<PAGE>
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 PERIOD ENDED
MARCH 31, 1996
CNB BANCSHARES, INC. 0-11510
(Exact name of registrant as specified (Commission file number)
in its charter)
INDIANA 35-1568731
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
20 N.W. THIRD STREET, EVANSVILLE, INDIANA 47739
(Address of principal executive office) (Zip Code)
(812) 464-3400
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of April 30, 1996, there were 17,912,060 outstanding shares, without par
value, of the registrant.
Exhibit index is on page 22.
<PAGE>
INDEX
Page No.
--------
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet....................... 1
Consolidated Condensed Statement
of Income...................................... 2
Consolidated Condensed Statement of
Changes in Shareholders' Equity................ 3
Consolidated Statement of Cash Flows............. 4
Notes to Consolidated Financial Statements....... 5-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.. 10-19
PART II. Other Information..................................... 20
Signatures........................................................... 21
Exhibit Index........................................................ 22
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CNB Bancshares, Inc.
Consolidated Balance Sheet
(In thousands except for share data)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1996 1995 1995
--------- ------------ ---------
<S> <C> <C> <C>
Assets
- ------
Cash & due from banks $ 101,678 $ 130,239 $ 102,583
Federal funds sold and other short-term money market
investments 8,422 8,546 21,631
---------- ---------- ----------
TOTAL CASH AND CASH EQUIVALENTS 110,100 138,785 124,214
Real estate loans held for sale 12,912 222,157 11,310
Investment securities available for sale 1,167,682 972,320 573,936
Investment securities held to maturity
(Market value $210,930 at March 31, 1996, $199,966 at
December 31, 1995, and $500,023 at March 31, 1995) 211,988 198,240 514,561
Loans, net of unearned income 2,000,700 1,971,454 2,116,638
Less: Allowance for loan losses 28,897 28,806 27,976
---------- ---------- ----------
NET LOANS 1,971,803 1,942,648 2,088,662
Premises & equipment 67,401 66,224 68,161
Foreclosed properties 2,954 1,727 2,978
Intangible assets 25,754 23,741 19,226
Interest receivable and other assets 60,112 62,840 54,868
---------- ---------- ----------
TOTAL ASSETS $3,630,706 $3,628,682 $3,457,916
========== ========== ==========
Liabilities
- -----------
Deposits:
Non-interest bearing $ 314,507 $ 322,706 $ 285,497
Interest bearing 2,471,704 2,467,283 2,326,643
---------- ---------- ----------
TOTAL DEPOSITS 2,786,211 2,789,989 2,612,140
Securities sold under repurchase agreements 273,006 325,271 299,366
Federal funds purchased 69,320 18,370 18,220
Other short-term borrowings 16,252 7,441 4,065
Long-term debt 159,094 158,046 207,817
Interest payable and other liabilities 31,238 31,872 34,266
---------- ---------- ----------
TOTAL LIABILITIES 3,335,121 3,330,989 3,175,874
Shareholders' equity
- --------------------
Preferred stock, no par or stated value
Shares authorized & unissued: 2,000,000
Common stock, $1 stated value
Shares authorized: 50,000,000
Shares issued: 17,821,446 at March 31, 1996, 17,894,770 at
December 31, 1995, and 17,175,651 at March 31, 1995 17,821 17,895 17,176
Capital surplus 243,962 246,492 238,427
Retained earnings 35,604 29,672 29,732
Net unrealized gains (losses) on investment securities
available for sale (1,802) 3,634 (3,293)
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 295,585 297,693 282,042
---------- ---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $3,630,706 $3,628,682 $3,457,916
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 1 of 24
<PAGE>
CNB Bancshares, Inc.
Consolidated Condensed Statement of Income
(In thousands, except for share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---------- -----------
<S> <C> <C>
Interest Income
Loans, including fees:
Taxable $ 45,495 $ 47,218
Tax exempt 381 439
Investment securities:
Taxable 18,698 16,151
Tax exempt 1,663 1,196
Real estate loans held for sale 3,232 50
Federal funds sold and other short-term
money market investments 316 512
----------- -----------
Total interest income 69,785 65,566
Interest Expense
Deposits 28,651 24,595
Short-term borrowings 4,293 4,497
Long-term debt 2,449 3,583
----------- -----------
Total interest expense 35,393 32,675
----------- -----------
Net Interest Income 34,392 32,891
Provision for loan losses 1,602 1,554
----------- -----------
Net Interest Income After Provision For Loan Losses 32,790 31,337
Non-Interest Income
Net securities gains 406 130
Other non-interest income 13,571 10,127
----------- -----------
Total non-interest income 13,977 10,257
Non-Interest Expense
Salaries, benefits, occupancy,
other operating expenses 31,627 29,162
----------- -----------
Income Before Income Taxes 15,140 12,432
Income taxes 5,455 4,518
----------- -----------
Net Income $ 9,685 $ 7,914
=========== ===========
Net Income Per Share $ 0.54 $ 0.43
=========== ===========
Average common and equivalent shares outstanding 18,041,319 18,396,048
=========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 2 of 24
<PAGE>
CNB BANCSHARES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Beginning Balance $ 297,693 $ 273,828
Net income 9,685 7,914
Cash dividends declared (3,753) (3,207)
Purchase and retirement of common stock (3,947) (2,408)
Dividends reinvested 922 761
Stock options exercised 164 112
Exercise and conversion of stock
purchase contracts and debentures 61 182
Other shares issued 196 219
Change in unrealized gains/losses on
investment securities available for sale (5,436) 4,641
---------- ----------
Ending Balance $ 295,585 $ 282,042
========== ==========
</TABLE>
See notes to consolidated financial statements.
