SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997 Commission file number 0-16878
CBT CORPORATION
(Exact name of registrant as specified in its charter)
Kentucky 61-1030727
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Broadway, Paducah, Kentucky 42001
(Address of principal executive offices)
Registrant's telephone number, including area code (502) 575-5100
Indicate by check mark whether the registrant (a) 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1997
Common Stock, No Par Value 7,862,627
Page 1
This filing contains 27 pages.
<PAGE> 2
<TABLE>
<CAPTION>
CBT CORPORATION
PART I. FINANCIAL INFORMATION PAGE
NO.
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997,
December 31, 1996 and June 30, 1996 3
Consolidated Statements of Income for the Three Months
and Six Months Ended June 30, 1997 and June 30, 1996 4
Consolidated Statements of Changes in Shareholders'
Equity for Six Months Ended June 30, 1997 and
June 30, 1996 5
Consolidated Statements of Cash Flows for Six
Months Ended June 30, 1997 and June 30, 1996 6
Notes to Consolidated Financial Statements 7 - 11
Item 2. Management's Discussion and Analysis of
Consolidated Financial Condition and Results
of Operations 12 - 22
PART II. OTHER INFORMATION
Item 1. through Item 6. 23
SIGNATURE PAGE 24
EXHIBIT INDEX 25
FINANCIAL DATA SCHEDULE 26 - 27
</TABLE>
Page 2
<PAGE> 3
<TABLE>
<CAPTION>
CBT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited) (audited) (unaudited)
($ in thousands) June 30 December 31 June 30
- -----------------------------------------------------------------------------
1997 1996 1996
-------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 35,300 $ 43,821 $ 30,669
Federal funds sold - - 1,000
-------- -------- --------
Total cash and cash equivalents 35,300 43,821 31,669
Securities to be held to maturity 60,060 56,241 54,760
Securities available for sale
(at fair market value) 173,530 149,254 157,163
Loans, net of unearned interest 695,912 687,218 650,186
Allowance for loan losses (9,325) (8,243) (9,896)
-------------------------------
Loans, net 686,587 678,975 640,290
Premises and equipment, net 18,251 18,198 18,493
Accrued interest receivable 7,193 6,845 6,770
Other 13,042 7,218 7,805
------------------------------
TOTAL ASSETS $993,963 $960,552 $916,950
==============================
LIABILITIES
Deposits:
Non-interest bearing $ 72,251 $ 78,596 $ 55,365
Interest bearing 659,931 631,535 598,939
------------------------------
Total deposits 732,182 710,131 654,304
Borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 53,734 41,866 58,458
Notes payable - U.S. Treasury 1,954 1,136 2,021
Revolving lines of credit 6,500 6,500 5,000
Federal Home Loan Bank advances 61,727 69,118 71,173
Term Debt 10,046 10,046 10,069
------------------------------
Total borrowings 133,961 128,666 146,721
Accrued interest payable 5,782 4,715 4,840
Other 7,566 6,824 5,888
------------------------------
TOTAL LIABILITIES 879,491 850,336 811,753
STOCKHOLDERS' EQUITY
Common stock, no par value, authorized
12,000,000 shares; issued and outstanding
7,862,627 shares at June 30, 1997;
7,858,986 shares at December 31, 1996;
and 7,866,469 shares at June 30, 1996 4,100 4,100 4,100
Capital surplus 16,042 16,160 17,981
Retained earnings 94,429 90,143 85,196
Unrealized losses on securities available
for sale, net of deferred taxes (99) (187) (2,080)
------------------------------
TOTAL STOCKHOLDERS' EQUITY 114,472 110,216 105,197
------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $993,963 $960,552 $916,950
==============================
</TABLE>
Page 3
<PAGE> 4
<TABLE>
<CAPTION>
CBT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)) Three Months Ended Six Months Ended
- -------------------------------------------------------------------------
($ in thousands except per share data) June 30 June 30
------------------------------------
1997 1996 1997 1996
------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees:
Taxable $ 16,740 $ 15,654 $ 33,074 $ 31,227
Tax-exempt 37 37 71 78
Securities:
Taxable 2,840 2,539 5,351 5,044
Tax-exempt 930 942 1,856 1,810
Other 128 7 197 26
-----------------------------------
Total interest income 20,675 19,179 40,549 38,185
-----------------------------------
INTEREST EXPENSE
Deposits 7,997 7,042 15,811 14,213
Other borrowings 1,901 1,706 3,609 3,322
-----------------------------------
Total interest expense 9,898 8,748 19,420 17,535
-----------------------------------
NET INTEREST INCOME 10,777 10,431 21,129 20,650
Provision for loan losses 1,017 485 1,947 955
-----------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 9,760 9,946 19,182 19,695
-----------------------------------
NON-INTEREST INCOME
Trust and investment advisory fees 517 535 1,055 1,000
Service charges on deposit accounts 814 871 1,650 1,630
Insurance commissions 345 329 709 641
Gain on sale of securities 56 21 56 34
Gain on sale of finance receivables 152 - 337 -
Other 522 365 1,070 786
-----------------------------------
Total non-interest income 2,406 2,121 4,877 4,091
-----------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 3,979 3,916 8,050 7,878
Net occupancy 352 328 711 681
Depreciation and amortization 583 554 1,129 1,108
Supplies 190 212 363 456
Data processing 419 371 861 786
FDIC assessments 40 57 32 114
Franchise tax 293 303 587 606
Other 1,785 1,828 3,370 3,535
-----------------------------------
Total non-interest expense 7,641 7,569 15,103 15,164
-----------------------------------
INCOME BEFORE INCOME TAXES 4,525 4,498 8,956 8,622
Income taxes 1,323 1,300 2,623 2,492
-----------------------------------
NET INCOME $ 3,202 $ 3,198 $ 6,333 $ 6,130
===================================
NET INCOME PER COMMON SHARE $ 0.41 $ 0.41 $ 0.81 $ 0.78
===================================
</TABLE>
Page 4
<PAGE> 5
<TABLE>
<CAPTION>
CBT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------
($ in thousands)
- -------------------------------------------------------------------------
Total Stockholders' Equity
--------------------------
<S> <C>
Balance, December 31, 1996 $110,216
Net income 6,333
Dividends on common stock (2,047)
Stock options exercised -
Purchase of common stock (118)
Net unrealized loss on securities available for sale 88
-------
Balance, June 30, 1997 $114,472
=======
Balance, December 31, 1995 $104,371
Net income 6,130
Dividends on common stock (1,895)
Stock options exercised 42
Purchase of common stock (1,064)
Net unrealized loss on securities available for sale (2,387)
-------
Balance, June 30, 1996 $105,197
=======
</TABLE>
Page 5
<PAGE> 6
<TABLE>
<CAPTION>
CBT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) Six Months Ended
($ in thousands) June 30
- --------------------------------------------------------------------------
1997 1996
---------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 6,333 $ 6,130
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 1,082 955
Depreciation 1,006 994
Amortization 123 114
Amortization and accretion of securities 180 32
Net gain on sale of securities (56) (33)
