<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
May 23, 1995 (February 1, 1995)
-----------------------------------------------------------------------------
Date of Report (Date of earliest event reported)
CNB BANCSHARES, INC.
-----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
INDIANA
-----------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-11510 35-1568731
-----------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
20 N.W. THIRD STREET, EVANSVILLE, INDIANA 47739-0001
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (812) 464-3400
Not Applicable
-----------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Exhibit Index on Page 5
<PAGE>
Item 5. Other Events
---------------------
On February 1, 1995, CNB Bancshares, Inc. (the "Registrant") acquired
King City Federal Savings Bank, Mt. Vernon, Illinois ("King City") in accordance
with an Agreement and Plan of Reorganization between the Registrant and King
City, dated July 27, 1994 (the "King City Agreement"). Under the terms of the
King City Agreement, a wholly-owned subsidiary of CNB was merged into King City
and CNB issued 652,447 shares of its common stock in exchange for all of the
outstanding shares of King City. The acquisition was accounted for as a pooling
of interests for accounting and financial reporting purposes.
On February 10, 1995, the Registrant acquired Harrisburg Bancshares,
Inc., Harrisburg, Illinois ("HBI"), and its subsidiary, The Harrisburg National
Bank, Harrisburg, Illinois ("Harrisburg National"), in accordance with an
Agreement and Plan of Merger between the Registrant, HBI Acquisition Company, a
wholly-owned subsidiary of the Registrant ("AcquisitionCo"), and HBI, dated
August 16, 1994 (the "Harrisburg Agreement"). Under the terms of the Harrisburg
Agreement, HBI was merged into AcquisitionCo and CNB issued 480,334 shares of
its common stock in exchange for all of the outstanding shares of HBI and the
minority interests of Harrisburg National. The acquisition was accounted for as
a pooling of interests for accounting and financial reporting purposes.
The Registrant has on file with the Securities and Exchange Commission
a Registration Statement on Form S-4 related to the acquisition of The Bank of
Orleans, located in Orleans, Indiana. In accordance with Item 10 of Form S-4,
the Registrant has submitted herewith under Item 7 of this Form 8-K, restated
supplemental consolidated financial statements, giving retroactive effect to the
February 1, 1995, acquisition of King City and the February 10, 1995,
acquisition of HBI and Harrisburg National, as if such organizations had been
combined with the Registrant for the periods presented. The supplemental
consolidated financial statements will become, in all material respects, the
historical financial statements of the Registrant.
2
<PAGE>
Item 7. Financial Statements and Exhibits
------------------------------------------
Exhibits
--------
The following exhibits are submitted herewith:
Exhibit 23 Consent of Independent Auditors.
Exhibit 27 CNB Bancshares, Inc. Supplemental Financial Data Schedule
for the Period Ended December 31, 1994.
Exhibit 99 Audited Supplemental Consolidated Financial Statements of
CNB Bancshares, Inc.
3
<PAGE>
SIGNATURES
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.
Dated: May 23, 1995
CNB BANCSHARES, INC.
By: /s/ David L. Knapp
-----------------------------
David L. Knapp
Executive Vice President
4
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Page
----------- ----------- ----
<S> <C> <C>
23 Consent of Independent Auditors 6
27 CNB Bancshares, Inc. Supplemental 7
Financial Data Schedule for the Year Ended
December 31, 1994.
99 Audited Supplemental Consolidated Financial 9
Statements of CNB Bancshares, Inc.
</TABLE>
5
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the below scheduled Form S-8
registration statements of our report dated May 15, 1995, on the consolidated
financial statements of CNB Bancshares, Inc. (as restated for the February
1995 acquisitions of Harrisburg Bancshares, Inc. and King City Federal Savings
Bank) for the year ended December 31, 1994, in the Current Report on Form 8-K
filed by CNB Bancshares, Inc.
<TABLE>
<CAPTION>
COMMISSION FILE NUMBER
----------------------
<S> <C>
Indiana Bancshares, Inc. 1985 Non-Qualified
Stock Option Plan and Indiana 33-47898
Bancshares, Inc. 1990 Stock Option Plan
CNB Bancshares, Inc. 1992 Incentive Stock
Option Plan 33-45929
Citizens Incentive Savings Plan 33-41514
Valley Bank Stock Option Plan 33-38651
King City Federal Savings Bank 1986 Stock Option and
Incentive Plan 33-89658
King City Federal Savings Bank 1993 Stock Option and
Incentive Plan 33-89722
</TABLE>
/s/Geo. S. Olive & Co. LLC
--------------------------
Geo. S. Olive & Co. LLC
Evansville, Indiana
May 23, 1995
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CNB BANCSHARES INC.'S CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31,
1994 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED
DECEMBER 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 105,638
<INT-BEARING-DEPOSITS> 5,171
<FED-FUNDS-SOLD> 16,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 221,418
<INVESTMENTS-CARRYING> 549,861
<INVESTMENTS-MARKET> 520,873
<LOANS> 1,919,242
<ALLOWANCE> 26,615
<TOTAL-ASSETS> 2,919,087
<DEPOSITS> 2,242,643
<SHORT-TERM> 356,903
<LIABILITIES-OTHER> 24,204
<LONG-TERM> 58,077
<COMMON> 15,009
0
0
<OTHER-SE> 222,251
<TOTAL-LIABILITIES-AND-EQUITY> 2,919,087
<INTEREST-LOAN> 149,349
<INTEREST-INVEST> 44,813
<INTEREST-OTHER> 1,305
<INTEREST-TOTAL> 195,467
<INTEREST-DEPOSIT> 72,068
<INTEREST-EXPENSE> 87,255
<INTEREST-INCOME-NET> 108,212
<LOAN-LOSSES> 6,319
<SECURITIES-GAINS> 687
<EXPENSE-OTHER> 97,707
<INCOME-PRETAX> 41,538
<INCOME-PRE-EXTRAORDINARY> 41,538
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,833
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 1.78
<YIELD-ACTUAL> 4.30
<LOANS-NON> 11,023
<LOANS-PAST> 2,933
<LOANS-TROUBLED> 1,065
<LOANS-PROBLEM> 6,812
<ALLOWANCE-OPEN> 22,629
<CHARGE-OFFS> 5,437
<RECOVERIES> 1,749
<ALLOWANCE-CLOSE> 26,615
<ALLOWANCE-DOMESTIC> 24,726
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,889
</TABLE>
<PAGE>
EXHIBIT 99
----------
CNB BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
-------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 105,638 $ 98,684
Interest bearing deposits in other banks 5,171 15,092
Federal funds sold and securities 16,200 49,800
purchased under agreements to resell
---------------------------
TOTAL CASH AND CASH EQUIVALENTS 127,009 163,576
Real estate loans held for sale 1,260 28,434
Investment securities available for sale 221,418 447,243
Investment securities held to maturity 549,861 254,105
(market value $520,873 and $259,636)
Loans:
Commercial, real estate and consumer 1,917,982 1,661,561
loans, net of unearned interest
Less: Allowance for loan losses 26,615 22,629
---------------------------
NET LOANS 1,891,367 1,638,932
Premises and equipment 59,584 59,215
Other real estate owned 2,943 5,289
Interest receivable and other assets 65,645 57,069
---------------------------
TOTAL ASSETS $2,919,087 $2,653,863
===========================
LIABILITIES
Deposits:
Non-interest bearing $ 297,954 $ 273,855
Interest bearing 1,944,689 1,935,223
---------------------------
TOTAL DEPOSITS 2,242,643 2,209,078
Securities sold under repurchase 319,965 94,095
agreements
Federal funds purchased 27,000 49,125
Other short-term borrowings 9,938 2,734
Long-term debt 58,077 50,111
Interest payable and other liabilities 24,204 24,417
---------------------------
TOTAL LIABILITIES 2,681,827 2,429,560
SHAREHOLDERS' EQUITY
Preferred stock, no par or stated
value
Shares authorized and unissued:
2,000,000
Common stock, $1 stated value
Shares authorized: 50,000,000
Shares issued: 15,008,636 in 1994 15,009 13,259
and 13,259,155 in 1993
Capital surplus 202,945 154,378
Retained earnings 21,125 51,530
Net unrealized gains (losses) on (1,819) 5,136
investment securities available for
sale
---------------------------
TOTAL SHAREHOLDERS' EQUITY 237,260 224,303
---------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' $2,919,087 $2,653,863
EQUITY
===========================
</TABLE>
See notes to consolidated financial statements.