Page 3 of 24
<PAGE>
CNB BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 9,685 $ 7,914
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,825 2,645
Provision for loan losses 1,602 1,554
Amortization of securities' premiums
and discounts 515 464
Net gains on securities (406) (130)
Loans originated for sale (25,089) (33,319)
Proceeds from sale of loans 24,482 33,675
Decrease (increase) in other assets,
net of amortization 4,031 (4,774)
Increase (decrease) in other liabilities (438) 8,113
--------- ---------
Net Cash Provided by Operating Activities 18,207 16,142
Investing Activities:
Proceeds from the maturity of investment
securities available for sale 69,898 38,402
Proceeds from the sale of investment
securities available for sale 141,713 38,562
Purchase of investment securities available
for sale (254,046) (111,240)
Proceeds from the maturity of investment
securities held to maturity 3,595 14,055
Purchase of investment securities held to maturity (17,423) (1,618)
Net decrease (increase) in loans 15,248 (745)
Purchase of bank premises and equipment (3,769) (1,222)
--------- ---------
Net Cash Used by Investing Activities (44,784) (23,806)
Financing Activities:
Net increase (decrease) in deposits (3,784) 16,678
Net increase (decrease) in short-term borrowings 7,204 (35,544)
Payment of long-term debt (8,914) (11,867)
Proceeds from long-term borrowings 10,000 9,795
Proceeds from exercise of stock options 164 112
Payment of cash dividends (3,753) (3,022)
Proceeds from common stock issued for
dividend reinvestment plan 922 761
Purchase and retirement of common stock (3,947) (2,408)
--------- ---------
Net Cash Provided by Financing Activities (2,108) (25,495)
--------- ---------
Net Decrease in Cash and Cash Equivalents (28,685) (33,159)
Cash and Cash Equivalents at January 1, 138,785 157,373
--------- ---------
Cash and Cash Equivalents at March 31, $ 110,100 $ 124,214
========= =========
Supplemental disclosure:
Cash paid for:
Interest $37,031 $30,835
Income taxes 830 1,167
Non-cash investing and financing activities:
Stock issued in exchange of debentures and
equity contracts and pursuant to employee
benefit plans 261 408
</TABLE>
See notes to consolidated financial statements.
Page 4 of 24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of CNB Bancshares,
Inc. (Corporation) and its wholly-owned subsidiaries, after elimination of all
material intercompany accounts and transactions.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and do not include all the information and footnotes
required for a complete presentation of statements. The Corporation's
accounting and reporting policies for interim financial reporting are consistent
with those followed for annual financial reporting. In the opinion of
management, all adjustments (consisting of normal recurring accruals) necessary
for a fair presentation of the results of operations for the periods reported
have been included in the foregoing interim consolidated financial statements.
The interim results of operations presented are not necessarily indicative of
the results that may be expected for the full year. A description of the
Corporation's current accounting policies is contained in the 1995 Annual Report
to Shareholders.
NOTE 2: BUSINESS COMBINATIONS
Information relating to mergers and acquisitions since April 1, 1995, for
which stock was issued includes:
<TABLE>
<CAPTION>
MERGER COMMON SHARES METHOD OF
DATE ISSUED ACCOUNTING
<S> <C> <C> <C>
Southern Finance Co., Inc.,
Madisonville, Kentucky December 1, 1995 31,932 Pooling*
Service Financial, Inc.,
Harriman, Tennessee December 1, 1995 37,064 Pooling*
UF Bancorp, Inc.,
Evansville, Indiana August 4, 1995 2,370,208 Pooling
Bank of Orleans, Indiana August 4, 1995 334,420 Pooling*
</TABLE>
* Accounted for as a pooling of interests without restatement of prior periods
as the amounts involved were not material to the Corporation's financial
results.