Net loss on sale of premises and equipment 4 -
Net gain on sale of finance receivables (337) -
Changes in assets and liabilities:
Accrued interest receivable (348) (18)
Other assets (5,994) (736)
Accrued interest payable 1,067 499
Other liabilities (280) (949)
------------------
Net cash provided by operating activities 2,780 6,988
INVESTING ACTIVITIES:
Proceeds from maturities of securities to be held
to maturity 2,220 1.139
Proceeds from sales of securities available for
sale 5,428 -
Proceeds from maturities of securities available
for sale 389 12,660
Principal collected on mortgage-backed securities,
including those classified as available for sale 8,648 5,326
Payment for purchases of securities (44,768) (29,818)
Net increase in loans (8,694) (7,588)
Proceeds from sales of premises and equipment 2 14
Proceeds from sales of finance receivables 337 -
Payment for purchase of premises and equipment (1,066) (630)
-------------------
Net cash used in investing activities (37,504) (18,897)
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 22,051 (19,430)
Net increase in short term borrowings 12,686 20,983
Net increase (decrease) in FHLB advances (7,391) 9,280
Cash advanced on revolving lines of credit - 1,000
Cash dividends paid (1,025) (1,895)
Stock options exercised - 42
Purchase of common stock (118) (1,064)
-------------------
Net cash used in financing activities 26,203 8,916
NET DECREASE IN CASH
AND CASH EQUIVALENTS (8,521) (2,993)
--------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 43,821 34,662
--------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 35,300 $ 31,669
====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 18,353 $ 17,035
Federal income taxes $ 1,792 $ 2,773
</TABLE>
Page 6
<PAGE> 7
CBT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1997
NOTE 1: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-1 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
financial statements include the accounts of CBT Corporation (the Parent
Company) and its wholly-owned subsidiaries: Citizens Bank and Trust Company
of Paducah (Citizens), Pennyrile Citizens Bank and Trust Company (PCB),
Bank of Marshall County (BOMC), Graves County Bank, Inc. (GCB), and United
Commonwealth Bank, FSB (UCB). Collectively, these entities constitute the
"Corporation", which provides financial services primarily in western
Kentucky and surrounding communities. Fidelity Credit Corporation (FCC), a
finance company that operates throughout Kentucky, is a wholly-owned
subsidiary of Citizens. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Operating results for the six month period ended June 30, 1997, are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Corporation's annual report on Form 10-K for the year ended December 31,
1996.
Cash and Cash Equivalents
For the purpose of reporting cash flows, cash and cash equivalents include
cash and due from banks, Federal funds sold and money market investments.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level considered adequate
to provide for potential losses based on management's evaluation of the
loan portfolio, including the financial strength of guarantors, valuation
of collateral, and the likelihood of further collection based upon the
borrower's financial condition, as well as on prevailing and anticipated
economic conditions.
Although management uses the best information available to make
determinations with respect to the Corporation's allowance, future
adjustments may be necessary if economic or other conditions differ
substantially from the economic and other conditions considered in making
the initial determinations, and such adjustments could be material.
Effective January 1, 1995, the Corporation adopted SFAS No. 114 "Accounting
by Creditors for Impairment of a Loan" as amended by SFAS No. 118
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures." These pronouncements require that impaired loans be measured
based upon the present value of expected future cash flows discounted at
the loans' effective interest rate or at the loans' market price or fair
value of collateral, if the loan is collateral dependent. When the measure
of the impaired loan is less than the recorded investment in the loan, the
impairment is recorded through a valuation allowance that is included in
the allowance for loan losses. These pronouncements did not have a
Page 7
<PAGE> 8
material impact on the Corporation's consolidated financial statements.
The Corporation's impaired loans are generally measured on a loan by loan
basis. Interest payments received on impaired loans are recorded as
interest income unless collection of the loan is doubtful, in which case
payments are recorded as a reduction of principal.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation.
Depreciation of premises and equipment is computed using the straight-line
and accelerated methods over the estimated useful lives of the assets, as
follows:
<TABLE>
<CAPTION>
Years
<S> <C>
Buildings and improvements 15 - 35
Furniture and fixtures 7
Equipment 5
</TABLE>
Repurchase Agreements
Certain securities are sold under agreements to repurchase and are treated
as financings. The obligation to repurchase such securities is reflected as
a liability on the consolidated balance sheets. The dollar amounts of
securities underlying the agreements are included in the respective asset
accounts
Trust Fees and Assets
Revenues from trust services are reported on the cash basis in accordance
with customary banking practice. Reporting such revenues on the accrual
basis would not materially affect the accompanying consolidated financial
statements. Assets held in a fiduciary or agency capacity for customers and
beneficiaries are not included in the consolidated financial statements as
such items are not assets of the Corporation.
Securities to be Held to Maturity and Securities Available for Sale
Effective January 1, 1994, the Corporation changed its method of accounting
for securities to conform with Statement of Financial Accounting Standards
(SFAS) No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." Securities to be held to maturity are reported at cost,
adjusted for premiums and discounts, and consist of securities for which
the Corporation has the positive intent and ability to hold to maturity.
Available for sale securities are reported at fair value and consist of
securities not classified as securities to be held to maturity. Unrealized
holding gains and losses, net of tax, on available for sale securities are
reported as a net amount in a separate component of stockholders' equity
until realized.
Federal Home Loan Bank stock is not considered to be a marketable equity
security under SFAS No. 115 and, therefore, is carried at cost. The stock
is included in securities available for sale.
Amortization of premiums and accretion of discounts are recorded primarily
on the interest method. Gains and losses on disposition of investment
securities and securities available for sale are computed by the specific
identification method.
