock and obligations
of the United States of America, obligations fully guaranteed by
the United States of America, or other securities approved by and
delivered to the FHLB as collateral for such borrowings. The
carrying value of the collateral securing the advances at December
31, 1995 and 1994, was as follows:
1995 1994
(Dollars in Thousands)
FHLB stock $ 1,144 $ 1,046
U.S. Treasury Notes - 2,491
U.S. Government agency securities 10,753 6,748
$11,897 $10,285
<PAGE> 26
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 8 - FEDERAL HOME LOAN BANK BORROWINGS (CONTINUED)
During each twelve month period, the Bank has the option of making
one partial prepayment of principal without a prepayment fee. The
remaining principal balance of all advances outstanding as of
December 31, 1995, matures as follows:
Year ending December 31, Amount
(Dollars in Thousands)
1996 $2,630
1997 668
1998 709
1999 752
2000 797
Thereafter 3,670
$9,226
NOTE 9 - LEASES
The Corporation and the Bank are obligated for rental payments
under various operating leases. All building leases have renewal
options available. There are no contingent rental clauses in any
of the leases.
Total rental expense incurred under all operating leases amounted
to $72,000 in 1995 ($75,000 in 1994 and $68,000 in 1993).
Future minimum rental commitments as of December 31, 1995 for all
noncancellable operating leases with initial or remaining terms of
one year or more are as follows:
Year ending December 31, Amount
(Dollars in Thousands)
1996 $ 62
1997 59
1998 42
1999 32
2000 31
Thereafter 67
Total future minimum
lease payments $293
NOTE 10 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs
of its customers. These financial instruments include commitments
to extend credit and standby letters of credit. Those instruments
involve, to varying degrees, elements of credit risk in excess of
the amount recognized in the balance sheet.
The Bank's exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to
extend credit and standby letters of credit is represented by the
contract or notional amount of those instruments. The Bank uses
the same credit policies in making commitments and conditional
obligations as it does for extending loans.
<PAGE> 27
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 10 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
(CONTINUED)
Unless noted otherwise, the Bank does not require collateral or
other security to support financial instruments with credit risk.
Contract or
Notional Amount
(Dollars in Thousands)
Financial instruments whose
contract amounts represent
credit risk at
December 31, 1995:
Commitments to extend credit $19,300
Standby letters of credit $ 328
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Since
many of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained is based on management's credit assessment of the customer.
Collateral held varies but consists primarily of real estate.
Standby letters of credit and financial guarantees written are
conditional commitments issued by the Bank to guarantee the
performance of a customer to a third party. Both arrangements have
credit risks essentially the same as that involved in extending
loans to customers and are subject to the Bank's normal credit
policies.
Income from fees on lines of credit and letters of credit is
recognized as collected.
NOTE 11 - DEFINED CONTRIBUTION PLAN
The Bank sponsors an employees' Thrift Plan (the "Plan"), which
encourages employees (Participants) to set aside a percentage of
their earnings in an account to provide a source of income for their
retirement. The Plan has been amended and restated since its
initial adoption to comply with tax law changes and to add a 401(k)
provision.
The Plan, a defined contribution plan, meets the requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA") which,
among other things, prohibits discriminating in favor of officers,
shareholders or highly compensated employees with respect to
eligibility, contributions or benefits. To participate in the Plan,
Participants must be 21 years of age and have completed one year of
service in which they are credited with at least 1,000 hours of
service. Vesting of Bank contributions to the Plan is as follows:
Years of Employment Percentage of Account
at Termination Vested
Less than 3 0%
3 20
4 40
5 60
6 80
7 years or more 100
<PAGE> 28
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 11 - DEFINED CONTRIBUTION PLAN (CONTINUED)
The Bank contributes to the Plan a minimum of 1% of each
Participant's compensation (compensation excludes bonuses and
gifts). In addition, the Bank matches Participants' before-tax
contributions up to 3% of each Participant's compensation whenever
Bank profits are deemed adequate by the Board of Directors. Plan
Participants may contribute before-tax dollars, up to 15% of their
annual compensation, to the 401(k) Plan (to a maximum contribution
of $9,240, indexed by the rate of change in inflation, per calendar
year subject to overall IRS limitations). These contributions will
be tax-deferred, within limits prescribed by the Plan. Plan
Participants may also make voluntary after-tax contributions of up
to 10% of their compensation to the Plan. The fund earnings to
their Individual Account are also tax-deferred.