On August 4, 1995, a subsidiary of the Corporation, Citizens Bank of Western
Indiana, acquired the four Indiana offices of Household Bank, f.s.b., a
subsidiary of Household International and assumed deposit liabilities of
$78,897,000. Goodwill of $5,345,000 is being amortized on a straight-line basis
over 15 years. The acquisition was accounted for under the purchase method of
accounting and, accordingly, the consolidated financial statements include the
assets and liabilities from the August 4, 1995, transaction date forward.
Page 5 of 24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 2: BUSINESS COMBINATIONS (CONTINUED)
On November 17, 1995, the Corporation announced the signing of a definitive
agreement to acquire all of the outstanding shares of DuQuoin Bancorp, Inc.,
parent company for DuQuoin National Bank, DuQuoin, Illinois. Under terms of the
agreement, the Corporation will issue approximately 499,000 shares of its common
stock. The transaction will be accounted for under the pooling of interests
method of accounting and is expected to be consummated during the second quarter
of 1996. At March 31, 1996, DuQuoin National Bank had total assets and
shareholders' equity of $84,705,000 and $6,398,000, respectively.
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>
Available for Sale at March 31, 1996:
U.S. Treasury $ 14,326 $ 131 $ (9) $ 14,448
Federal agencies:
Bonds and notes 176,526 803 (1,076) 176,253
Mortgage-backed securities 821,829 3,505 (4,905) 820,429
State and municipal 35,076 1,072 (98) 36,050
Collateralized mortgage 99,605 1,817 (4,237) 97,185
obligations
Other securities 23,406 71 (160) 23,317
- --------------------------------------------------------------------------------------------
Total $1,170,768 $7,399 $(10,485) $1,167,682
============================================================================================
Held to Maturity at March 31, 1996:
Federal agencies:
Mortgage-backed securities $ 113,433 $ 106 $ (2,972) $ 110,567
State and municipal 95,550 2,593 (750) 97,393
Collateralized mortgage 3,005 1 (36) 2,970
obligations
- --------------------------------------------------------------------------------------------
Total $ 211,988 $2,700 $ (3,758) $ 210,930
============================================================================================
</TABLE>
Net unrealized gains or (losses) on investment securities available for sale,
net of tax, at December 31, 1995 and March 31, 1996 and 1995, were $3,634,000,
$(1,802,000) and $(3,293,000), respectively. The amortized cost and estimated
market value of investment securities at March 31, 1996, by contractual
maturity, are shown in the following table. 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.
Page 6 of 24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
NOTE 3: INVESTMENT SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY (CONTINUED)
AVAILABLE FOR SALE HELD TO MATURITY
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
<S> <C> <C> <C> <C>
Maturity distribution
at March 31, 1996:
Due in one year or less $ 20,413 $ 20,576
Due after one year through five years 189,335 189,825 $ 10,633 $ 11,214
Due after five years through ten years 9,639 9,658 32,876 33,980
Due after ten years 7,783 7,901 52,041 52,199
Mortgage-backed securities 821,829 820,429 113,433 110,567
Collateralized mortgage obligations 99,605 97,185 3,005 2,970
- --------------------------------------------------------------------------------------------------------------------
Total debt securities 1,148,604 1,145,574 211,988 210,930
Equity securities 22,164 22,108
- --------------------------------------------------------------------------------------------------------------------
Total $1,170,768 $1,167,682 $211,988 $210,930
====================================================================================================================
</TABLE>
Proceeds from sales of investment securities available for sale during the
three months ended March 31, 1996, were $141,713,000. Gross gains and losses
realized on those sales were as follows. The gains related to investment
securities held to maturity were due to the call of certain securities prior to
their maturities.
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY TOTAL
<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1996
Gross gains from sales
and called bonds $ 551 $ 2 $553
Gross losses from sales (147) (147)
- -----------------------------------------------------------------------------------
Net securities gains $ 404 $ 2 $406
===================================================================================
</TABLE>
NOTE 4: IMPAIRED LOANS
At March 31, 1996, impaired loans totaled $12,420,000. An allowance for
loan losses was not deemed necessary for impaired loans totaling $6,585,000, but
an allowance of $1,011,000 was recorded for the remaining balance of impaired
loans of $5,835,000. At December 31, 1995, impaired loans totaled $14,149,000.
An allowance of $1,212,000 was recorded for impaired loans totaling $7,448,000.
The average balance for impaired loans was $16,789,000 for the quarter ended
March 31, 1996.