Loans and Interest Income
Loans are stated at the principal balance outstanding, net of unearned
interest. Interest on loans is based upon the principal balance
outstanding, except interest on some consumer installment loans, which is
recognized on the sum-of-the-years-digits method, and does not differ
materially from the interest method.
Page 8
<PAGE> 9
The accrual of interest income is generally reviewed for discontinuance
when a loan becomes 90 days past due as to principal or interest. When
interest is discontinued, all unpaid accrued interest is reversed.
Management may elect to continue the accrual of interest when the estimated
net realizable value of collateral is sufficient to cover the principal
balance and accrued interest or, in the opinion of management, when the
interest is collectible.
Income Taxes
The provision for income taxes in the interim periods has been calculated
using the anticipated effective tax rate for the respective calendar year,
taking into consideration certain tax-exempt loan and investment income.
Per Common Share Data
Net income per common share data for the three months ended June 30, 1997
and 1996 is based on 7,862,267 average shares outstanding and 7,879,471
average shares outstanding, respectively. Net income per common share for
the six months ended June 30, 1997 and 1996 is based upon 7,862,904 average
shares outstanding and 7,892,530 average shares outstanding, respectively.
Common stock options are not included in net income per common share data
since their effect is not material.
Reclassifications
Certain reclassifications have been made in the 1996 financial statements
to conform to the presentation of the 1997 financial statements.
Uses 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 at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
NOTE 2: SECURITIES HELD TO MATURITY
<TABLE>
<CAPTION>
SECURITIES HELD TO
MATURITY
($ in thousands) June 30, 1997
----------------------------------------
AMORTIZED ESTIMATED GROSS UNREALIZED
COST FAIR VALUE GAIN LOSS
----------------------------------------
<S> <C> <C> <C> <C>
U.S. Government agency
obligations 905 915 10 -
State and political
subdivisions 59,155 62,035 2,910 30
---------------------------------------
Total $ 60,060 $ 62,950 $ 2,920 $ 30
=======================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------
AMORTIZED ESTIMATED GROSS UNREALIZED
COST FAIR VALUE GAIN LOSS
VALUE
------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 1,108 $ 1,106 $ - $ 2
U.S. Government agency
obligations 907 921 14 -
State and political
subdivisions 54,226 55,922 2,204 508
------------------------------------------
Total securities $ 56,241 $ 57,949 $ 2,218 $ 510
==========================================
</TABLE>
Page 9
<PAGE> 10
Certain securities held to maturity were pledged to secure public deposits,
securities sold under agreements to repurchase, and for other purposes as
required or permitted by law. These pledged securities had an amortized
cost and estimated fair value of approximately $28,486,513 and $29,998,029,
respectively, at June 30, 1997.
NOTE 3: SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
($ in thousands) June 30, 1997
------------------------------------------
AMORTIZED ESTIMATED GROSS UNREALIZED
COST FAIR VALUE GAIN LOSS
------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 7,603 $ 7,599 $ 2 $ 6
U.S. Government agency
obligations 57,252 57,095 57 214
State and political
subdivisions 3,839 3,936 114 17
Mortaged-backed
securities 94,478 94,390 541 629
Derivative Securities 1,002 1.002 1 1
Federal Home Loan Bank 9,406 9,406 - -
Stock
Other 102 102 - -
-----------------------------------------
Total $173,682 $173,530 $ 715 $ 867
=========================================
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------
AMORTIZED ESTIMATED GROSS UNREALIZED
COST FAIR VALUE GAIN LOSS
------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 7,715 $ 7,728 $ 17 $ 4
U.S. Government agency
obligations 37,250 37,018 26 258
State and political
subdivisions 7,259 7,489 270 40
Mortaged-backed
securities 87,402 87,109 495 788
Derivative Securities 1,003 997 - 6
Federal Home Loan Bank 8,791 8,791 - -
Other 122 122 - -
-----------------------------------------
$149,542 $149,254 $ 808 $1,096
=========================================
</TABLE>
Certain securities available for sale were pledged to secure public
deposits, securities sold under agreements to repurchase, and for other
purposes as required or permitted by law. These pledged securities had an
amortized cost and estimated fair value of approximately $130,303,424 and
$129,963,380 respectively, at June 30, 1997. Federal Home Loan Bank stock,
which is classified as available for sale, is carried at cost.
Page 10
<PAGE> 11
NOTE 4: LOANS
<TABLE>
<CAPTION>
($ in thousands) June 30 December 31 June 30
---------------------------------
1997 1996 1996
---------------------------------
<S> <C> <C> <C>
Commercial, industrial,
and agricultural loans $214,346 $209,941 $209,874
Residential real estate and mobile 286,356 279,803 259,260
home loans
Installment loans 203,810 206,998 190,188
-------------------------------
Total loans 704,512 696,742 659,322
Less: Unearned interest 8,600 9,524 9,136
-------------------------------
Total loans. net of unearned
interest $695,912 $687,218 $650,186
===============================
</TABLE>
NOTE 5: PREMISES AND EQUIPMENT
<TABLE>
<CAPTION>
($ in thousands) June 30 December 31 June 30
-------------------------------
1997 1996 1996
-------------------------------
<S> <C> <C> <C>
Land $ 2,017 $ 1,971 $ 1,971
Buildings and improvements 19,171 18,568 17,833
Furniture and equipment 13,976 13,569 13,959
Construction in progress 33 - 59
------------------------------
Total premises and equipment 35,197 34,108 33,822
Less: Accumulated depreciation
and amortization 16,946 15,910 15,329
------------------------------
Net premises and equipment $18,251 $18,198 $18,493
==============================
</TABLE>
NOTE 6: INTEREST-BEARING DEPOSITS
<TABLE>
<CAPTION>
($ in thousands) June 30 December 31 June 30
--------------------------------
1997 1996 1996
--------------------------------
<S> <C> <C> <C>
NOW accounts $ 96,992 $106,882 $ 95,517
Money Manager accounts 58,012 39,008 37,597
Individual Retirement accounts 52,303 49,542 48,443
Savings accounts 52,053 51,984 50,633
Certificates of deposit under $100,000 308,953 291,154 280,978
Certificates of deposit $100,000 and
above 91,618 92,965 85,771
-------------------------------
Total interest-bearing deposits $659,931 $631,535 $598,939
===============================
</TABLE>
Page 11
<PAGE> 12
PART I - FINANCIAL INFORMATION
ITEM 2. Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations
CBT Corporation ("CBT") is a multi-bank holding company consisting of four
state chartered commercial banks, one federal savings bank, and a consumer
finance company. The banks' 19 locations provide financial services
primarily in western Kentucky, while the finance company has 27 locations
throughout the Commonwealth. The following discussion and analysis is
presented on a consolidated basis, with all significant intercompany
accounts and transactions eliminated.