The contributions are invested in a Trust fund managed by the
Bank's Trust Department and from which benefits are distributed.
As of December 31, 1995, 95 persons (104 in 1994 and 103 in 1993)
were participating in the Plan, and the Bank's annual contribution
amounted to $98,000 ($88,000 in 1994 and $89,000 in 1993). Total
salaries of Participants during 1995 were $2,521,000 ($2,535,000 in
1994 and $2,349,000 in 1993). The Bank contributed approximately
3.89% of Participants' salaries in 1995 (3.47% in 1994 and 3.79% in
1993).
NOTE 12 - DEFERRED COMPENSATION PLAN
On March 8, 1988, effective as of January 12, 1988, the Bank
entered into nonqualified deferred compensation agreements with
certain of its directors. There are presently eleven directors and
two former directors included in the group which, when certain
conditions are met, will be paid monthly benefits of varying
amounts for up to 180 months. In case of the director's death, or
retirement on or after normal retirement age, benefits will be paid
to the covered person or his beneficiary for the maximum term of
180 months. If the director retires for any other reason, the
benefits will be reduced to a pro rata portion of his original
benefit based on the length of time the director was included in
the plan.
In accordance with generally accepted accounting principles, the
Bank has recorded a liability in the amount of the present value of
an investment necessary to amortize the future liability over the
years the services are rendered. The amount charged to expense for
1995 was $201,000 ($156,000 in 1994 and $137,000 in 1993).
The Bank has chosen to fund the obligation by purchasing and owning
life insurance contracts, naming the Bank as beneficiary, on each
participating director. The value of the contracts is carried as
an asset of the Bank as follows:
1995 1994
(Dollars in Thousands)
Value of contracts - beginning of year $1,062 $ 879
Increase in surrender value 221 183
Redemption of policy ( 42) -
Value of contracts - end of year $1,241 $1,062
Liabilities for contracts - beginning of year $ 687 $ 508
Expense recognized for the year 201 156
Distribution to resigning director ( 42) -
Other ( 15) 23
Liabilities for contracts - end of year $ 831 $ 687
<PAGE> 29
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 13 - SHAREHOLDERS' EQUITY
The Corporation and the Bank are subject to various federal and
state regulatory capital requirements. Failure to meet capital
requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that could have
a direct material effect on the Corporation and the Bank's
financial statements. The regulations require the Corporation
and the Bank to meet specific capital adequacy guidelines that
involve quantitative measures of the Corporation's and the
Bank's assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The
capital classification is also subject to qualitative judgments
by the regulators about components, risk weightings and other
factors. At December 31, 1995, management believes that the
Corporation and the Bank meet all capital requirements.
NOTE 14 - DIVIDEND AND NET ASSET RESTRICTIONS
Dividends paid by the Bank are the primary source of funds
available to the Corporation for payment of dividends to its
shareholders and for other working capital needs. Applicable
Tennessee statutes and regulations impose restrictions on the
amount of dividends that may be declared by the subsidiary Bank.
NOTE 15 - RELATED PARTY TRANSACTIONS
On June 30, 1994, the Corporation redeemed 42,457 shares of
outstanding common stock from a shareholder, who was the
Chairman of the Board, and his associates for $4,005,817, or
$94.35 per share.
NOTE 16 - SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK
The Bank grants agribusiness, commercial and residential loans
to customers primarily in Warren and DeKalb Counties, Tennessee.
Although the Bank has a diversified loan portfolio, a
substantial portion of its debtors' ability to honor their
contracts is dependent on the agribusiness industry.
NOTE 17 - INCENTIVE BONUS PLAN
In 1990, the Bank adopted an incentive bonus plan pursuant to
which officers of the Bank receive, subject to an annual review
and modification by the Bank's Board of Directors, a bonus
determined by the Bank's performance as measured by its return
on assets. For the year 1995, the bonus was $126,000 ($116,000
in 1994 and $141,000 in 1993).