Page 7 of 24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5: ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
At March 31, 1996 and 1995, and December 31, 1995, the carrying value of
mortgage servicing rights, which are reported as intangible assets on the
consolidated balance sheet, were $2,928,000, $59,000, and $589,000,
respectively. The impact of recognizing originated mortgage servicing rights
(OMSRs) as assets in the Corporation's financial statements was an increase in
non-interest income of $2,340,000 and $59,000 for the three months ended March
31, 1996 and 1995, respectively. OMSRs of $2,400,000 and $60,000 were
capitalized during the first three months of 1996 and 1995, respectively. For
purposes of measuring impairment, the Corporation stratified mortgage servicing
rights on the basis of loan term, interest rate and type of interest rate (fixed
or adjustable). The servicing assets were reduced only by normal amortization of
$60,000 and $1,000 for the three month periods ended March 31, 1996 and 1995,
respectively. No valuation allowance was required at March 31, 1995, December
31, 1995, or March 31, 1996.
NOTE 6: INTEREST RATE CONTRACTS
Through the purchase of interest rate cap agreements, (caps) the Corporation
has reduced the impact of increased interest rates on its costs to acquire
certain repurchase agreements and long-term borrowings 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. Amortization of premiums paid for interest rate caps totaled
$324,000 and $315,000 for the three months ended March 31, 1996 and 1995,
respectively. This expense was offset by counterparty reimbursements of $226,000
during the three months ended March 31, 1996, and $372,000 during the three
months ended March 31, 1995.
At March 31, 1996, the notional amount of the interest rate caps was
$135,000,000. The caps are indexed to LIBOR with contract strike prices ranging
from 4 percent to 7 percent and mature in 1997. The carrying value and estimated
market value of the caps at March 31, 1996, was $1,172,000 and $756,000,
respectively.
The Corporation has entered into interest rate swaps as a hedge against
certain long-term borrowings to manage its interest rate sensitivity. The
contracts represent an exchange of interest payments and the underlying
principal balances of the liabilities are not affected. At March 31, 1996, the
Corporation had swaps with a notional value of $20,000,000. The agreements
require the Corporation to pay a fixed rate of interest ranging from 5.77% to
5.93% and receive a variable rate based on three-month LIBOR. The agreements
terminate on or prior to January 12, 2001.
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.
At March 31, 1996, option forward contracts outstanding committed the
Corporation to sell $30,000,000 par value of mortgage-backed securities during
the second quarter of 1996. Fees received from these contracts have been
deferred until completion of the transactions.
Page 8 0f 24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7: LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1996 1995 1995
--------- ------------ ---------
<S> <C> <C> <C>
Parent Company:
Convertible subordinated debentures,
7.50%, redemptions of $1,125 annually
beginning in 2001, balance due 2011 $ 6,473 $ 6,538 $ 6,671
Redeemable subordinated debentures,
9.50% due 1997 2,187 2,187 2,192
Notes payable, unsecured:
9.81%, payable $600 annually through
1996, balance due in 1997 3,000 3,000 3,600
Variable rate adjusted with changes in
LIBOR, payable $250 quarterly through
2000 (6.06%, 6.69% and 7.50% at March
31, 1996, December 31, 1995, and
March 31, 1995, respectively) 5,250 5,500 6,000
Subsidiaries:
Federal Home Loan Bank advances, due
at various dates through 2014
(weighted average rates of 5.44%,
5.89% and 6.43% at March 31, 1996,
December 31, 1995 and March 31,
1995, respectively) 122,813 115,794 171,727
Notes payable, revolving credit
agreement, secured by finance
receivables, variable rate adjusted
with changes in LIBOR (6.00%, 6.63%
and 8.00% at March 31, 1996, December
31, 1995, and March 31, 1995,
respectively) 14,247 19,851 12,100
Other, including capitalized leases 5,124 5,176 5,527
-------- -------- --------
Total $159,094 $158,046 $207,817
=============================================================================
</TABLE>
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.
NOTE 8: NET INCOME PER SHARE
Net income per share has been computed by dividing net income by the
weighted average number of common and common equivalent shares outstanding
during each period. The assumed conversion of the convertible subordinated
debentures into common shares had no materially dilutive effect on net income
per share for either the three months ended March 31, 1996 or 1995. All share
data included in the notes to the financial statements and Management's
Discussion and Analysis has been adjusted for the one-for-twenty stock dividend
declared on October 18, 1995.
Page 9 of 24
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
- --------
Net income for the three months ended March 31, 1996, was $9,685,000, an
increase of 22.4 percent over the $7,914,000 earned in the same period of 1995.