For the three month period ended June 30, 1997, CBT earned $3,202,000
virtually identical to the $3,198,000 earned during the second quarter of
1996. Earnings per share was $.41 for both periods.
Return on average equity was 11.23 percent and 12.00 percent for the second
quarter of 1997 and 1996, respectively. Return on average assets for the
three month period ended June 30, 1997 was 1.31 percent, compared with 1.41
percent for the same 1996 period.
For the first six months of 1997, CBT earned $6,333,000 an increase of 3.32
percent from the first six months of 1996 which was $6,130,000. Net income
per share was $0.81 for the six month period ended June 30, 1997 compared
with $0.78 for the comparable period in 1996.
Return on average equity was 11.29 percent and 11.61 percent for the first
six months of 1997 and 1996, respectively. Return on average assets for
the six month period ended June 30, 1997 was 1.32 percent, compared with
1.36 percent for the similar 1996 period.
Consolidated Income Statement Analysis
Net Interest Income
Net interest income is the difference between interest earned on assets and
interest incurred on liabilities. It is affected by changes in the mix and
volume of earning assets and interest-bearing liabilities, their related
yields, and overall interest rates. For discussion purposes herein, net
interest income is presented on a tax-equivalent basis with adjustments
made to present yields on tax-exempt assets as if such income was fully
taxable.
In the second quarter of 1997, tax equivalent net interest income provided
82.20 percent of CBT's net revenue, compared with 83.50 percent in the
second quarter of 1996. The change was a result of higher fee income in
1997 rather than a reduction in net interest income. Total tax-equivalent
net interest income for the second quarter of 1997 increased 2.00 percent
from the second quarter a year ago. Growth in tax-equivalent net interest
income for the second quarter of 1997 over 1996 was due to growth in
earning assets of 7.7 percent partially offset by a 24 basis point decline
in net interest margin.
Net interest margin, the ratio of tax-equivalent net interest income
divided by average earning assets, was 4.81 percent and 5.01 percent for
the six months ended June 30, 1997 and June 30, 1996, respectively. The
following schedule presents yields and costs on key components of interest
income and interest expense for the first quarter of 1997 and 1996.
Page 12
<PAGE> 13
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------------------
1997 1996 1997 1996
------------------------------------
<S> <C> <C> <C> <C>
Yield on securities 7.12% 6.98% 7.12% 6.96%
Yield on loans 9.68% 9.89% 9.61% 9.86%
Yield on federal funds sold and other
money market investments 5.25% 3.65% 5.42% 4.61%
------------------------------------
Yield on earning assets 9.01% 9.16% 9.01% 9.14%
Rate on interest-bearing deposits 4.97% 4.74% 4.99% 4.78%
Rate on borrowings 5.58% 5.21% 5.57% 5.27%
------------------------------------
Rate on interest bearing
liabilities 5.08% 4.83% 5.09% 4.87%
Net interest spread 3.93% 4.33% 3.92% 4.27%
Net interest margin 4.81% 5.05% 4.81% 5.01%
</TABLE>
Provision for Loan Losses
The provision for loan losses reflects management's judgment of the current
period cost associated with maintaining adequate reserves for the credit
risk inherent in CBT's loan portfolio. The consolidated provision for loan
losses was $1,017,000 for the second quarter of 1997, a 109.7 percent
increase from the $485,000 provision recorded in the second quarter of
1996. The second quarter provision for loan losses was 0.6 percent of
average loans on an annualized basis, compared with 0.3 percent in the
prior year. Provision expense was substantially increased in 1997 in light
of a significant increase in loan charge-offs during 1996, principally
related to one commercial account and increased installment loan charge-
offs experienced in 1996 and 1997.
Net loan losses were $375,000 for the second quarter of 1997 compared to
$477,000 for the second quarter of 1996. Net loan losses as a percent of
average loans on an annualized basis were .22 percent for the three months
ended June 30, 1997, compared to 0.28 percent for the three months ended
June 30, 1996. Net loan losses were $813,000 and $2,063,000 for the six
months ended June 30, 1997 and 1996, respectively. Net loan losses as a
percent of average loans on an annualized basis were 0.24 percent and 0.65
percent for the six month period ended June 30, 1997 and 1996,
respectively.
Page 13
<PAGE>
The following is a progression of the allowance for loan losses:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
($ in thousands) June 30 June 30
-------------------------------------
1997 1996 1997 1996
-------------------------------------
<S> <C> <C> <C> <C>
Balance, beginning of period $8,707 $9,858 $8,243 $11,004
Adjustment for sales of finance
receivables (24) - (52) -
Provision for loan losses 1,017 485 1,947 955
Loans charged off (654) (576) (1,225) (2,295)
Recoveries 279 129 412 232
------------------------------------
Net charge-offs (375) (447) (813) (2,063)
------------------------------------
Balance, end of period $9,325 $9,896 $9,325 $9,896
====================================
Allowance for loan losses to total
loans, net of unearned interest 1.34% 1.52% 1.34% 1.52%
Net charge-offs to average loans 0.22% 0.28% 0.24% 0.65%
Non-performing assets to period-end
loans and other real estate 0.91% 1.65% 0.91% 1.65%
</TABLE>
Non-Interest Income
Non-interest income represented 10.28 percent of CBT's tax-equivalent
revenue in the second quarter of 1997, compared with 9.81 percent in the
second quarter of 1996. Consolidated non-interest income increased 13.4
percent or $285,000 in the second quarter of 1997 to $2,406,000 compared to
$2,121,000 in the same period of 1996. Improvements in insurance commisions
(4.8 percent) and car club revenue by FCC (16.2 percent) offset a decline
in service charges on deposit accounts. Official check commisions
increased 753% over the second quarter of 1997 through the outsourcing
of official check processing which was implemented late in the second
quarter of 1996. Non-interest income was further enhanced during the second
quarter of 1997 by sales of finance receivables by FCC and sales
of securities by Citizens. Other non-interest income increased 4.59
percent over the second quarter of 1996.