<PAGE> 30
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 18 - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
CONDENSED BALANCE SHEETS
C B & T, INC. (PARENT ONLY)
1995 1994
(Dollars in Thousands)
ASSETS
Investment in bank subsidiary $30,657 $26,543
Other investments 69 69
$30,726 $26,612
LIABILITIES
Taxes payable $ 5 $ 15
SHAREHOLDERS' EQUITY
Common stock, par value $2.50 per
share, authorized 1,000,000 shares;
issued 331,814 shares, including
62,147 treasury shares in 1995
(59,325 treasury shares in 1994) 830 830
Additional paid-in capital 5,000 5,000
Retained earnings 28,815 25,973
Net unrealized gains (losses) on
available-for-sale securities, net
of deferred income taxes
of: 1995 - ($559); 1994 - $403 912 ( 657)
35,557 31,146
Less cost of treasury shares ( 4,836) ( 4,549)
30,721 26,597
$30,726 $26,612
CONDENSED STATEMENTS OF INCOME
C B & T, INC. (PARENT ONLY)
1995 1994 1993
(Dollars in Thousands)
INCOME:
Dividends received - bank $1,481 $5,449 $1,224
Other income 56 86 58
1,537 5,535 1,282
EXPENSES:
Professional fees 9 5 8
Income before income tax allocation
and equity in undistributed net income
of subsidiary 1,528 5,530 1,274
Allocation of income taxes 5 10 6
INCOME BEFORE EQUITY IN UNDISTRIBUTED
NET INCOME OF SUBSIDIARY 1,523 5,520 1,268
Net income of subsidiary bank less
distribution from subsidiary bank 2,544 ( 1,260) 3,698
NET INCOME $4,067 $4,260 $4,966
<PAGE> 31
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 18 - CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
(CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
C B & T, INC. (PARENT ONLY)
1995 1994 1993
(Dollars in Thousands)
OPERATING ACTIVITIES:
Net income $4,067 $4,260 $4,966
Adjustments to reconcile net
income to net cash provided by
operating activities:
Net income of subsidiary bank
less distribution from subsidiary bank ( 2,544) 1,260 ( 3,698)
Increase (decrease) in taxes payable ( 11) 9 2
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,512 5,529 1,270
FINANCING ACTIVITIES:
Purchase of outstanding common stock ( 287) ( 4,332)( 7)
Cash dividends ( 1,225) ( 1,239)( 1,259)
NET CASH USED IN FINANCING ACTIVITIES ( 1,512) ( 5,571)( 1,266)
INCREASE (DECREASE) IN CASH - ( 42) 4
CASH - BEGINNING OF YEAR - 42 8
CASH - END OF YEAR $ - $ - $ 42
<PAGE> 32
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 19 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates made as of December 31, 1995 are based on
relevant market information about the financial instruments. These
estimates do not reflect any premiums or discounts that could result
from offering for sale at one time the Corporation's or the Bank's
entire holding of a particular financial instrument. In cases where
quoted market prices are not available, fair value estimates are
based on judgments regarding future expected loss experience,
current economic conditions, risk characteristics of various
financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and matters of
significant judgment and, therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the
estimates. In addition, the tax ramifications related to the
realization of the unrealized gains and losses can have a
significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Bank in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents -- The carrying amounts reported in the
balance sheets for cash and short-term instruments approximate those
assets' fair values.
Securities Available-for-Sale and Securities Held-to-Maturity --
Fair values were based on quoted market prices available. If quoted
market prices were not available, fair values were based on quoted
market prices of comparable instruments.
Loans -- The carrying values, reduced by estimated inherent credit
losses, of variable-rate loans and other loans with short-term
characteristics were considered fair values. For other loans, the
fair market values were calculated by discounting scheduled future
cash flows using current interest rates offered on loans with
similar terms adjusted to reflect the estimated credit losses
inherent in the portfolio.
Accrued Interest Receivable and Accrued Interest Payable -- The
carrying amounts reported in the balance sheets for accrued interest
receivable and accrued interest payable approximate their fair
values.
Deposit Liabilities -- The fair value of deposits with no stated
maturity, such as noninterest-bearing demand deposits, and NOW,
savings, and money market deposits, was, by definition, equal to the
amount payable on demand as of December 31, 1995. The fair value of
certificates of deposit was based on the discounted value of
contractual cash flows, calculated using discount rates equal to
interest rates offered at the valuation date for deposits of similar
remaining maturities.
Short-Term Borrowings -- The carrying amounts of federal funds
purchased, borrowings under repurchase agreements, and other short-
term borrowings, if any, are considered to approximate their fair
values.