Net income per share increased by 25.6 percent to $.54 for the three months
ended March 31, 1996, compared to $.43 for the three months ended March 31,
1995. The increased earnings improvement was due to continued growth in earning
assets which resulted in a $1,501,000 or 4.6 percent increase in net interest
income over the first three months of 1995 and a $3,720,000 or 36.3 percent
increase in non-interest income. The net interest margin was 4.21 percent for
the three months ended March 31, 1996 and 1995. During the first three months of
1996, average earning assets were 4.0 percent greater than during the same
period of 1995. Net income and net income per share for the three months ended
March 31, 1996, were also increased from the $9,370,000 and $.52, respectively,
reported for the fourth quarter of 1995.
The Corporation's total assets at March 31 1996, were $3,630,706,000, which
were 5.0 percent greater than the $3,457,916,000 at March 31, 1995, and
$2,024,000 greater than total assets at December 31, 1995. Total loans of
$2,000,700,000 at March 31, 1996, were increased from $1,971,454,000 at December
31, 1995, but were decreased from $2,116,638,000 from one year ago. At year-end
1995, the Corporation reclassified $209 million of fixed rate residential
mortgage loans from the loan portfolio into real estate loans held for sale.
Initiated to provide more flexibility in balance sheet management, the
Corporation securitized $162 million of these mortgages and placed the
securities into the investments available for sale classification.
Annualized returns on average assets and average shareholders' equity for
the three months ended March 31, 1996, were 1.08 percent and 13.22 percent,
respectively, compared with .91 percent and 11.11 percent for the same period of
1995.
Cash dividends of $.21 per share were declared during the first quarter of
1996 compared with $.19 per share, adjusted for the 5 percent stock dividend
declared October 18, 1995, during the same period of 1995 representing an
increase of 10.5 percent. Total dividends declared were $3,753,000 and
$3,207,000, respectively.
NET INTEREST INCOME
- -------------------
Net interest income is the Corporation's largest component of income and
represents the difference between interest and fees earned on loans and
investments and the interest paid on interest bearing liabilities. Net interest
income was $34,392,000 for the three months ended March 31, 1996, compared with
$32,891,000 for the same period in 1995. The increased net interest income was
the result of a 4.0 percent increase in average earning assets compared to the
first quarter of 1995 and a consistent net interest margin during both quarters.
Net interest income increased by $144,000 from the $34,248,000 recorded in the
fourth quarter of 1995 due to the effects of a higher net interest margin
offsetting a $4,127,000 decrease in average earning assets.
Page 10 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NET INTEREST INCOME (CONTINUED)
- -------------------
The interest margin is a percentage computed by dividing net interest income
on a fully taxable equivalent basis ("FTE") by average earning assets and
represents a measure of basic earnings on interest bearing assets held by the
Corporation. The annualized net interest margin was 4.21 percent for the
quarters ended March 31, 1996 and 1995. Average earning assets for the three
months ended March 31, 1996, increased to $3,374,251,000 from $3,244,482,000 for
the same period in 1995. Average loans decreased by $144,525,000 to
$1,966,143,000 for the first three months of 1996 and represented 58.3 percent
of earning assets compared to 65.1 percent in 1995. Investment securities
increased by 13.0 percent for the first three months of 1996 compared to 1995
and represented 36.4 percent and 33.5 percent of earning assets for similar
periods of 1996 and 1995, respectively. The increase in investment securities
and related decrease in loans is primarily the result of the Corporation
securitizing approximately $162 million of fixed rate residential first mortgage
loans during the first quarter of 1996. At year-end 1995, the Corporation
reclassified $209 million of residential loans from the loan portfolio into real
estate loans held for sale. It was determined that approximately $38 million of
that amount could not be securitized at this time and was returned to the loan
portfolio. The prime lending rate decreased during the current quarter by 25
basis points, as opposed to the same period one year ago when the prime rate
increased by 50 basis points during the quarter. As a result of continued
efforts to alter the mix and reprice earning assets and interest bearing
liabilities acquired in recent thrift acquisitions, the Corporation has been
able to improve the net interest margin from 4.13 percent for the fourth quarter
of 1995 to 4.21 percent for the first quarter of 1996. The net interest margin
for the first quarter of 1995 was also 4.21 percent.
An ongoing objective of the Corporation's asset/liability management policy is
to match rate-adjustable assets and liabilities at similar maturity horizons so
that changes in interest rates will not result in wide fluctuations in net
interest income. The rate sensitivity position is computed for various repricing
intervals by calculating rate sensitivity gaps. The Corporation had a cumulative
one-year positive gap on March 31, 1996, of $32,264,000 which represented .9
percent of the $3,401,704,000 in earning assets at that date and, in the opinion
of management, represented a balanced position. Net interest income at financial
institutions with positive gaps tends to increase in periods of rising interest
rates and decline as interest rates fall.