Non-interest income represented 11.84 percent of CBT's tax-equivalent
revenue in the first six months of 1997, compared with 9.53 percent in the
first six months of 1996 as management continues to emphasize fee income
opportunities. Consolidated non-interest income increased 19.2 percent or
$786,000 in the first six months of 1997 to $4,877,000, compared with the
same period in 1996. Non-interest income was enhanced during the first six
months of 1997 by sales of securities by Citizens and sales of finance
receivables by FCC. CBT's alliance with J.C. Bradford & Co. ("JCB"), a
Nashville-based regional brokerage firm and the resultant fees generated by
this alliance resulted in a 16.00 percent increase in investment advisory
services. Service charges on deposit accounts grew 1.2 percent from
$1,630,000 in the first six months of 1996 to $1,650,000 in the first six
months of 1997, primarily as a result of increased return check charges and
commercial analysis fees. Consumer loan growth pushed credit-related
insurance fees up 10.6 percent from $641,000 to $709,000. Car club revenue
increased $59,000 or 27.83 percent as FCC focused more sales efforts on
this product. The $211,000 (224 percent) increase in official check
commissions shows the impact of a full six months of outsourcing the
processing of official checks. All other fee income increased a modest
2.91 percent to $494,000 from $480,000.
Page 14
<PAGE> 15
The following table shows a breakdown of non-interest income:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
($ in thousands) June 30 June 30
------------------------------------
1997 1996 1997 1996
------------------------------------
<S> <C> <C> <C> <C>
Trust fees $ 259 $ 261 $ 533 $ 550
Investment advisory fees 256 274 522 450
Service charges on deposit accounts 814 871 1,650 1,630
Insurance commissions 345 329 709 641
Car club revenue 151 130 271 212
Official check commissions 145 17 305 94
Net gain on sale of securities 56 21 56 34
Net gain on sale of finance
receivables 152 - 337 -
Other 228 218 494 480
---------------------------------
Total non-interest income $ 2,406 $ 2,121 $ 4,877 $ 4,091
=================================
</TABLE>
Non-Interest Expenses
Total non-interest expense grew $72,000, or 1.00 percent, for the second
quarter of 1997 compared to the second quarter of 1996. Salaries and
benefits increased $63,000 (1.60 percent) as a result of merit increases
and the filling of open positions. Depreciation and amortization grew
$29,000 (5.20 percent) because of the acquisition of fixed assets and
deposits of a branch of the Fifth Third Bank of Kentucky, Inc. (Fifth
Third) by GCB in May, 1997 and the resultant write-off of premiums
associated with the acquired deposits and depreciation of the acquired
building. Data processing costs increased $48,000 or 12.94 percent due
to CBT's increased utilization of services offered by its service provider.
FDIC costs declined as assessment rates fell during 1997. Recruitment costs
decreased $49,000 as positions were filled without the expense of executive
search firms. Miscellaneous charge-offs decreased $90,000 as a result of
implementing tighter procedures for reconcilements. Special services
increased $51,000 with the expiration of a real estate option.
For the six month period ended June 30, 1997, total non-interest expense
fell $61,000, or 0.4 percent compared to the first six months of 1996 as a
result of management's continued emphasis on reducing administrative
expenses. Data processing was up $75,000 (8.7 percent) because of
increased volumes and additional services provided in 1997. Supplies
decreased $93,000 through cost savings from centralized purchasing. The
decrease in FDIC fees was a result of reductions in the assessment rate.
Advertising decreased $89,000 or 15.48 percent, audit fees by $91,000 or
30.64% and miscellaneous charge-offs by 90,000 or 18.82%. All other non-
interest expenses increased $143,000 (14.33 percent) primarily from
increases in collection expenses incurred to repossess and refurbish
automobiles and mobile homes.
Page 15
<PAGE> 16
The following table shows a breakdown of non-interest expense:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
($ in thousands) June 30 June 30
-------------------------------------
1997 1996 1997 1996
-------------------------------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 3,979 $ 3,916 $ 8,050 $ 7,878
Net occupancy 352 328 711 681
Depreciation and amortization 583 554 1,129 1,108
Supplies 190 212 363 456
Data processing 419 371 861 786
FDIC assessments 40 57 32 114
Franchise tax 293 303 587 606
Recruiting Fees - 49 - 62
Advertising 277 295 486 575
Phone 133 125 267 281
Postage 158 127 306 280
Audit and exam fees 91 151 206 297
Miscellaneous charge-offs 222 313 388 478
Special Services 143 92 233 228
Travel and entertainment 99 92 171 163
Community Development 91 98 172 173
Other 571 486 1,141 998
---------------------------------
Total non-interest expense $ 7,641 $ 7,569 $15,103 $15,164
=================================
</TABLE>
The efficiency ratio, defined as non-interest expense divided by tax-
equivalent revenue, is a measure of how effective a financial services
company is in leveraging its resources to produce revenue. A lower ratio
indicates better performance. CBT's efficiency ratio was 56.57 percent for
the second quarter of 1997 compared to 58.76 percent for the same period in
1996. For the six months ending June 30, 1997 and 1996 respectively, the
efficiency ratio was 56.66 percent and 59.76 percent.
Income Taxes
CBT's income tax planning is based upon the goal of maximizing long-term,
after-tax profitability. Income tax expense is significantly affected by
the mix of taxable versus tax-exempt revenues.
The effective income tax rate for the three months ended June 30, 1997 and
1996 was 29.20 percent and 28.90 percent, respectively. The effective
income tax rate for the six months ended June 30, 1997 and 1996 was 29.30
percent and 28.90 percent, respectively. The increase is attributable to
the decline of tax-exempt revenue as a percent of total revenue.
Consolidated Balance Sheet Analysis
Earning Assets
At June 30, 1997, earning assets were $929.5 million, compared with $863.1
million at June 30, 1996. This increase is due to a $45.7 million increase
in loans and a $21.7 million increase in securities. Total earning assets
at June 30, 1997 consisted of 74.87 percent loans and 25.13 percent
securities, while the June 30, 1996 earning asset mix consisted of 75.33
percent loans and 24.55 percent securities. Average earning assets for the
first six months of 1997 were $913.4 million, an increase of 6.9 percent
over the first six months of 1996.