The estimated fair values of financial instruments are as follows:
December 31, 1995 December 31, 1994
Carrying Fair Carrying Fair
Amounts Values Amounts Values
(Dollars in Thousands)
Financial Assets
Cash and cash equivalents $ 13,296 $ 13,296 $ 9,434 $ 9,434
Securities available-for-sale 97,643 97,643 59,583 59,583
Securities held-to-maturity - - 50,736 49,512
Loans, net of allowance for
possible loan losses 136,539 138,329 126,137 124,212
Accrued interest receivable 3,061 3,061 2,942 2,942
Financial Liabilities
Deposits 213,257 213,114 212,821 212,724
Long-term debt 9,226 8,843 7,821 6,786
Short-term borrowings - - 5,700 5,700
Accrued interest payable 1,328 1,328 892 892
<PAGE> 33
C B & T, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
NOTE 19 - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
At December 31, 1995 and 1994, the Bank had commitments to extend
credit and outstanding standby letters of credit. These off-
balance-sheet financial instruments are generally exercisable at
the market rate prevailing at the date the underlying transaction
will be completed and, therefore, are deemed to have no current
fair market value.
Fair value estimates are based on existing on-balance sheet and off-
balance sheet financial instruments without attempting to estimate
the value of anticipated future business and the value of assets
and liabilities that are not considered financial instruments.
Significant assets and liabilities that are not considered
financial assets or liabilities include the value of deferred tax
assets, premises and equipment.
NOTE 20 - QUARTERLY RESULTS OF OPERATIONS
The following is a summary of the unaudited consolidated quarterly
results of operations:
(Dollars in Thousands First Second Third Fourth
Except Share Data) Quarter Quarter Quarter Quarter Total
1995
Interest income $4,667 $4,899 $4,931 $5,030 $19,527
Interest expense 2,073 2,175 2,238 2,232 8,718
Net interest income 2,594 2,724 2,693 2,798 10,809
Provision for possible
loan losses 90 71 99 116 376
Noninterest expenses,
net of noninterest income 1,057 1,203 938 1,380 4,578
Income before income taxes 1,447 1,450 1,656 1,302 5,855
Income taxes 459 427 569 333 1,788
Net income $ 988 $1,023 $1,087 $ 969 $ 4,067
Earnings per share $ 3.63 $ 3.76 $ 4.01 $ 3.60 $ 15.00
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
1994
Interest income $4,464 $4,686 $4,707 $4,715 $18,572
Interest expense 1,710 1,772 1,816 1,953 7,251
Net interest income 2,754 2,914 2,891 2,762 11,321
Provision for
possible loan losses 91 101 82 56 330
Noninterest expenses,
net of noninterest income 1,013 1,128 1,342 1,304 4,787
Income before income taxes 1,650 1,685 1,467 1,402 6,204
Income taxes 512 526 519 387 1,944
Net income $1,138 $1,159 $ 948 $1,015 $ 4,260
Earnings per share $ 3.57 $ 3.64 $ 3.10 $ 4.06 $ 14.37
<PAGE> 34
<TABLE>
<CAPTION>
C B & T, INC. AND SUBSIDIARY
Table 1 -- Distribution of Assets, Liabilities and Shareholders'
Equity, Interest Rates and Interest Differential
1995
Average Interest Interest
Balance Income/Expense Rate
(Dollars in Thousands)
<S> <C> <C> <C>
ASSETS
Bank interest-bearing deposits $ 60 3 5.00%
U.S. Treasury securities 20,465 1,451 7.09
U.S. Government agencies
and corporations 49,820 3,227 6.48
Securities of States and
political subdivisions 21,454 1,788* 8.33
Other investments 4,466 274 6.14
Federal funds sold 5,070 297 5.86
Loans, net 131,761 13,021 9.88
TOTAL EARNING ASSETS 233,096 $20,061 8.61
Cash and due from banks 6,353
Other assets 8,880
TOTAL ASSETS $248,329
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:
NOW accounts $ 23,758 $ 660 2.78%
Money market deposit accounts 18,990 593 3.12
Savings 30,733 1,003 3.26