NON-INTEREST INCOME
- -------------------
During the first three months of 1996, non-interest income, which includes
deposit fees, insurance commissions, trust fees, credit card and other non-
interest fees on loans, mortgage loan origination and servicing revenues,
investment products fees, and net securities gains, was $13,977,000 compared to
$10,257,000 reported for the same period in 1995. Net security gains of $406,000
were recorded during the first quarter of 1996 compared to $130,000 for the same
period of 1995. Non-interest income excluding net securities gains totaled
$13,571,000, which represented an increase of 34.0 percent over the same period
of 1995.
Mortgage loan origination and servicing fees increased by $2,653,000 during
the first quarter of 1996 compared to the same period of 1995. The
securitization of $162 million of residential mortgage loans, as previously
discussed, generated net gains of $2,578,000. Service charges on deposit
accounts were increased by $283,000 or 11.3 percent due to increased volumes and
revised fee schedules. Trust fees,
Page 11 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NON-INTEREST INCOME (CONTINUED)
- -------------------
based primarily on the market value of assets under management, increased by
$84,000 or 6.3 percent compared to the first three months of 1995 due to an
increase in the number of accounts and an increase in the market value of assets
managed. Investment products fees increased by 35.2 percent to $1,083,000 as the
Corporation continued to place greater emphasis on sale of annuities, mutual
funds and other non-traditional banking products. Other income increased to
$1,686,000 during the three months ended March 31, 1996, from $1,511,000 for the
comparable period of 1995. The first quarter of 1996 included revenues of
$91,000 from the expiration of interest rate option contracts and administrative
service and direct marketing revenues of $53,000. In addition, data processing
revenues increased by $30,000 during the first quarter of 1996 compared to the
same period one year ago.
NON-INTEREST INCOME
- -------------------------------------------------------------------------------
(IN THOUSANDS)
THREE MONTHS
ENDED
MARCH 31, INCREASE
1996 1995 (DECREASE)
Mortgage loan origination and servicing $ 3,812 $ 1,159 $2,653
Service charges on deposit accounts 2,796 2,513 283
Insurance premiums and commissions 1,690 1,706 (16)
Trust fees 1,408 1,324 84
Credit card and other non-interest fees
on loans 1,096 1,113 (17)
Investment products fees 1,083 801 282
Net securities gains 406 130 276
Other 1,686 1,511 175
------- ------- ------
Total non-interest income $13,977 $10,257 $3,720
===============================================================================
NON-INTEREST EXPENSE
- --------------------
Non-interest expense, which includes personnel, occupancy costs, equipment
and other operating expenses was $31,627,000 for the three months ended March
31, 1996, compared to $29,162,000 for the same period of 1995, an increase of
8.5 percent. Non-recurring charges of $2.3 million, primarily related to recent
or planned office closures, are included in non-interest expenses for the first
quarter of 1996. Excluding these charges, non-interest expenses increased
$182,000 or .6 percent from the three months ended March 31, 1995.
Salaries and employee benefits increased by $1,121,000 or 7.9 percent for the
three month period in 1996 over 1995. This increase was generally due to normal
salary increases, additional staff and related expenses associated with
increased business activity. Data processing expense in 1996 has increased by
$98,000 due to credit card processing expenses increasing by $136,000. The
issuance of additional credit cards and the related increased transaction
volumes resulted in increased processing expenses. This increase in expense was
partially offset by savings realized from the conversion of four wholly-owned
entities to our internal data processing systems during the last three quarters
of 1995. Occupancy expenses increased by $128,000 to $2,079,000 during the first
quarter of 1996 due to additional banking
Page 12 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NON INTEREST EXPENSE, (CONTINUED)
- --------------------
offices acquired, as compared to the first quarter of 1995. Advertising and
promotion expense increased by $238,000 during the three months ended March 31,
1996, compared to the same period one year ago due to increased marketing
efforts related to loan and deposit promotions, Corporate identity promotions
and non-traditional banking services. Expenses for postage and freight increased
by $224,000 during the first three months of 1996 compared to 1995 primarily due
to mailing promotional materials related to various loan and deposit direct
marketing campaigns and increased communications with a larger customer and
shareholder base. FDIC assessments decreased by $919,000 during the three months
ended March 31, 1996, compared to the same period of 1995. The assessment rate
was reduced from $.23 to only minimal amounts for deposits insured by the Bank
Insurance Fund (BIF) effective January 1, 1996. The portion of the Corporation's
deposits acquired from thrifts over the years remains insured by the Savings
Association Insurance Fund (SAIF) of the FDIC which continues to be assessed at
$.23 per $100 of deposits. Congress is currently considering a special, one-time
assessment on SAIF-insured deposits. If enacted, this assessment could result in
a one-time, pre-tax charge of up to $7,300,000, which could be offset by lower
insurance costs in the future. Other expenses were increased by $1,547,000
during the first three months of 1996 compared to the same period of 1995. One-
time charges of $1,983,000, primarily related to the recent or planned closure
of five offices, accounted for all of this increase. These offices are generally
near other Corporate-owned banking facilities and no significant loss of
customer base is anticipated.