Page 16
<PAGE> 17
Investment Risk Management
CBT has certain securities in its available for sale portfolio that are
classified as derivative securities by banking regulators. At June 30,
1997 and December 31, 1996, respectively, CBT had $1,000,000 and $1,003,000
in derivative securities. These amounts represent 0.6 percent and 0.7
percent of the total securities available for sale at June 30, 1997 and
December 31, 1996, respectively. All are guaranteed by government agencies
and none have a maturity of over 2 years. The amount and nature of these
securities pose no undue risk to CBT's financial position and there are no
plans to acquire additional derivative securities.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," which was adopted by CBT in the third quarter of
1994. The Statement requires that investment securities classified as
available for sale be reported at fair value with unrealized gains and
losses reported, net of deferred taxes, as a separate component of
shareholders' equity. As of June 30, 1997, net unrealized losses related
to investment securities available for sale were $99,000, net of deferred
taxes. At June 30, 1996, the fair value of securities available for sale
reflected unrealized losses of $2,080,000, net of deferred taxes.
Credit Risk Management
CBT manages exposure to credit risk though loan portfolio diversification
by customer, industry, and loan type. As a result, there is no undue
concentration in any single sector. CBT annually evaluates economic
conditions affecting its lending markets. Economic indicators such as
unemployment levels, construction activity, and bankruptcy filings are
evaluated. During the second quarter of 1997, CBT's primary market areas
continued to experience favorable unemployment levels and stable real
estate values and commercial development. Bankruptcy filings in CBT's
markets have continued to increase during 1997, however. Management has
considered expected economic trends in assessing the adequacy of the
allowance for loan losses and believes that the allowance for loan losses
is adequate in light of these trends, among other factors. CBT's credit
risk is also diversified by loan type. At June 30, 1997, 40.7 percent of
the portfolio consisted of residential real estate and mobile home loans,
30.4 percent of commercial loans and 28.9 percent of consumer loans.
Credit risk management also includes monitoring the performance of existing
portfolios. CBT has in place a comprehensive internal credit review
program to assess the current financial condition and operating performance
of significant commercial borrowers.
Loans by type appear below:
<TABLE>
<CAPTION>
($ in thousands) June 30 December 31 June 30
---------------------------------
1997 1996 1996
---------------------------------
<S> <C> <C> <C>
Commercial, industrial, and
agricultural loans $214,346 $209,941 $209,874
Residential real estate and mobile
homes 286,356 279,803 259,260
Consumer loans 203,810 206,998 190,188
--------------------------------
Total loans 704,512 696,742 659,322
Less: Unearned interest 8,600 9,524 9,136
-------------------------------
Total loans, net of unearned
interest $695,912 $687,218 $650,186
===============================
</TABLE>
Page 17
<PAGE> 18
CBT continues to classify its loans consistent with current regulatory
review results. There are no material commitments to lend additional funds
to customers whose loans were classified as non-accrual at June 30, 1997.
Allowance for Loan Losses
At June 30, 1997, the allowance for loan losses was $9.3 million, or 1.34
percent of net loans outstanding, compared with $8.2 million, or 1.20
percent at December 31, 1996. The ratio of the allowance for loan losses
to non-performing assets was 147.7 percent at June 30, 1997, compared with
111.9 percent at December 31, 1996. Non-performing assets consist of non-
accrual loans, loans past-due ninety days or more that are still accruing
interest and other real estate owned.
Although it is impossible for any lender to predict future loan losses with
complete accuracy, management monitors the allowance for loan losses with
the intent to provide for all losses that can reasonably be anticipated
based on current conditions. CBT has a comprehensive credit grading system
and other internal loan monitoring systems to support this assessment.
Such systems fully comply with the loan review guidelines set forth in the
December 21, 1993 Interagency Policy Statement on the Allowance for Loan
and Lease Losses. CBT management maintains the allowance available to
cover future loan losses within the entire loan portfolio and believes the
allowance for loan losses is adequate at June 30, 1997 based on the current
level of non-performing assets and the expected level of future charge-
offs.
Non-Performing Assets
The table below presents data on CBT's non-performing assets. As
previously defined, non-performing assets consist of non-accrual loans,
loans past due ninety days or more that are still accruing interest and
other real estate owned. At June 30, 1997, non-performing assets totaled
$6.3 million, or 0.91 percent of net loans and other real estate owned,
compared with $7.4 million, or 1.07 percent of net loans and other real
estate owned, at December 31, 1996.
<TABLE>
<CAPTION>
($ in thousands) June 30 December 31 June 30
-------------------------------
1997 1996 1996
-------------------------------
<S> <C> <C> <C>
Non-accrual loans $ 4,742 $ 5,158 $ 8,772
Accruing loans which are contractually
past due 90 days or more 1,544 2,207 1,954
------------------------------
Total non-performing loans 6,286 7,365 10,726
Other real estate owned 27 - 30
------------------------------
Total non-performing assets $ 6,313 $ 7,365 $10,756
==============================
</TABLE>
In 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan", (FAS 114). It was subsequently amended in 1994 with
the issue of FAS 118, "Accounting by Creditors for Impairment of a Loan-
Income Recognition and Disclosure". FAS 114, as amended, requires that
impaired loans be measured based on the present value of expected future
cash flow discounted at the loan's effective rate, at the loan's market
price, or the fair value of the collateral is the loan is collateral
dependent. CBT adopted FAS 114 in 1995. The adoption of FAS 114 did not
have a material effect on CBT's consolidated financial statements.
Page 18
<PAGE> 19
Funding Sources
Non-Interest Bearing Deposits
Non-interest bearing deposits, which represent a portion of CBT's core
deposits, were $72.2 million at June 30, 1997, a $6.3 million decline from
December 31, 1996. Average non-interest bearing deposits were $68.7
million for the first six months of 1997 compared with $64.4 million for
first six months of 1996. Non-interest bearing deposits represented 8.3
percent of CBT's total funding sources at June 30, 1997, compared with 9.4
percent at December 31, 1996.
Interest-Bearing Liabilities
Interest-bearing liabilities for CBT consist of certain core deposits,
purchased deposits, short-term and long-term borrowings. At June 30, 1997,
interest-bearing liabilities totaled $793.9 million, an increase of $33.7
million over December 31, 1996. The increase is due primarily to a $28.4
million increase in interest-bearing deposits, an $11.9 million increase in
Federal funds purchased and securities sold under agreements to repurchase
and a $7.4 million decrease in Federal Home Loan Bank advances. During May
1997 $30.5 million in interest-bearing deposits were added by GCB through
the acquisition of the Fifth Third branch of Mayfield, Kentucky.