9
<PAGE>
CNB BANCSHARES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except for share data)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees:
Taxable $ 146,932 $ 128,821 $ 134,935
Tax exempt 1,628 1,782 2,281
Investment securities:
Taxable 39,922 37,692 38,749
Tax exempt 4,891 4,875 5,699
Real estate loans held for sale 789 1,178 412
Federal funds sold and securities 884 1,984 3,964
purchased under agreements to resell
Interest bearing deposits in other banks 421 874 1,842
---------------------------------------
Total interest income 195,467 177,206 187,882
---------------------------------------
INTEREST EXPENSE
Deposits 72,068 72,839 85,393
Short-term borrowings 11,448 3,352 3,871
Long-term debt 3,739 4,573 6,686
---------------------------------------
Total interest expense 87,255 80,764 95,950
---------------------------------------
NET INTEREST INCOME 108,212 96,442 91,932
Provision for loan losses 6,319 3,605 8,960
---------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR 101,893 92,837 82,972
LOAN LOSSES ---------------------------------------
NON-INTEREST INCOME
Net securities gains 687 1,221 1,104
Other non-interest income 36,665 32,689 27,209
---------------------------------------
Total non-interest income 37,352 33,910 28,313
NON-INTEREST EXPENSE
Salaries and employee benefits 48,893 45,092 41,158
Net occupancy expense 7,067 6,632 6,114
Equipment expense 5,968 5,104 5,006
Other 35,779 31,039 29,081
---------------------------------------
Total non-interest expense 97,707 87,867 81,359
---------------------------------------
INCOME BEFORE INCOME TAXES AND 41,538 38,880 29,926
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
Income taxes 14,705 12,914 8,550
---------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF 26,833 25,966 21,376
ACCOUNTING CHANGE
CUMULATIVE EFFECT OF CHANGE IN - 1,568 -
ACCOUNTING FOR INCOME TAXES
---------------------------------------
NET INCOME $ 26,833 $ 27,534 $ 21,376
=======================================
Per Share:
Primary:
Income before cumulative effect $ 1.82 $ 1.82 $ 1.52
of accounting change
Cumulative effect of change in .11
accounting for income taxes
---------------------------------------
Primary net income per share $ 1.82 $ 1.93 $ 1.52
=======================================
Fully diluted:
Income before cumulative effect $ 1.78 $ 1.76 $ 1.48
of accounting change
Cumulative effect of change in .11
accounting for income taxes
---------------------------------------
Fully diluted net income per $ 1.78 $ 1.87 $ 1.48
share
=======================================
Cash dividends $ .79 $ .73 $ .71
=======================================
AVERAGE SHARES OUTSTANDING 14,716,725 14,270,212 14,076,726
=======================================
</TABLE>
See notes to consolidated financial statements.
10
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands except for share data)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL RETAINED UNREALIZED
SHARES AMOUNT SURPLUS EARNINGS GAINS/LOSSES TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1992 11,414,684 $11,415 $102,222 $70,803 $184,440
Net income for 1992 21,376 21,376
Cash dividends (9,194) (9,194)
Stock dividend ($54 paid in lieu of
fractional shares) 983,966 984 25,033 (26,071) (54)
Purchase and retirement of common stock (132,538) (133) (1,407) (1,972) (3,512)
Shares issued for dividend reinvestment plan 65,561 66 1,619 1,685
Stock options exercised 23,264 23 408 431
Exercise and conversion of stock purchase
contracts and debentures 7,215 7 139 146
-------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1992 12,362,152 12,362 128,014 54,942 195,318
Net income for 1993 27,534 27,534
Cash dividends (10,438) (10,438)
Stock dividend ($46 paid in lieu of fractional
shares) 562,352 562 17,577 (18,185) (46)
Purchase and retirement of common stock (125,354) (125) (1,540) (2,323) (3,988)
Shares issued for dividend reinvestment plan 80,187 80 2,316 2,396
Stock options exercised 21,738 22 264 286
Exercise and conversion of stock purchase
contracts and debentures 220,695 221 4,520 4,741
Issuance of common stock related to
acquisition of subsidiary 115,088 115 2,606 2,721
Issued pursuant to employee benefit plans 22,297 22 621 643
Effect of change in accounting for
investment securities available for sale $ 5,136 5,136
-------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1993 13,259,155 13,259 154,378 51,530 5,136 224,303
Net income for 1994 26,833 26,833
Cash dividends (11,427) (11,427)
Stock dividend ($46 paid in lieu of fractional
shares) 1,224,881 1,225 41,379 (42,650) (46)
Purchase and retirement of common stock (288,820) (289) (2,926) (6,239) (9,454)
Shares issued for dividend reinvestment plan 84,446 84 2,649 2,733
Stock options exercised 19,477 20 305 325
Exercise and conversion of stock purchase
contracts and debentures 149,380 149 2,916 3,065
Issuance of common stock related to
acquisitions of subsidiaries 548,471 549 3,794 5,626 9,969
Issued pursuant to employee benefit plans 11,646 12 373 385
Adjustments for pooling of King City to
conform with the Corporation's different
year-end 77 (2,548) (2,471)
Change in unrealized gains/losses on
investment securities available for sale (6,955) (6,955)
-------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1994 15,008,636 $15,009 $202,945 $21,125 $(1,819) $237,260
=========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 26,833 $ 27,534 $ 21,376
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 8,840 7,497 7,324
Provision for loan losses 6,319 3,605 8,960
Amortization of securities
premiums and discounts 2,666 2,209 328
Deferred income tax benefit (1,845) (185) (2,077)
Cumulative effect of change in
accounting for income taxes (1,568)
Net gains on securities (687) (1,221) (1,104)
Loans originated for sale (39,890) (104,307) (118,015)
Proceeds from sale of loans 67,131 90,986 102,902
(Increase) decrease in interest
receivable and other assets,
net of amortization (810) (5,312) 4,879
Increase (decrease) in interest payable
and other liabilities (1,676) 4,111 (2,856)
------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 66,881 23,349 21,717
------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Cash and cash equivalents of
subsidiaries acquired, net
of purchase price 5,708 3,832
Proceeds from the maturity of
investment securities
available for sale 154,591
Proceeds from the sale of
investment securities
available for sale 178,774 91,433 108,994
Purchase of investment securities
available for sale (101,041) (98,473)
Proceeds from the maturity of
investment securities held
to maturity 57,170 277,347 225,712
Proceeds from the sale of investment
securities held to maturity 23,510
Purchase of investment securities held
to maturity (346,840) (415,529) (324,440)
Net (increase) decrease in loans (209,318) (263,816) 101,191
Purchase of bank premises and equipment (5,165) (7,543) (4,104)
------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (266,121) (314,276) 32,390
------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits (47,601) 145,595 32,172
Net increase (decrease) in short-term
borrowings 217,994 38,444 (4,059)
Payment of long-term debt (11,086) (16,320) (18,807)
Proceeds from long-term borrowings 20,751 10,990 3,699
Proceeds from exercise of stock options 325 286 431
Payment of cash dividends (10,989) (10,357) (8,905)
Proceeds from common stock issued for
dividend reinvestment plan 2,733 2,396 1,685
Purchase and retirement of common stock (9,454) (3,988) (3,512)
------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 162,673 167,046 2,704
------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (36,567) (123,881) 56,811
CASH AND CASH EQUIVALENTS AT JANUARY 1, 163,576 287,457 230,646
------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT DECEMBER 31, $ 127,009 $ 163,576 $ 287,457
==============================================================================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Supplemental disclosure:
Cash paid for:
Interest $86,123 $ 81,657 $98,978
Income taxes 17,135 11,371 9,114
Non-cash investing and financing activities:
Common stock issued for acquisitions 9,969 2,721
Other real estate transfers 1,036 1,587 3,779
Stock issued in exchange of debentures and equity contracts and
pursuant to employee benefit plans 3,637 5,680 146
Reclassification of investment securities available for sale 518,521 20,285
</TABLE>
See notes to consolidated financial statements
13
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
(TABLE DOLLAR AMOUNTS IN THOUSANDS.)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
CNB Bancshares, Inc. (Corporation) is a regional, interstate bank holding
company based in Evansville, Indiana. The Corporation's banking subsidiaries
are engaged in commercial and retail banking, consumer lending, mortgage lending
and servicing, trust services and cash management services for corporate
accounts and other banks. The Corporation also has non-banking subsidiaries
which provide data processing services, credit insurance and the sale of
property and casualty insurance. Through its subsidiaries, the Corporation has
104 offices throughout its primary market areas of Indiana, Illinois, Kentucky,
and portions of Tennessee.