The Corporation continues its efforts to maintain control of its operating
costs and has implemented several strategies to further improve operating
efficiencies, including consolidating certain subsidiary banks in adjacent
markets and centralizing backroom operations. Operating expenses as a percentage
of revenues, commonly referred to as the efficiency ratio, improved from 66.3
percent to 63.2 percent during the first three months of 1995 and 1996,
respectively.
<TABLE>
<CAPTION>
NON-INTEREST EXPENSE
- --------------------------------------------------------------------------------
(IN THOUSANDS)
THREE MONTHS
ENDED
MARCH 31, INCREASE
1996 1995 (DECREASE)
<S> <C> <C> <C>
Salaries and employee benefits $15,376 $14,255 $1,121
Data processing and other services 2,935 2,837 98
Occupancy expense 2,079 1,951 128
Equipment expense 1,706 1,629 77
Advertising and promotion 1,156 918 238
Postage and freight 1,002 778 224
Professional fees 930 977 (47)
Printing and supplies 881 883 (2)
FDIC assessments 543 1,462 (919)
Other 5,019 3,472 1,547
------- ------- ------
Total non-interest expense $31,627 $29,162 $2,465
================================================================================
</TABLE>
Page 13 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
INCOME TAX EXPENSE
- ------------------
Income tax expense was $5,455,000 for the three months ended March 31, 1996,
compared with $4,518,000 for the same period in 1995. The effective tax rate was
36 percent for the three months ended March 31, 1996 and 1995.
LOANS
- -----
Total loans were $2,000,700,000 at March 31, 1996, compared to $2,116,638,000
at March 31, 1995, and $1,971,454,000 at December 31, 1995. The loan portfolio
was increased by $29.2 million from year-end 1995 but was decreased by $115.9
million or 5.5 percent from one year ago. This decrease was a result of the
Corporation reclassifying $209 million of residential mortgage loans to real
estate loans held for sale at December 31, 1995. The majority of these loans
were subsequently securitized, as previously discussed. Commercial loans totaled
$555,571,000 at December 31, 1995, compared to $551,684,000 and $327,859,000 at
March 31, 1996 and 1995, respectively. As of December 31, 1995, the Corporation
reclassified $214,550,000 of real estate mortgage loans secured by owner-
occupied commercial or service related businesses. Management believes that
classifying such loans as commercial loans is more consistent with their
underwriting criteria and also more accurately reflects the credit risk
associated with such loans. As prior year's loan balances in the accompanying
table have not been reclassified using the new criteria, the $223,825,000
increase in commercial loans must be viewed in the context of the
reclassification. Tax exempt loans declined from one year ago by $2.5 million.
Real estate mortgage loans, which consist of residential, commercial and
agricultural loans secured by real estate and construction loans, totaled
$898,383,000 at March 31, 1996, compared to $1,237,440,000 one year prior.
Residential real estate loans were decreased as the Corporation reclassified
$209 million of fixed rate first mortgage real estate loans to loans held for
sale. Of this amount, $162 million was securitized during the quarter and
classified as investment securities available for sale and $38 million was
reclassified to the mortgage loan portfolio at March 31, 1996. The Corporation
has continued to experience demand for new residential real estate mortgage
loans, but has sold most new production during the current quarter. Customer
preference in the current rate environment has shifted from adjustable rate
residential real estate loans to fixed rate 15-year and shorter term balloon
loans. In addition to residential real estate mortgages reported as loans, the
Corporation held $12,912,000 and $222,157,000 of real estate loans for sale at
March 31, 1996, and December 31, 1995, respectively. These loans were
$11,310,000 at March 31, 1995.
Consumer loans at March 31, 1996, were $1.8 million greater than at March 31,
1995, and $11.5 million less than at December 31, 1995. Direct consumer loan
demand has continued through 1995 and first quarter 1996 due to direct mail and
in-office promotions, for both fixed and variable rate automobile and other
personal loans. The volume of new indirect consumer loans purchased through
automobile dealers, however, was not sufficient to replace normal payments and
payoffs and these balances continued to decline during the first quarter of
1996. New marketing efforts were initiated during the quarter, and the volume of
these loans purchased late in the quarter and thus far in the second quarter has
increased. Credit card outstandings were $34,104,000 at March 31, 1996, which
were $2.3 million less than at March 31, 1995, and $3.6 million less than at
December 31, 1995, which were seasonally high at that time.