Interest-bearing Core Deposits - In CBT's banking subsidiaries, NOW, Money
Manager, Individual Retirement and savings accounts, and certificates of
deposit under $100,000 are considered core interest-bearing deposits. At
June 30, 1997 these deposits accounted for 66.0 percent of CBT's total
funding sources compared with 63.9 percent at December 31, 1996.
Purchased Deposits - Purchased deposits, which CBT defines as certificates
of deposit with denominations of $100,000 or more and brokered certificates
of deposit, decreased $7.0 million or 7.30 percent to $88.6 million from
$95.6 million at December 31, 1996. Purchased deposits represented 10.23
percent of CBT's total funding sources at June 30, 1997, compared with
11.39 percent at December 31, 1996. At June 30, 1997, CBT held $11.6
million of brokered certificates of deposit.
Borrowings - Borrowings include Federal funds purchased, securities sold
under agreements to repurchase, U.S. Treasury notes payable, revolving
lines of credit, and Federal Home Loan Bank advances. Management views
borrowings as a cost-effective alternative to purchased deposits and
interest-bearing core deposits and actively manages CBT's borrowing
position to maintain acceptable net interest margins and liquidity. At
June 30, 1997, borrowings accounted for 15.5 percent of CBT's total funding
sources, compared with 15.3 percent at December 31, 1996. The increase was
in Federal funds purchased and securities sold under agreements to
repurchase.
Asset and Liability Management
Financial institutions manage the inherently different maturity and
repricing characteristics of earning assets and interest-bearing funding to
achieve a desired interest rate sensitivity position and to limit their
exposure to interest rate risk. The goal of the asset and liability
management process is to manage the structure of the balance sheet to
provide the optimal level of net interest income while maintaining
acceptable levels of interest rate risk (as defined below) and liquidity.
The focal point of this process is the Asset and Liability Management
Committee (ALCO) of CBT, an executive-level management committee. ALCO
meets monthly to consider CBT's consolidated interest rate risk and
liquidity posture. The committee takes an active role in maintaining and
hedging CBT's profitability under a variety of interest rate scenarios.
The actual management of interest rate risk is governed by an asset and
liability management policy.
Page 19
<PAGE> 20
Interest Rate Risk and Its Measurement
Interest rate risk is the risk that future changes in interest rates will
reduce net interest income or the market value of a financial institution.
Management uses various measurement tools to monitor CBT's interest rate
risk position. One measurement tool is the GAP report, which classifies
assets and liabilities and their respective yields and costs in terms of
maturity or repricing dates. While considerable judgment is necessary to
appropriately classify certain balance sheet items that have no contractual
maturity or repricing dates, the GAP report provides management a basic
measure of interest rate risk. CBT monitors the GAP position of each
subsidiary individually (FCC is included with Citizens), as well as on a
consolidated basis. The asset and liability management policy at each
subsidiary specifies targets based primarily on the one year cumulative GAP
position in conjunction with a market volatility risk analysis. At June
30, 1997 the one year cumulative interest rate GAP, defined as the ratio of
rate sensitive assets to rate sensitive liabilities, was .85, while at
December 31, 1996, the one year cumulative interest rate GAP was .99. The
change was primarily the result of an investment strategy implemented in
anticipation of a branch deposit acquisition scheduled to close in May
1997. Exclusive of that, the GAP is within corporate guidelines. A GAP of
less than one indicates that, over the time horizon measured, more
liabilities will reprice than assets.
GAP as an interest rate risk measurement tool has several limitations: it
is a static measurement; it requires the establishment of an subjective
time horizon; and it does not capture basis risk or risk that varies non-
proportionally with rate movements. Because of such limitations, CBT
supplements its use of GAP with a computer model to estimate the impact of
various parallel shifts in the yield curve on net interest income and the
fair value of equity under a variety of interest rate scenarios. CBT's
management believes the two approaches compliment each other in
understanding the impact of changes in interest rates on the financial
performance and condition of CBT. Based on modeling using June 30, 1997
data, CBT would expect its net interest income to change no more than 2.0
percent under a 200 basis point parallel shift up or down of the yield
curve.
Liquidity Management
Liquidity management involves planning to meet funding needs at a
reasonable cost, as well as developing contingency plans to meet
unanticipated funding needs or a loss of funding sources. Liquidity
management for CBT is monitored by ALCO, which takes into account the
marketability of assets, the sources and stability of funding, and the
level of unfunded loan commitments.
CBT's consumer deposits provide a certain level of stability with respect
to liquidity. In addition, membership in the Federal Home Loan Bank of
Cincinnati provides a cost-effective alternate source of funding, as does
access to brokered certificates of deposit. CBT's available for sale
investment portfolio also provides an additional source of liquidity.
Capital Management
CBT management believes that a strong capital position is vital to
continued profitability and promotes depositor and investor confidence.
CBT bank subsidiaries are required to maintain capital levels sufficient to
qualify for "well capitalized" status with banking regulators and to meet
anticipated growth needs. Net income and capital infusions from the parent
are the primary sources of new capital for subsidiaries. Net income of
subsidiaries in excess of capital requirements is available to CBT in the
form of dividends and is used primarily to pay corporate dividends and to
infuse other subsidiaries with capital, as required.
Page 20
<PAGE> 21
The following analysis shows comparisons between the regulatory
requirements for "well capitalized" institutions and the actual capital
position of CBT:
<TABLE>
<CAPTION>
Well
Capitalized Actual Excess
-----------------------------------------------------------------------
<S> <C> <C> <C>
June 30, 1997
Leverage Ratio (Equity to 5.00% 11.02% 6.02%
Assets)
Tier 1 Risk-Based 6.00% 15.62% 9.63%
Total Risk-Based 10.00% 16.88% 6.88%
December 31, 1996
Leverage Ratio (Equity to 5.00% 11.36% 6.36%
Assets)
Tier 1 Risk-Based 6.00% 16.05% 10.05%
Total Risk-Based 10.00% 17.30% 7.30%
</TABLE>
Because of solid performance and conservative capital management, CBT has
consistently maintained a strong capital position. These ratios compare
favorably with industry standards and CBT's peers.
The Corporation occasionally repurchases and retires common stock. During
the first six months of 1997, all repurchases have been done in non-block
sizes (less than 5,000 shares) and are accomplished to meet internal needs
(e.g. 401(k), stock options). For the six month period ended June 30, 1997,
5,000 shares had been repurchased at an aggregate price of $118,000.