The accounting and reporting policies of CNB Bancshares, Inc. and its
subsidiaries conform to generally accepted accounting principles and reporting
practices followed by the banking industry. The more significant policies are
described below.
RESTATEMENT
The consolidated financial statements presented herein have been restated
for the February, 1995 acquisitions of Harrisburg Bancshares, Inc. and King City
Federal Savings Bank, as described in Note 2.
CONSOLIDATION
The consolidated financial statements include the accounts of the
Corporation and its subsidiaries, after elimination of all material intercompany
accounts and transactions. Certain prior year amounts have been reclassified to
conform with current classifications.
REAL ESTATE LOANS HELD FOR SALE
Certain residential real estate mortgage loans are originated to be sold in
the secondary market. Real estate loans held for sale are carried at the lower
of aggregate cost or market value. Gains and losses on real estate loans sold,
which represents the premium or discount paid by the purchaser, are recorded at
the time of the cash sale. Servicing fee income subsequent to the sales is
included in non-interest income and represents a normal servicing fee on each
loan sold.
INVESTMENT SECURITIES
The Corporation adopted Financial Accounting Standards Board Statement No.
115, "Accounting for Certain Investments in Debt and Equity Securities" (FAS
115) effective December 31, 1993. Debt securities that the Corporation has the
positive intent and ability to hold to maturity are classified as "held to
maturity" and reported at amortized cost. Other investment securities are
classified as "available for sale" or "trading" and reported at fair value with
unrealized gains and losses included in shareholders' equity net of related
taxes, or income, respectively.
Prior to adopting FAS 115, securities purchased to be held for indefinite
periods of time and which might not be held to maturity or on a long-term basis
were classified as held for sale and carried at the lower of aggregate amortized
cost or market value. These securities have been reported under the caption
"available for sale." Investment securities that management had the intent and
the
14
<PAGE>
Corporation had the ability at the time of purchase to hold until maturity or on
a long-term basis were classified as investment securities and carried at
amortized historical cost.
Amortization of premiums and accretion of discounts are recorded as an
adjustment to interest income using the level-yield method over the estimated
remaining period until maturity, adjusted for estimated prepayments. Gains and
losses on the sale of investment securities are determined on the specific
identification method at the time of sale.
LOANS
Loans are stated net of unearned interest and unamortized deferred fees and
costs. Interest income on loans is accrued on the principal amount of such
loans outstanding, except for discounted installment loans which is computed
using a method that approximates a level yield. Certain nonrefundable loan fees
and related direct loan costs are deferred and amortized over the life of the
loan as an adjustment to interest income. Loans are placed on nonaccrual status
when the collection of the interest becomes doubtful. Interest previously
accrued but not deemed collectible is reversed and charged against current
income. Interest income on these loans is then recognized only when collected.
The Financial Accounting Standards Board has issued Statement No. 114
"Accounting by Creditors for Impairment of a Loan" (FAS 114) which was amended
by Statement No. 118. These accounting standards will require that impaired
loans be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate or the fair value of the
underlying collateral. The Corporation plans to adopt these statements
effective January 1, 1995, and does not expect it to have a material impact on
its financial position or results of operations.
ALLOWANCE FOR LOAN LOSSES
An allowance for loan losses is maintained at a level considered adequate
to absorb potential loan losses determined on the basis of management's
continuing review and evaluation of the loan portfolio and its judgment as to
the impact of economic conditions on the portfolio. The evaluation by
management includes consideration of past loan loss experience and trends,
changes in the composition of the loan portfolio, and the current volume and
condition of loans outstanding.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method based on
estimated useful lives. Maintenance and repairs are expensed as incurred, while
major additions and improvements are capitalized. Gains and losses on
dispositions are included in current operations.
OTHER REAL ESTATE OWNED
Other real estate owned represents properties acquired through foreclosure
or deed in lieu of foreclosure and is recorded at the lower of the related loan
amount or fair value minus estimated costs to sell. Any excess of the loan
amount over the estimated fair value less selling costs of such property when
acquired is charged to the allowance for loan losses. Subsequent write-downs
and gains or losses on sales are included in current operations. Any rental
income and costs of maintaining the properties are also included in current
operations.
15
<PAGE>
INTANGIBLE ASSETS
The excess of cost over the fair value of net assets acquired in
acquisitions accounted for as purchases is amortized using the straight-line
method over estimated lives ranging from 15 to 25 years. Core deposit
intangible assets are amortized using the interest method over estimated lives
of 10 years. These intangible assets are included in other assets in the
consolidated balance sheet.
INTEREST RATE CONTRACTS
Premiums paid for interest rate cap agreements and gains or losses on the
early termination of interest rate cap agreements used to hedge changes in
interest rates are included in the carrying amounts of those liabilities being
hedged. These amounts are amortized as an adjustment to interest expense of the
related liability on a straight-line method over the contractual terms of the
caps. Interest expense is reduced on a current basis as amounts are earned from
counterparties when the index rate exceeds the rate contractually specified
under the cap agreement. Gains or losses on the early termination of a hedged
transaction are included in current operations.
INCOME TAXES
Income taxes provided in the consolidated statement of income include
deferred income tax provisions or benefits for all significant temporary
differences in recognizing income and expenses for financial reporting and
income tax purposes. The Corporation and its subsidiaries file consolidated
income tax returns.
NET INCOME PER SHARE
Primary net income per share has been computed by dividing net income by
the weighted average number of common shares outstanding during each period.
Fully diluted net income per share has been computed based on the weighted
average number of common and common equivalent shares outstanding during each
period assuming conversion of the convertible subordinated debentures into
common shares and the elimination from net income of the related interest
expense, less income tax effect. All share data included in the notes to the
financial statements has been adjusted for stock dividends.
TRUST ASSETS
Assets held by the Corporation's subsidiaries in fiduciary or agency
capacity for customers are not included in the consolidated financial statements
as such items are not assets of the Corporation or its subsidiaries.
16
<PAGE>
NOTE 2: BUSINESS COMBINATIONS
The Corporation issued 480,334 shares of its common stock on February 10,
1995, in exchange for all of the outstanding shares of Harrisburg Bancshares,
Inc., holding company for the Harrisburg National Bank, Harrisburg, Illinois,
(Harrisburg) and the minority interests of Harrisburg. At December 31, 1994,
Harrisburg had total assets and shareholders' equity of $108,936,000 and
$6,973,000, respectively. On February 1, 1995, the Corporation issued 652,447
shares of its common stock in exchange for all of the outstanding shares of King
City Federal Savings Bank, Mt. Vernon, Illinois (King City). In addition, the
Corporation reserved an additional 57,467 shares for future issuance due to
outstanding King City stock options. At December 31, 1994, King City had total
assets and shareholders' equity of $172,112,000 and $8,209,000, respectively.
On December 1, 1994, the Corporation issued 416,775 shares of its common stock
in exchange for all of the outstanding common shares of Citizens Realty and
Insurance, Inc., Evansville, Indiana. All three acquisitions were accounted for
under the pooling of interests method of accounting and, accordingly, all
financial data of the Corporation for prior periods has been restated to include
the financial position and operating results of these acquisitions.
Separate operating results of the combined entities for the periods prior
to the mergers were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Net interest income:
CNB Bancshares, Inc. $ 99,822 $87,635 $83,297
Harrisburg Bancshares, Inc. 3,507 3,431 3,216
King City 4,980 5,376 5,479
Citizens Realty & Insurance, Inc. (97) (60)
------------------------------------------------------------------------
Combined $108,212 $96,442 $91,932
========================================================================
Net income:
CNB Bancshares, Inc. $ 26,198 $24,318 $20,088
Harrisburg Bancshares, Inc. (916) 216 (257)
King City 832 1,749 564
Citizens Realty & Insurance, Inc. 719 1,251 981
------------------------------------------------------------------------
Combined $ 26,833 $27,534 $21,376
========================================================================
</TABLE>
King City's results of operations and cash flows included in the financial
statements are for the years ended June 30, 1994, 1993 and 1992, respectively,
since King City through June 30, 1994 was on a June 30 fiscal year. As a result
of changing its fiscal year from June 30 to December 31, retained earnings have
been reduced by $2,548,000 attributable to King City's net loss for the six
months ended December 31, 1994. Revenues and expenses for this six-month period
totaled $5,451,000 and $7,999,000, respectively. Also as a result of the change
in fiscal years, surplus was increased by $77,000 due to the exercise of stock
options.