Time of $100M or more 23,622 1,348 5.71
Time--other 82,632 4,466 5.40
TOTAL INTEREST-BEARING DEPOSITS 179,735 8,070 4.49
Federal funds purchased 825 54 6.55
Long-term debt 9,907 593 5.99
TOTAL INTEREST-BEARING
LIABILITIES 190,467 $8,717 4.58
Demand deposits 27,013
Other liabilities 2,538
TOTAL LIABILITIES 220,018
Shareholders' equity 28,311
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $248,329
Spread between combined rates earned
and combined rates paid* 4.03%
Net yield on interest earning assets* 4.87%
*Taxable equivalent basis
<PAGE> 35
C B & T, INC. AND SUBSIDIARY
Year Ended December 31,
1994 1993
Average Interest Interest Average Interest Interest
Balance Income/Expense Rate Balance Income/Expense Rate
(Dollars in Thousands) (Dollars in Thousands)
<C> <C> <C> <C> <C> <C>
$ 80 $ 3 3.75% $ 100 $ 2 2.00%
37,130 2,341 6.30 25,042 1,787 7.14
55,107 3,419 6.20 62,493 4,123 6.60
25,357 2,212 * 8.72 27,684 2,654 * 9.59
1,862 97 5.21 915 55 6.01
1,621 56 3.45 3,079 89 2.89
117,160 11,196 9.56 110,751 10,923 9.86
238,317 $19,324 8.11 $230,064 $19,633 8.53
7,192 6,530
8,524 7,589
$254,033 $244,183
$ 24,244 $ 651 2.69% $ 22,090 $ 637 2.88%
28,798 841 2.92 31,314 969 3.09
36,519 1,102 3.02 37,994 1,235 3.25
26,313 1,131 4.30 21,312 926 4.34
73,940 2,987 4.04 74,971 3,032 4.04
189,814 6,712 3.54 187,681 6,799 3.62
1,350 64 4.74 128 5 3.91
7,976 475 5.96 5,710 348 6.09
199,140 $7,251 3.64 193,519 $7,152 3.70
24,500 22,377
2,222 1,868
225,862 217,764
28,171 26,419
$254,033 $244,183
4.47% 4.83%
5.07% 5.43%
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
C B & T, INC. AND SUBSIDIARY
Table 2 --Distribution of Assets, Liabilities and Shareholders'
Equity, Interest Rates and Interest Differential --
(Continued)
The following table sets forth for the periods indicated a summary of
the changes in interest earned and interest paid resulting from
changes in volume and changes in rates:
1995 Compared to 1994
Increase (Decrease)
Volume Rate Net
(Dollars in Thousands)
<S> <C> <C> <C>
Interest Income
Bank interest-bearing deposits $( 1) $ 1 $ 0
Net Loans 1,395 430 1,825
Taxable investment securities (1,379) 297 (1,082)
Nontaxable investment
securities* ( 340) ( 84) ( 424)
Other securities 136 41 177
Federal funds sold 119 122 241
TOTAL INTEREST INCOME* $( 70) $ 807 $ 737
Interest Expense
NOW accounts $ ( 13) $ 22 9
Money market deposit accounts (286) 38 ( 248)
Savings (175) 76 ( 99)
Time deposits 235 1,461 1,696
Federal funds purchased ( 25) 15 ( 10)
Long-term debt 116 2 118
TOTAL INTEREST EXPENSE $ (148) $ 1,614 $ 1,466
* Tax equivalent basis
The rate/volume variances are allocated between rate and volume
variances in proportion to the relationship of the absolute dollar
amounts of the change in each.
<PAGE> 37
C B & T, INC. AND SUBSIDIARY
1994 Compared to 1993 1993 Compared to 1992
Increase (Decrease) Increase (Decrease)
Volume Rate Net Volume Rate Net
(Dollars in Thousands) (Dollars in Thousands)
<C> <C> <C> <C> <C> <C>
$ 0 $ 1 $ 1 $ 2 $ 0 $ 2
619 ( 346) 273 833 ( 612) 221
307 ( 457) (150) 386 ( 747) (361)
(212) ( 230) (442) 309 ( 316) ( 7)
50 ( 8) 42 ( 43) 12 ( 31)
( 48) 15 ( 33) ( 27) ( 24) ( 51)
$ 716 $(1,025) $ (309) $ 1,460 $(1,687) $(227)
$ 60 $ ( 46) $ 14 $ 79 $( 152) $( 73)
( 75) ( 53) ( 128) ( 9) ( 193) ( 202)
( 47) ( 86) ( 133) 724 ( 137) 587
163 ( 3) 160 (939) (1,066) (2,005)
58 1 59 5 0 5
135 ( 8) 127 348 0 348
$ 294 $ (195) $ 99 $ 208 $(1,548)$(1,340)
</TABLE>
<PAGE> 38
C B & T, INC. AND SUBSIDIARY
Table 3 --Summary of Loan Loss Experience
Year Ended December 31,
1995 1994 1993 1992 1991
(Dollars in Thousands)
Balance at beginning of period $1,733 $1,601 $1,453 $1,191 $1,047
Loans charged off:
Commercial, financial, and