For the six month period ended June 30, 1997, CBT's shareholders' equity,
exclusive of the unrealized loss on securities available for sale (net of
deferred tax) and stock repurchases, grew $4.2 million. CBT's internal
capital growth rate (ICGR) for the six months ended June 30, 1997 was 3.8
percent. The ICGR represents the rate at which CBT's shareholders' equity
grew as a result of earnings retained (net income less dividends paid).
CBT declared a $0.13 per share dividend in the second quarter of 1997,
which represented an 8.3 percent increase over one year ago. This brings
the total dividends per share to $0.26 through 6/30/97. The dividend
payout ratio for the first six months of 1997 was 32.3 percent of net
income, which was within management's general payout guideline of 25 to 35
percent.
Management is currently not aware of any recommendation by regulatory
authorities which, if implemented, would have a material effect on the
Corporation's liquidity, capital resources, or operations. Management is
also not aware of any events or uncertainties that will have or that are
reasonably likely to have a material impact on CBT's liquidity, capital
resources or operations.
Market Data
At June 30, 1997, CBT had issued and outstanding 7,862,627 shares of common
stock held by approximately 1,455 shareholders of record. Shareholders
have received cash dividends for each share of common stock on a quarterly
basis in 1996 and 1997.
CBT Corporation common stock is traded on the NASDAQ National Stock Market
under the symbol CBTC.
The following table summarizes common stock prices and cash dividends
declared in 1997, 1996, and 1995. The price information reflects the range
of prices for CBT Corporation common stock as reported by NASDAQ.
Page 21
<PAGE> 22
<TABLE>
Price
-----------------
Quarter High Low Dividends
--------------------------------
<S> <C> <C> <C>
June 30, 1997 24.50 20.25 0.13
March 31, 1997 26.50 20.50 0.13
December 31, 1996 28.00 21.00 0.13
September 30, 1996 23.50 20.00 0.13
June 30, 1996 24.25 21.50 0.12
March 31, 1996 24.50 21.50 0.12
December 31, 1995 23.00 20.00 0.12
September 30, 1995 24.25 19.25 0.12
June 30, 1995 24.00 19.75 0.11
March 31, 1995 24.75 21.00 0.11
</TABLE>
Subsequent Events
CBT Corporation through its affiliate United Commonwealth, FSB in Murray,
Kentucky acquired the deposits and various assets of Republic Bank in
Murray in July 1997. Deposits acquired totaled $18.2 million.
Page 22
<PAGE> 23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on Tuesday,
April 15, 1997
(b) Each person named in the proxy statement as a nominee for
director was elected
(c) The following are the voting results on each of the
matters which were submitted to the shareholders:
<TABLE>
<CAPTION>
Election of Directors:
----------------------------------------------------------------
Against
Director For or Withheld Abstain
----------------------------------------------------------------
<S> <S> <S> <S>
Irving P. Bright, Jr. 6,349,256 0 70,858
John L. Burman 6,332,092 0 70.858
Patrick J. Cvengros 6,262,371 0 70,858
William H. Dyer 6,353,738 0 70,858
Louis A. Haas 6,364,008 0 70,858
Joe Tom Haltom 6,295,591 0 70,858
Kerry B. Harvey 6,307,124 0 70,858
F. Donald Higdon 6,263,642 0 70,858
William J. Jones 6,076,578 0 70,858
Ted S. Kinsey 6,353,797 0 70,858
Louis M. Michelson 6,319,446 0 70,858
Bill B. Morgan 6,281,774 0 70,858
David M. Paxton 6,278,195 0 70,858
Robert P. Petter 6,354,483 0 70,858
Joseph A. Powell 6,285,496 0 70,858
William A. Usher 6,317,322 0 70.858
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits set out on the Exhibit Index included as page
24 of this report are furnished as a part of this report.
(b) No Form 8-K has been filed during the first six months of
1997.
Page 23
<PAGE> 24
Pursuant to the requirements 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.
CBT CORPORATION
DATE: Aug. 14, 1997 SIGNED: /s/ Paula J. Laird
Paula J. Laird
Vice President and Controller
Page 24
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE
<S> <C> <C>
3(a) Articles of Incorporation of CBT Corporation,
as amended are incorporated by reference to
Exhibit 4(a), of Amended Form 10-Q of CBT
Corporation dated September 6, 1994.
3(b) Articles of Amendment to the Articles of Incorporation
of CBT Corporation are incorporated by reference to
Exhibit 4(b) of Form 10-Q of CBT Corporation
dated June 30, 1995.
3(c) By-Laws of CBT Corporation are incorporated
by reference to Exhibit 3, to the Registration
Statement of Form S-14 of CBT Corporation
(Registration No. 2-83583).
27 Financial Data Schedule 26-27
</TABLE>
Page 25
<PAGE> 26
EXHIBIT 27
FINANCIAL DATA SCHEDULE
(filed in electronic format)
FOR
CBT CORPORATION
For the Period Ended
June 30, 1997
Page 26
<PAGE> 27
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<CIK> 0000719227
<NAME> CBT CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. CURRENCY
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 35,200
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 60,060
<INVESTMENTS-CARRYING> 173,530
<INVESTMENTS-MARKET> 173,682
<LOANS> 695,912
<ALLOWANCE> 9,325
<TOTAL-ASSETS> 993,963
<DEPOSITS> 732,182
<SHORT-TERM> 111,711
<LIABILITIES-OTHER> 13,348
<LONG-TERM> 22,250
0
0
<COMMON> 4,100
<OTHER-SE> 110,372
<TOTAL-LIABILITIES-AND-EQUITY> 993,963
<INTEREST-LOAN> 33,145
<INTEREST-INVEST> 7,207
<INTEREST-OTHER> 197
<INTEREST-TOTAL> 40,549
<INTEREST-DEPOSIT> 15,811
<INTEREST-EXPENSE> 19,420
<INTEREST-INCOME-NET> 21,129
<LOAN-LOSSES> 19,182
<SECURITIES-GAINS> 56
<EXPENSE-OTHER> 15,103
<INCOME-PRETAX> 8,956
<INCOME-PRE-EXTRAORDINARY> 8,956
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,333
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.81
<YIELD-ACTUAL> 4.81
<LOANS-NON> 4,742
<LOANS-PAST> 1,544
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,243
<CHARGE-OFFS> 1,225
<RECOVERIES> 412
<ALLOWANCE-CLOSE> 9,325
<ALLOWANCE-DOMESTIC> 9,325
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