Effective August 30, 1994, the Corporation issued 157,875 shares of its
common stock in exchange for all of the outstanding shares of Oakland City
Bancshares Corp., holding company for First Bank & Trust Company of Oakland City
(First Bank), and the minority interests of First Bank. At that time, First Bank
was merged into the Corporation's lead bank, The Citizens National Bank of
Evansville. On July 1, 1994, the Corporation issued 445,443 shares of its common
stock in exchange for all of the
17
<PAGE>
outstanding common stock of Union Bank and Trust Company, Morganfield, Kentucky
(Union). Union was renamed Citizens Bank of Kentucky at that time. Simultaneous
with the merger, Peoples Bank and Trust Company, and the Morganfield office of
First Federal Savings Bank of Kentucky, both wholly-owned subsidiaries of the
Corporation, were merged into Citizens Bank of Kentucky. On September 30, 1994,
the Corporation merged three other of its subsidiary banks (CNB Bank of
Kentucky, First Federal Savings Bank of Kentucky and Citizens Bank of Kentucky,
N.A.) into Citizens Bank of Kentucky. These mergers were accounted for under the
pooling of interests method of accounting without restatement of prior periods
as the amounts involved were not material to the Corporation's financial
results.
On November 1, 1993, a subsidiary of the Corporation, The Citizens National
Bank of Evansville, purchased certain loans totaling $18,137,000, and one parcel
of improved real property located in Evansville which it operates as a branch
office, and assumed $43,319,000 deposit liabilities from a wholly-owned
subsidiary of American General Finance, Inc. of Evansville, Indiana. Goodwill
and other intangibles of approximately $956,000 are being amortized on a
straight-line basis over their estimated lives ranging up to 20 years. The
transaction was accounted for under the purchase method of accounting and,
accordingly, the consolidated statements include the assets and liabilities from
the November 1, 1993, transaction date forward.
Effective May 3, 1993, the Corporation issued 632,554 shares of its common
stock in exchange for all of the outstanding common stock of South Central
Illinois Bancorp, Inc. (South Central), holding company for the First National
Bank of Effingham, Illinois. Additionally, the Corporation issued 749,824
shares of its common stock effective June 18, 1993, in exchange for all of the
outstanding common stock of First Corporation (First), Henderson, Kentucky,
holding company for The First National Bank of Henderson and Peoples Security
Finance Company, Inc. Both mergers were accounted for as poolings of interests
and, accordingly, all financial data of the Corporation for prior periods has
been restated to include the financial position and operating results of South
Central and First.
On January 4, 1993, the Corporation acquired all of the common stock of
First Federal Savings Bank of Kentucky, Madisonville, Kentucky (First Federal).
The total purchase price, including expenses, was $3,590,000 and was comprised
of $869,000 in cash and liabilities assumed and 132,926 shares of the
Corporation's common stock. Goodwill of $583,000 is being amortized on a
straight-line basis over 25 years. The acquisition was accounted for under the
purchase method of accounting and, accordingly, the consolidated financial
statements include First Federal's results from January 1, 1993, forward.
Effective May 1, 1992, the Corporation issued 1,044,076 shares of its
common stock in exchange for all of the outstanding common stock of Greenwood,
Indiana-based Indiana Bancshares, Inc. and merged Indiana Bancshares into CNB of
Central Indiana, Inc., a wholly-owned subsidiary of the Corporation. The merger
was accounted for under the pooling of interests method of accounting and,
accordingly, all financial data of the Corporation for prior periods has been
restated to include the financial position and results of operations of Indiana
Bancshares, Inc.
On October 18, 1994, the Corporation signed a definitive agreement to
acquire all of the outstanding shares of The Bank of Orleans, Indiana. Under
terms of the agreement, the Corporation will issue approximately 319,000 shares
of its common stock. The transaction will be accounted for under the pooling of
interests method of accounting and is subject to approval by shareholders and
appropriate regulatory agencies. Although the Corporation anticipates that the
merger will be consummated during the third quarter of 1995, there can be no
assurance that the acquisition will be
18
<PAGE>
completed. At December 31, 1994, The Bank of Orleans had total assets and
shareholders' equity of $58,965,000 and $5,565,000, respectively.
On December 13, 1994, the Corporation signed a definitive agreement to
acquire all of the outstanding shares of UF Bancorp, Inc., parent company for
Union Federal Savings Bank, Evansville, Indiana. Under terms of the agreement,
the Corporation will issue approximately 2,196,000 shares of its common stock
and will reserve an additional 235,000 shares for future issuance due to
outstanding UF Bancorp options. The transaction will be accounted for under the
pooling of interests method of accounting and is subject to approval by
shareholders and appropriate regulatory agencies. Although the Corporation
anticipates that the merger will be consummated during the third quarter of
1995, there can be no assurance that the acquisition will be completed. At
December 31, 1994, UF Bancorp had total assets and shareholders' equity of
$551,771,000 and $38,209,000, respectively.
On April 7, 1995, the Corporation announced the signing of an agreement
whereby a wholly-owned subsidiary, Citizens Bank of Western Indiana, will
acquire the four Indiana offices of Household Bank, f.s.b., (Household) a
subsidiary of Household International. The transaction will be accounted for
under the purchase method of accounting and is subject to approval by
appropriate regulatory agencies. Although the Corporation anticipates that the
merger will be consummated during the third quarter of 1995, there can be no
assurance that the transaction will be completed. At March 31, 1995, the four
Household offices had total deposits of approximately $80,069,000.
19
<PAGE>
NOTE 3: INVESTMENT SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
Investment Securities Available for Sale
at December 31, 1994:
U.S. Treasury $ 67,725 $ 96 $ (1,249) $ 66,572
Federal agencies:
Bonds and notes 35,406 50 (337) 35,119
Mortgage-backed securities 106,285 851 (2,097) 105,039
State and municipal securities 4,661 90 (95) 4,656
Other securities 10,169 11 (148) 10,032
--------------------------------------------------------------------------------------------
Total $224,246 $1,098 $ (3,926) $221,418
============================================================================================
Investment Securities Held to Maturity
at December 31, 1994:
U.S. Treasury $ 12,132 $ (386) $ 11,746
Federal agencies:
Bonds and notes 10,626 $ 13 (412) 10,227
Mortgage-backed securities 445,647 122 (28,320) 417,449
State and municipal 81,290 1,859 (1,851) 81,298
Other securities 166 (13) 153
--------------------------------------------------------------------------------------------
Total $549,861 $1,994 $(30,982) $520,873
============================================================================================
Investment Securities Available for Sale
at December 31, 1993:
U.S. Treasury $198,982 $5,330 $ (353) $203,959
Federal agencies:
Bonds and notes 32,286 780 (39) 33,027
Mortgage-backed securities 192,172 3,272 (610) 194,834
Other securities 15,387 91 (55) 15,423
--------------------------------------------------------------------------------------------
Total $438,827 $9,473 $ (1,057) $447,243
============================================================================================
Investment Securities Held to Maturity
at December 31, 1993:
U.S. Treasury $ 15,261 $ 179 $ (18) $ 15,422
Federal agencies:
Bonds and notes 16,346 223 (93) 16,476
Mortgage-backed securities 146,878 732 (946) 146,664
State and municipal 75,610 5,532 (78) 81,064
Other securities 10 10
--------------------------------------------------------------------------------------------
Total $254,105 $6,666 $ (1,135) $259,636
============================================================================================
</TABLE>
Net unrealized gains or (losses) on investment securities available for
sale, net of tax, at December 31, 1994 and 1993, were ($1,819,000) and
$5,136,000, respectively. The amortized cost and estimated market value of
investment securities at December 31, 1994, by contractual maturity, are shown
below. Expected maturities will differ from contractual maturities because
issuers may have the right to call or prepay obligations with or without call or
prepayment penalties.