agricultural 128 129 143 116 209
Real estate-mortgage 39 90 49 125 89
Installment 172 124 179 162 149
TOTAL LOANS CHARGED OFF 339 343 371 403 447
Recoveries of loans previously charged off:
Commercial, financial, and
agricultural 25 65 9 31 89
Real estate--mortgage 5 3 9 3 51
Installment 64 77 70 66 35
TOTAL RECOVERIES 94 145 88 100 175
NET LOANS CHARGED OFF 245 198 283 303 272
Additions to the allowance charged to
operating expenses 376 330 431 565 416
BALANCE AT END OF PERIOD $1,864 $1,733 $1,601 $1,453 $1,191
1995 1994 1993 1992 1991
Ratio of net charge-offs
(recoveries) during the
periods to average loans
outstanding .19% .17% .26% .30% .29%
<PAGE> 39
C B & T, INC. AND SUBSIDIARY
Table 4 -- Financial Ratios
The ratio of net income to average shareholders' equity and average
total assets, and certain other ratios, are presented below:
Year Ended December 31,
1995 1994 1993
Percentage of net income to:
Total average assets 1.64% 1.68% 2.03%
Average shareholders' equity 14.37 15.12 18.80
Percentage of dividends
declared per average
Common share to net income
per average Common Share 30.00 28.53 25.35
Percentage of average
shareholders' equity
to total average assets 11.40 11.09 10.82
<PAGE> 40
C B & T, INC. AND SUBSIDIARY
SUMMARY OF CONSOLIDATED SELECTED FINANCIAL DATA
1995 1994 1993 1992 1991
(Dollars in Thousands - Except Per Share)
Interest Income $ 19,527 $ 18,572 $ 18,730 $ 18,955 $ 18,520
Net interest income 10,809 11,321 11,578 10,463 8,518
Provision for possible
loan losses 376 330 431 565 416
Income from continuing operations
(net income) 4,067 4,260 4,966 4,428 3,251
Total assets 255,882 254,973 247,524 239,626 212,649
Long-term debt 9,226 7,821 7,729 350 0
Per share data of Common Stock:
Income from continuing
operations (net income) 15.00 14.37 15.58 13.88 10.19
Dividends 4.50 4.10 3.95 3.00 2.60
COMMON STOCK MARKET PRICE INFORMATION
There is no established public trading market for the Corporation's
Common Stock and the stock is not traded on any securities exchange.
There were approximately 633 shareholders of record of the Common
Stock of the Corporation at December 31, 1995.
The price range of the known sales of the Common Stock of the
corporation for 1995 and 1994 was a minimum of $93.10 to a maximum of
$107.00 and a minimum of $56.62 to a maximum of $94.35 respectively.
The Corporation paid dividends of $4.50 per share in 1995 and $4.10
per share in 1994. The dividends were paid semiannually.
The Corporation expects to continue to pay regular semiannual cash
dividends, although there is no assurance as to future dividends
because they are dependent on future earnings, capital requirements
and financial condition.
<PAGE> 41
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 8,559
<INT-BEARING-DEPOSITS> 37
<FED-FUNDS-SOLD> 4,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 97,643
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 97,643
<LOANS> 138,403
<ALLOWANCE> (1,864)
<TOTAL-ASSETS> 255,882
<DEPOSITS> 213,257
<SHORT-TERM> 2,000
<LIABILITIES-OTHER> 2,678
<LONG-TERM> 7,226
0
0
<COMMON> 830
<OTHER-SE> 29,891
<TOTAL-LIABILITIES-AND-EQUITY> 255,882
<INTEREST-LOAN> 13,021
<INTEREST-INVEST> 6,205
<INTEREST-OTHER> 301
<INTEREST-TOTAL> 19,527
<INTEREST-DEPOSIT> 8,125
<INTEREST-EXPENSE> 593
<INTEREST-INCOME-NET> 10,809
<LOAN-LOSSES> 376
<SECURITIES-GAINS> (14)
<EXPENSE-OTHER> 6,321
<INCOME-PRETAX> 5,855
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,067
<EPS-PRIMARY> 15.00
<EPS-DILUTED> 15.00
<YIELD-ACTUAL> 8.38
<LOANS-NON> 96
<LOANS-PAST> 436
<LOANS-TROUBLED> 954
<LOANS-PROBLEM> 339
<ALLOWANCE-OPEN> 1,733
<CHARGE-OFFS> 339
<RECOVERIES> 94
<ALLOWANCE-CLOSE> 1,864
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