20
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT SECURITIES INVESTMENT SECURITIES
AVAILABLE FOR SALE HELD TO MATURITY
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
<S> <C> <C> <C> <C>
Maturity distribution
at December 31, 1994:
Due in one year or less $ 36,769 $ 35,999 $ 14,113 $ 14,265
Due after one year through five years 65,901 64,646 36,796 37,158
Due after five years through ten years 2,273 2,933 33,114 32,414
Due after ten years 2,849 2,769 20,191 19,587
Mortgage-backed securities 106,285 105,039 445,647 417,449
--------------------------------------------------------------------------------------
Total debt securities 214,077 211,386 549,861 520,873
--------------------------------------------------------------------------------------
Equity securities 10,169 10,032
--------------------------------------------------------------------------------------
Total $224,246 $221,418 $549,861 $520,873
======================================================================================
</TABLE>
Investment securities with a total amortized cost of $497,629,000 and
$343,903,000, and a total market value of $474,209,000 and $349,673,000 were
pledged at December 31, 1994 and 1993, respectively, to secure securities sold
under repurchase agreements, public deposits, trust funds and for other purposes
as required or permitted by law.
Proceeds from sales of investment securities held to maturity during 1992
were $23,510,000. Proceeds from the sale of investment securities available for
sale during 1994, 1993 and 1992 were $57,170,000, $277,347,000 and $225,712,000,
respectively. Gross gains and losses realized on those sales for the respective
portfolios and years were as follows:
<TABLE>
<CAPTION>
INVESTMENT INVESTMENT
SECURITIES SECURITIES
AVAILABLE FOR SALE HELD TO MATURITY TOTAL
<S> <C> <C> <C>
1994
Gross gains from sales
and called bonds $ 1,888 $ 31 $ 1,919
Gross losses from sales
and called bonds (1,221) (11) (1,232)
------------------------------------------------------------------------------------------
Net securities gains $ 667 $ 20 $ 687
==========================================================================================
1993
Gross gains from sales
and called bonds $ 1,306 $ 61 $ 1,367
Gross losses from sales
and called bonds (88) (58) (146)
------------------------------------------------------------------------------------------
Net securities gains $ 1,218 $ 3 $ 1,221
==========================================================================================
1992
Gross gains from sales
and called bonds $ 1,378 $ 375 $ 1,753
Gross losses from sales
and called bonds (545) (104) (649)
------------------------------------------------------------------------------------------
Net securities gains $ 833 $ 271 $ 1,104
==========================================================================================
</TABLE>
21
<PAGE>
NOTE 4: LOANS AND CREDIT RISK
Through its subsidiaries, the Corporation generates commercial, mortgage
and consumer loans and receives deposits from customers located in its primary
market areas of Indiana, Illinois, Kentucky, and portions of Tennessee.
Collateral, if deemed necessary, is based on management's credit evaluation and
may include business assets of commercial borrowers as well as personal property
and real estate of individual borrowers or guarantors. The Corporation's loan
portfolio is diversified with no concentration related to any one industry.
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Loans at December 31:
Commercial and industrial loans $ 271,566 $ 237,282
Agricultural production loans 42,093 29,377
Tax exempt loans 25,248 26,788
Real estate mortgage loans:
Commercial 271,442 249,258
Agricultural 36,593 35,357
Construction 64,699 39,430
Residential 684,700 572,503
------------------------------------------------------------------------------
1,057,434 896,548
Consumer loans 536,319 472,961
Bankers' acceptances and
term federal funds 14,470
------------------------------------------------------------------------------
1,932,660 1,677,426
Less: Unearned interest on loans 14,678 15,865
------------------------------------------------------------------------------
Total loans, net of unearned interest $1,917,982 $1,661,561
==============================================================================
</TABLE>
The above table does not include real estate loans held for sale which
totaled $1,260,000 and $28,434,000 at December 31, 1994 and 1993, respectively.
The Corporation has sold certain loans to the Federal Home Loan Mortgage
Corporation (FHLMC) and other investors while retaining servicing rights. Loans
serviced for others totaled $355,063,000 and $361,553,000 at December 31, 1994
and 1993, respectively, and are not included in the accompanying consolidated
financial statements.
Loans on which the accrual of interest was discontinued or reduced amounted
to $12,270,000 at December 31, 1994, and $13,358,000 at December 31, 1993.
Additional interest income of approximately $902,000 for 1994, $567,000 for
1993, and $1,019,000 for 1992, would have been recorded had income on these
loans been accounted for on the accrual basis.
22
<PAGE>
NOTE 5: ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Allowance for loan losses:
Balances, January 1, $22,629 $21,673 $ 20,077
Allowance of subsidiaries at
acquisition date 1,118 924
Adjustment for net change in
allowance to conform King City
with the Corporation's year-end 237
Provision for loan losses 6,319 3,605 8,960
Recoveries 1,749 2,405 3,423
Loans charged-off (5,437) (5,978) (10,787)
--------------------------------------------------------------------------
Balances, December 31, $26,615 $22,629 $ 21,673
===========================================================================
</TABLE>
23
<PAGE>
NOTE 6: PREMISES AND EQUIPMENT
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Cost at December 31:
Land $ 7,359 $ 7,314
Buildings 62,740 59,696
Leasehold improvements 2,477 2,350
Equipment 35,771 34,879
-------------------------------------------------
Total cost 108,347 104,239
Accumulated depreciation (48,763) (45,024)
-------------------------------------------------
Net $ 59,584 $ 59,215
==================================================
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NOTE 7: DEPOSITS
1994 1993
<S> <C> <C>
Deposits at December 31:
Demand $ 297,954 $ 273,855
Interest bearing transaction accounts 380,592 350,650
Money market investment accounts 220,449 234,499
Savings 221,806 261,081
Certificates of $100,000 or more 108,944 103,107
Certificates of deposit and other time 1,012,898 985,886
----------------------------------------------------------------
Total $2,242,643 $2,209,078
================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
NOTE 8: LONG-TERM DEBT
<S> <C> <C>
1994 1993
Long-term debt as of December 31:
Convertible subordinated debentures,
7.50%, redemptions of $1,125,000
annually beginning in 2001, balance $ 6,785 $10,031
due 2011
Redeemable subordinated debentures,
9.50% due 1997 2,266 2,272
Notes payable, unsecured:
6.25%, adjusted quarterly with
changes in LIBOR, payable $250,000
quarterly through 2000 6,000 7,000
9.75%, payable in 1994 1,800
9.81%, payable $600,000 annually
through 1996, balance due in 1997 3,600 4,200
Note payable, secured by stock:
10.00%, payable semi-annually, balance
due 2000 3,250 3,250
Federal Home Loan Bank advances:
6.05%, adjusted monthly with changes in
LIBOR, payable in 1995 10,000
5.56%, adjusted quarterly with changes in
LIBOR, payable in 1999 5,000
8.85%, payable in 1994 5,000
Mortgage notes payable:
2.00%, payable $75,000 annually including
interest, due year 2032 (Federal Urban
Development Grant Program) 1,977 2,011
Notes payable, revolving credit agreement,
secured by finance receivables:
8.50%, adjusted with changes in the prime
interest rate not to exceed 10.00% 9,102 6,692
Fixed rate borrowings at 7.50% to 8.20%,
payable in 1995 6,500 4,550
Other, including capitalized leases 3,597 3,305
-----------------------------------------------------------------------
Total $58,077 $50,111
=======================================================================
</TABLE>
The scheduled principal reduction of long-term debt at December 31, 1994,
is approximately as follows: 1995 - $18,770,000; 1996 - $11,499,000; 1997 -
$6,469,000; 1998 - $2,492,000; 1999 -$6,842,000; 2000 and after - $12,005,000.
Certain notes payable permit earlier principal payments without penalty.
26
<PAGE>
The Corporation sold $15,000,000 of 7.5 percent convertible subordinated
debentures on August 29, 1991. The debentures are convertible into shares of
common stock of the Corporation at a conversion price of $19.84 per share,
subject to certain adjustments, any time prior to maturity. The debentures are
subject to equal annual redemptions of $1,125,000 commencing in 2001 with final
maturity on September 1, 2011. The Corporation has the option to redeem the
debentures in whole or in part under certain conditions prior to maturity.
The redeemable subordinated debentures were issued in tandem with a like
face amount of cancelable mandatory stock purchase contracts as described in
Note 9.
Qualifying unencumbered mortgage loans held in the loan portfolio that
equal at least 170 percent of the aggregate amount of advances have been pledged
as collateral for the Federal Home Loan Bank advances.
27
<PAGE>
NOTE 9: SHAREHOLDERS' EQUITY
The Corporation is authorized to issue 2,000,000 shares of preferred stock,
no par value, which remain unissued at December 31, 1994. In the event any
preferred shares are issued, specific voting powers, dividend preferences, and
other rights and restrictions of the preferred stock will be designated by the
Board of Directors.
Shareholders' equity has been adjusted to record the one-for-ten stock
dividend declared on December 15, 1992, the one-for-twenty stock dividend
declared on November 16, 1993, and the one-for-ten stock dividend declared on
October 18, 1994. All share data has been adjusted to reflect the stock
dividends.
The Corporation offers a Dividend Reinvestment and Stock Purchase Plan (the
Plan), which provides shareholders of the Corporation with a convenient method
of purchasing additional shares of common stock without the payment of any
brokerage commissions or fees. At December 31, 1994, there were 213,332 shares
of common stock reserved for issuance under the Plan. Shares distributed
pursuant to the Plan totaled 92,689, 92,616, and 83,295 for 1994, 1993 and 1992,
respectively.
In connection with its merger with Indiana Bancshares, Inc., the
Corporation reserved 156,365 shares of its common stock effective May 1, 1992,
for issuance pursuant to Indiana Bancshares' $2,500,000 cancelable mandatory
stock purchase contracts, which were assumed by the Corporation. The cancelable
mandatory stock purchase contracts outstanding at December 31, 1994, require the
purchase of 142,535 shares of the Corporation's common stock at a price of
approximately $15.99 per share on or before January 1, 1997. The Corporation
issued 375 shares in 1994, 4,376 shares in 1993, and 9,067 shares in 1992 in
connection with the exercise of stock purchase contracts.
The Corporation has an Incentive Stock Option Plan (ISOP), whereby shares
of common stock can be granted to certain key officers or employees of the
Corporation or its subsidiaries. Under terms of the Plan, options may be
granted to purchase the Corporation's common stock at a price not less than the
fair market value of the common stock at the date of the grant, for a period up
to 10 years. Options granted pursuant to the Plan are intended to qualify as
incentive stock options; however, certain conditions may be waived which would
result in the options being treated as non-qualified stock options. The Board
of Directors may modify or terminate the Plan at any time, except that no option
shall be granted after January 22, 2002.
On April 18, 1995, the Corporation's shareholders approved the CNB
Bancshares, Inc. 1995 Stock Incentive Plan (Plan), which provides for several
different types of stock and stock-based awards. The total number of shares of
common stock issuable under the Plan in any plan year is limited to one (1)
percent of the outstanding common stock of the Corporation as reported in its
Annual Report on Form 10-K for the fiscal year ending immediately prior to such
plan year, plus (i) any unused portion of the limit for a prior plan year, (ii)
shares represented by awards which are forfeited, surrendered, terminated, paid
in cash or expire unexercised, and (iii) the excess amount of variable awards
which become fixed at less than their maximum limitations. Notwithstanding the
foregoing, no more than 700,000 shares in the aggregate for all plan years may
be subject to incentive stock option awards under the Plan. Unless earlier
terminated by the Board of Directors, the Plan will terminate on March 20, 2005.
The Plan will essentially replace the ISOP. Grants outstanding under the ISOP
will remain in place until they are exercised and/or forfeited or until such
plan expires, although no further grants are contemplated thereunder.
28
<PAGE>
The following table presents share data related to the plans and other
options assumed by the Corporation as a result of certain mergers.
<TABLE>
<CAPTION>
1994 1993 1992
AVERAGE Average Average
SHARES OPTION PRICE Shares Option Price Shares Option Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding, January 1 209,374 $19.80 152,087 $15.33 102,187 $10.33
Options granted
or assumed 135,756 22.91 82,334 25.47 79,788 21.60
Less: Options exercised 34,435 11.70 25,047 11.42 29,888 14.93
------- ------- -------
Outstanding, December 31, 310,695 $22.04 209,374 $19.80 152,087 $15.33
================================================================================================
</TABLE>
At December 31, 1994, options for 249,755 shares were exercisable and
254,344 shares were available for the granting of additional options.
The Corporation had also reserved 342,134 shares of its common stock at
December 31, 1994, for its convertible subordinated debentures as described in
Note 8.
29
<PAGE>
NOTE 10: EMPLOYEE BENEFIT PLANS
The Corporation and its subsidiaries maintain noncontributory, defined-
benefit pension plans covering substantially all employees. Pension benefits are
generally based on years of service and compensation, as defined. Pension
expense was $288,000, $508,000 and $246,000 for 1994, 1993 and 1992,
respectively, and included the following components:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Service costs-benefits earned during the period $ 1,282 $ 1,275 $ 957
Interest costs on projected benefit obligation 1,980 1,913 1,754
Return on plan assets (2,750) (2,501) (2,192)
Net amortization and deferral (224) (179) (273)
------------------------------------------------------------------------------------------------
Net pension expense $ 288 $ 508 $ 246
================================================================================================
</TABLE>
It is the Corporation's policy to make contributions to the plans
sufficient to meet the minimum funding requirements of applicable laws and
regulations, plus additional amounts, if any, that the Corporation may determine
to be appropriate.
The following table sets forth the plans' funded status and the amounts
recognized in the Corporation's consolidated balance sheet at December 31:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Actuarial present value of accumulated
benefit obligation:
Vested $ 20,993 $ 21,237 $ 19,561
Nonvested 725 829 655
------------------------------------------------------------------------------------------------
Total $ 21,718 $ 22,066 $ 20,216
================================================================================================
Plan assets at fair value, primarily
marketable securities $ 30,082 $ 31,121 $ 29,767
Actuarial present value of projected
benefit obligation (26,108) (27,621) (25,493)
------------------------------------------------------------------------------------------------
Excess of plan assets over projected
benefit obligation 3,974 3,500 4,274
Unrecognized net transition asset (1,966) (2,163) (2,299)
Unrecognized net (gain) loss 2,308 1,585 (63)
Unrecognized prior service cost (1,005) 151 166
------------------------------------------------------------------------------------------------
Prepaid pension expense included
in other assets $ 3,311 $ 3,073 $ 2,078
================================================================================================
</TABLE>
30
<PAGE>
Assumptions used in determining the projected benefit obligations and net
pension expense were:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Discount rate 8.25% 7.50% 8.25%
Rate of increase in compensation levels 4.25 4.25 5.00
Expected long-term rate of return
on plan assets 9.00 9.00 9.00
</TABLE>
The discount rates used to compute the projected benefit obligations were
reduced in 1993 and increased during 1994 as noted above due to changes in
market interest rates. The projected benefit obligations were increased by
approximately $1,600,000 in 1993 and reduced by approximately $2,909,000 in 1994
as a result of these changes.
In addition, the Corporation incurred additional pension expense of $77,000
related to the early retirement of employees at certain subsidiaries in 1993.
The Corporation and its subsidiaries also have a deferred income savings
plan (Savings Plan) with substantially all employees eligible to participate. At
the discretion of the Board of Directors, the subsidiaries match a percentage of
employee contributions and may make an additional contribution based on earnings
performance. The Corporation's expense for the Savings Plan was $1,014,000,
$1,094,000 and $1,264,000 for 1994, 1993 and 1992, respectively.
The Corporation does not provide postretirement benefits as defined by
Financial Accounting Standards Board Statement 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions."
The Financial Accounting Standards Board has issued Statement No. 112
"Employers' Accounting for Postemployment Benefits" (FAS 112). The statement
requires the recognition of liabilities for postemployment benefits provided to
former and inactive employees, prior to retirement. The Corporation adopted FAS
112 in 1994 and was not significantly impacted by this statement.
31
<PAGE>
NOTE 11: OTHER NON-INTEREST INCOME AND EXPENSE
Components of other non-interest income and expense that exceeded one
percent of total revenue in any of the years presented are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Other non-interest income:
Service charges on deposit accounts $ 8,746 $ 7,852 $ 7,463
Insurance premiums and commissions 6,660 5,461 4,727
Trust fees 4,538 4,195 3,706
Credit card and other non-interest fees on loans 4,032 3,240 2,211
Brokerage fees and commissions 2,565 1,990 1,142
Other fees and commissions 2,525 2,411 2,241
Net gains and servicing fees on real estate
loans sold 1,895 3,550 3,494
Other 5,704 3,990 2,225
-------------------------------------------------------------------------------
Total other non-interest income $36,665 $32,689 $27,209
===============================================================================
Other non-interest expense:
Data processing and other services $ 6,142 $ 4,818 $ 3,694
FDIC assessments 5,271 4,780 4,639
Printing and supplies 2,828 2,591 2,277
Professional fees 2,973 2,872 3,492
Postage and freight 2,439 2,331 2,145
Advertising and promotion 2,358 2,322 1,936
Other 13,768 11,325 10,898
-------------------------------------------------------------------------------
Total other non-interest expense $35,779 $31,039 $29,081
===============================================================================
</TABLE>
32
<PAGE>
NOTE 12: INCOME TAXES
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Income taxes:
Currently payable:
Federal $13,332 $10,597 $ 8,246
State 3,218 2,502 2,381
Deferred expense (benefit):
Federal (1,700) (136) (1,819)
State (145) (49) (258)
--------------------------------------------------------------------------------
Total income taxes $14,705 $12,914 $ 8,550
================================================================================
1992
<S> <C>
Deferred provision (benefit) relating to:
Depreciation on fixed assets $ 137
Provision for loan losses (731)
Compensation (157)
Asset valuation adjustments (340)
Accounting loss carryforward (591)
Other (395)
--------------------------------------------------------------------------------
Deferred income tax (benefit) $(2,077)
================================================================================
1994 1993 1992
<S> <C> <C> <C>
Reconciliation of federal statutory tax
to income tax expense:
Federal income tax at applicable statutory
rate (35%, 35%, and 34%, respectively) $14,538 $13,608 $10,175
Tax exempt interest (2,070) (2,153) (2,306)
Accounting loss carryforward (699)
State franchise tax, net of federal
tax benefit 1,997 1,594 1,400
Other 240 (135) (20)
--------------------------------------------------------------------------------
Income tax expense $14,705 $12,914 $ 8,550
================================================================================
Effective rate 35% 33% 29%
================================================================================
</TABLE>
33
<PAGE>
A cumulative net deferred tax asset (liability) of $5,646,000 and
$(247,000) for 1994 and 1993, respectively, is included in other assets
(liabilities). The components of the asset (liability) at December 31 are as
follows:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Securities available for sale $ 1,005 $(3,281)
Differences in depreciation methods (2,089) (3,312)
Accretion of investments discounts (286) (386)
Differences in accounting for loan losses 7,919 6,485
Deferred compensation and pension (826) (805)
Difference in accounting for loan fees 89 691
Other (166) 361
------------------------------------------------------------------------
Net deferred tax asset (liability) $ 5,646 $ (247)
========================================================================
Assets $ 12,521 $ 8,447
Liabilities (6,875) (8,694)
------------------------------------------------------------------------
Net deferred tax asset (liability) $ 5,646 $ (247)
========================================================================
</TABLE>
During 1993, the Corporation adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." As a result, the beginning
deferred tax asset was increased by $1,568,000, which is reported as the
cumulative effect of a change in accounting method. A valuation allowance was
not required at any time during 1994 or 1993.
Income tax expense attributable to securities gains was $279,000, $496,000
and $437,000 for 1994, 1993 and 1992, respectively.
NOTE 13: LEASE COMMITMENTS
The Corporation is committed under various operating leases that have
initial or remaining non-cancelable lease periods in excess of one year as of
December 31, 1994. Lease rental expense for real estate was $1,048,000 in 1994,
$960,000 in 1993 and $856,000 in 1992. Equipment lease rental expense was
$336,000 in 1994, $327,000 in 1993 and $232,000 in 1992.
Minimum rentals for lease commitments in succeeding years are as follows:
<TABLE>
<CAPTION>
REAL ESTATE EQUIPMENT
<S> <C> <C>
1995 $1,030 $ 351
1996 975 325
1997 921 292
1998 766 263
1999 653
2000 and after 2,577
------------------------------------------------------------------------
Total $6,922 $1,231
========================================================================
</TABLE>
34
<PAGE>
NOTE 14: COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business there are outstanding commitments and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements. The
Corporation's exposure to credit loss in the event of nonperformance by the
other party to the financial instruments for commitments to extend credit and
standby letters of credit is represented by the contractual or notional amount
of those instruments. The Corporation uses the same credit policies in making
such commitments as it does for instruments that are included in the
consolidated balance sheet.
At December 31, these financial instruments whose contract amount
represents credit and/or interest rate risk are summarized in the following
table:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Commitments to extend credit $409,798 $352,064
Commitments to purchase investment securities 19,175 77,012
Standby letters of credit 16,077 14,849
</TABLE>
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 Corporation evaluates each customer's
credit worthiness on a case-by-case basis. The amount of collateral obtained,
if deemed necessary by the Corporation upon extension of credit, is based on
management's credit evaluation. Collateral held varies but may include accounts
receivable, inventory, real property, plant and equipment, and income-producing
commercial properties.
Commitments to purchase investment securities were related to the
purchase of U.S. Government Agency securities. These transactions settled in
January 1995 and 1994, respectively.
Standby letters of credit are conditional commitments issued by the
Corporation to guarantee the performance of a customer to a third party.
The Corporation and its subsidiaries are also subject to claims and
lawsuits which arise primarily in the ordinary course of business. Based on
information presently available and advice received from legal counsel
representing the Corporation in connection with such claims and lawsuits, it is
the opinion of management that the disposition or ultimate determination of such
claims and lawsuits will not have a material adverse effect on the consolidated
financial position of the Corporation.
The Corporation has entered into employment contracts with nine officers
which provide for the continuation of salary and certain benefits for a
specified period of time under certain conditions. Under the terms of the
agreements, these payments could occur in the event of a change in control of
the Corporation, as defined, along with certain other specified conditions. The
contingent liability under these agreements in the event of a change in control
is approximately $3,368,000. The Corporation is not required to pay any amounts
under these agreements which cannot be deducted for federal income tax purposes.
35
<PAGE>
The Corporation has entered into an agreement with ALLTEL Information
Services, Inc. (ALLTEL) whereby ALLTEL will provide the Corporation with certain
services, including software, specified computer equipment and the overall
management and operations of its data processing through November 1999. The
agreement provides for minimum annual payments as follows: 1995 - $4,228,000;
1996 - $4,395,000; 1997 - $4,513,000; 1998 - $4,537,000; and 1999 - $4,346,000.
NOTE 15: INTEREST RATE CONTRACTS
Through the purchase of interest rate cap agreements, (caps) the
Corporation has reduced the potential impact of increased interest rates on its
costs to acquire certain repurchase agreements being hedged. These caps entitle
the Corporation to receive periodic payments from counterparties based upon the
notional amount of the caps and the excess of the index rate over the strike
price.
At December 31, 1994, the notional amount of the interest rate caps was
$125,000,000. The caps are indexed to LIBOR with contract strike prices ranging
from 4 percent to 6 percent and mature in 1997. The carrying value and
estimated market value of the caps at December 31, 1994, was $2,576,000 and
$7,217,000, respectively. The Corporation is exposed to credit losses in the
event of nonperformance by the counterparties but has no off-balance sheet
credit risk of accounting loss. Although collateral or other security is not
obtained, the Corporation minimizes its credit risk by monitoring the credit
standing of the counterparties and anticipates that the counterparties will be
able to fully satisfy their obligation under the agreements.
NOTE 16: RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Corporation has loan, deposit and
other transactions with officers, directors, and principal shareholders, and
with organizations and individuals with which they are financially or otherwise
closely associated. All of the transactions were entered into on substantially
the same terms as those prevailing at the time for comparable transactions with
other parties. These loans do not involve more than normal risk of
collectability or present other unfavorable features. As defined, total loans
to executive officers, directors, and principal shareholders were as follows:
<TABLE>
<CAPTION>
<S> <C>
Balance, January 1, 1994 (all current) $ 26,552
New loans (including renewals of $8,440) 86,811
Director and officer changes (752)
Payments (including renewals of $8,440) (78,017)
------------------------------------------------------
Balance, December 31, 1994 (all current) $ 34,594
======================================================
</TABLE>
NOTE 17: REGULATIONS ON BANK DIVIDENDS AND CASH
The principal source of income and funds for the Corporation (Parent
Company) is dividends from its banking subsidiaries. During the year 1995, the
amount of dividends that the banking subsidiaries can pay to the Corporation
without obtaining prior regulatory approval is limited to the total of their
1995 net income and $20,682,000 (the amount available at December 31, 1994). As
a practical matter, the banks may restrict dividends to a lesser amount because
of the need to maintain adequate capital structures.
The bank subsidiaries are required by the Federal Reserve Bank to
maintain non-interest bearing cash reserve balances which are dependent on the
amounts and types of deposits held by the banks. The reserves required at
December 31, 1994, were $38,910,000.
36
<PAGE>
NOTE 18: FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Corporation's financial instruments are
provided in the following table. A financial instrument is defined as cash,
evidence of an ownership interest in an entity, or a contract that both: a)
Imposes on one entity a contractual obligation to deliver cash or another
financial instrument to a second entity or, b) Conveys to a second entity a
contractual right to receive cash or another financial instrument from the first
entity. All of the Corporation's assets and liabilities are not financial
instruments, as defined, and are therefore not included in the table.
The estimated fair values of the Corporation's financial instruments at
December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments $ 127,009 $ 127,009 $ 163,576 $ 163,576
Investment securities available for sale 221,418 221,418 447,243 447,243
Investment securities held to maturity 549,861 520,873 254,105 259,636
Net loans (including loans held for sale) 1,892,627 1,879,770 1,667,366 1,709,963
Interest receivable 20,433 20,433 18,025 18,025
Financial liabilities:
Deposits (2,242,643) (2,234,057) (2,209,078) (2,216,054)
Short-term borrowings (359,479) (359,479) (145,954) (145,954)
Interest rate caps 2,576 7,217
Long-term debt (58,077) (56,324) (50,111) (51,021)
Interest payable (8,764) (8,764) (7,436) (7,436)
Off-balance sheet financial instruments:
Commitments to extend credit 1,803 1,475
</TABLE>
The carrying amounts of cash and short-term investments were reasonable
estimates of their fair values. Fair values for investment securities were
based on quoted market prices or dealer quotes where available. The fair values
of investment securities, where market values or dealer quotes were not
available, and loans were calculated by discounting expected cash flows to
average maturities. The discount rate was adjusted to allow for varying
repricing opportunities, credit risks and carrying costs, as deemed appropriate
by management. The fair values of demand deposits, savings accounts, money
market deposits and short-term borrowings were the carrying amounts which were
payable on December 31, 1994, and December 31, 1993, respectively. Fair values
for rate caps were based on dealer quotes. The fair values of fixed-maturity
certificates of deposit and long-term debt were estimated using current interest
rates for similar remaining maturities. Commitments to make loans and standby
letters of credit are not recorded on the balance sheet. The fair values of
off-balance sheet financial instruments were based on fees currently charged to
enter into similar agreements with similar maturities and interest rates.
37
<PAGE>
Because no active market exists for a significant portion of the
Corporation's financial instruments, fair value estimates were based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and other
such factors. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision.
NOTE 19: CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY
Presented below is condensed financial information as to financial
position, results of operations and cash flows of the Corporation (Parent
Company only).
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEET
DECEMBER 31,
1994 1993
<S> <C> <C>
Assets
Cash on deposit $ 3,210 $ 174
Securities purchased under repurchase
agreements with subsidiaries 16,000 12,017
------------------------------------------------------------------------
Total cash and cash equivalents 19,210 12,191
Investment in subsidiaries 228,406 230,215
Premises and equipment 334 79
Receivables from subsidiaries 9,554 8,127
Other assets 633 717
------------------------------------------------------------------------
Total assets $258,137 $251,329
========================================================================
Liabilities
Accrued expenses $ 1,679 $ 1,156
Dividends payable 2,813 2,328
Long-term debt 16,385 23,542
------------------------------------------------------------------------
Total liabilities 20,877 27,026
Shareholders' equity
Preferred stock
Common stock 15,009 13,259
Capital surplus 202,945 154,378
Retained earnings 21,125 51,530
Net unrealized gains (losses) on investment
securities available for sale (1,819) 5,136
------------------------------------------------------------------------
Total shareholders' equity 237,260 224,303
------------------------------------------------------------------------
Total liabilities and shareholders' equity $258,137 $251,329
========================================================================
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Income
Dividends from subsidiaries $ 31,269 $29,031 $12,070
Management fees from subsidiaries 5,673
Other income 1,817 197 423
------------------------------------------------------------------------
Total income 38,759 29,228 12,493
Expenses
Personnel expense 5,731
Interest expense 1,426 1,882 2,469
Other expenses 3,166 2,726 2,456
------------------------------------------------------------------------
Total expenses 10,323 4,608 4,925
------------------------------------------------------------------------
Income before income tax and equity in
undistributed earnings of subsidiaries 28,436 24,620 7,568
Income tax benefit 938 634 2,076
------------------------------------------------------------------------
Income before equity in undistributed
earnings of subsidiaries 29,374 25,254 9,644
Equity in undistributed earnings of
subsidiaries (2,541) 2,280 11,732
------------------------------------------------------------------------
Net income $ 26,833 $27,534 $21,376
========================================================================
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
Operating activities:
Net income $ 26,833 $ 27,534 $ 21,376
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 97 68 77
(Increase) decrease in
undistributed net income 2,541 (2,280) (11,160)
of subsidiaries
(Increase) decrease in other assets (123) 1,288 (566)
Increase in other liabilities 523 181 139
-------------------------------------------------------------------------------
Net cash provided by operating activities 29,871 26,791 9,866
-------------------------------------------------------------------------------
Investing activities:
Principal payments received on notes
from subsidiaries 1,650 456 14
Purchase of subsidiaries (688)
Advances on notes to subsidiaries (3,077) (7,154) (1,360)
Capital contributions to subsidiaries (193) (1,606) (5,733)
Purchase of premises and equipment (321) (94)
-------------------------------------------------------------------------------
Net cash used by investing activities (1,941) (9,086) (7,079)
-------------------------------------------------------------------------------
Financing activities:
Payment of long-term debt (3,911) (4,711) (4,711)
Proceeds from long-term borrowings 7,000
Proceeds from common stock issued for
dividend reinvestment plan 2,733 2,396 1,685
Proceeds from exercise of stock
options and stock purchase contracts 710 929 431
Payment of cash dividends (10,989) (10,357) (8,905)
Purchase and retirement of common stock (9,454) (3,988) (3,512)
-------------------------------------------------------------------------------
Net cash used by financing activities (20,911) (8,731) (15,012)
-------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 7,019 8,974 (12,225)
Cash and cash equivalents at January 1, 12,191 3,217 15,442
-------------------------------------------------------------------------------
Cash and cash equivalents at December 31, $ 19,210 $ 12,191 $ 3,217
===============================================================================
Supplemental disclosure:
Non-cash investing and financing
activities:
Stock issued in exchange of
debentures and equity contracts $ 3,252 $ 5,037 $ 146
Common stock issued for
acquisition 9,969 2,721 12,225
</TABLE>
40
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
CNB Bancshares, Inc.
Evansville, Indiana
We have audited the consolidated balance sheet of CNB Bancshares, Inc.
and subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1994. 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements described above
present fairly, in all material respects, the consolidated financial position of
CNB Bancshares, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in Note 2, the consolidated financial statements of CNB
Bancshares, Inc. and subsidiaries as of December 31, 1994 and 1993 and for the
three years in the period ended December 31, 1994, have been restated for the
February, 1995 acquisitions of Harrisburg Bancshares, Inc. and King City Federal
Savings Bank. As discussed in the notes to the consolidated financial
statements, effective January 1,1993, and December 31, 1993, respectively, the
Corporation adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, and Statement of Financial Accounting Standards No.
115, Accounting for Certain Investments in Debt and Equity Securities.
GEO. S. OLIVE & CO. LLC
Evansville, Indiana
May 23, 1995
41