Page 14 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
LOANS OUTSTANDING
- -------------------------------------------------------------------------------
(IN THOUSANDS)
MARCH 31, DECEMBER 31, MARCH 31,
1996 1995 1995
<S> <C> <C> <C>
Commercial, industrial and
agricultural production loans $ 551,684 $ 555,571 $ 327,859
Tax exempt loans 21,197 23,354 23,669
Real estate mortgage loans:
Commercial and agricultural 129,253 136,941 339,385
Construction 60,886 48,690 58,678
Residential 708,244 665,986 839,377
Consumer loans 529,436 540,912 527,670
---------- ---------- ----------
Total loans $2,000,700 $1,971,454 $2,116,638
===============================================================================
</TABLE>
The Corporation's loan portfolio contains no loans to foreign governments,
foreign enterprises, foreign operations of domestic companies, nor any
concentrations to borrowers engaged in the same or similar industries that
exceed 10 percent of total loans.
LOAN QUALITY
- ------------
The allowance for loan losses is maintained at a level considered adequate to
absorb potential loan losses based upon quarterly evaluations of the loan
portfolio by management and the boards of directors of the Corporation and each
subsidiary bank. These evaluations include consideration of past loan loss
experience, changes in the composition of the portfolio, the volume and
condition of loans outstanding, expected cash flows or the observable market
price of the loans or the fair value of the collateral for impaired loans, as
well as current economic conditions.
<TABLE>
<CAPTION>
SUMMARY OF ALLOWANCE FOR LOAN LOSSES
- -------------------------------------------------------------------------------
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
1996 1995
<S> <C> <C>
Beginning balance $ 28,806 $ 28,502
Provision for loan losses 1,602 1,554
Loans charged-off (2,084) (2,557)
Recoveries 573 477
- -------------------------------------------------------------------------------
Ending balance $ 28,897 $ 27,976
===============================================================================
- -------------------------------------------------------------------------------
Percent of total loans 1.44% 1.32%
===============================================================================
</TABLE>
Page 15 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LOAN QUALITY (CONTINUED)
- ------------
The allowance for loan losses was $28,897,000 at March 31, 1996, representing
1.44 percent of total loans, compared with $27,976,000 at March 31, 1995, which
represented 1.32 percent of total loans. At December 31, 1995, the allowance for
loan losses was $28,806,000 and represented 1.46 percent of total loans.
Annualized net charge-offs to average loans decreased to .31 percent during the
first quarter of 1996 from .39 percent for the same period of 1995. The
provision for loan losses to average loans was .33 percent and .30 percent for
the three months ending March 31, 1996 and 1995, respectively. The allowance for
loan losses to non-performing loans at March 31, 1996, and 1995, and at December
31, 1995, were 142.4 percent, 198.6 percent, and 138.1 percent, respectively.
<TABLE>
<CAPTION>
NON-PERFORMING AND RISK ASSETS
- ----------------------------------------------------------------------------------
(IN THOUSANDS)
MARCH 31, DECEMBER 31, MARCH 31,
1996 1995 1995
<S> <C> <C> <C>
Non-accrual loans:
Commercial, agricultural, and tax exempt $11,507 $10,393 $ 4,163
Real estate mortgage 4,175 6,326 6,340
Consumer 3,633 3,194 2,505
------- ------- -------
Total non-accrual 19,315 19,913 13,008
Restructured loans:
Commercial, agricultural, and tax exempt 368 479 363
Real estate mortgage 573 464 715
Consumer 43 5
------- ------- ---------
Total restructured 984 948 1,078
------- ------- -------
Total non-performing loans 20,299 20,861 14,086
Foreclosed properties 2,954 1,727 2,978
------- ------- -------
Total non-performing assets 23,253 22,588 17,064
90 days or more past due:
Commercial, agricultural, and tax exempt 266 344 242
Real estate mortgage 2,315 1,285 1,382
Consumer 1,260 598 750
------- ------- -------
Total 90 days or more past due 3,841 2,227 2,374
------- ------- -------
Total risk assets $27,094 $24,815 $19,438
=================================================================================
- ---------------------------------------------------------------------------------
Risk assets to loan-related assets 1.35% 1.26% 0.92%
=================================================================================
</TABLE>
Risk assets consist of non-performing loans, foreclosed properties and loans
90 days or more past due but accruing. Although these assets have more than a
normal risk of loss, they will not necessarily result in a higher level of
future charge-offs or losses.
Page 16 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LOAN QUALITY (CONTINUED)
- ------------
Non-performing loans consist of loans classified as troubled debt
restructurings and loans on non-accrual status. As indicated by the previous
table, the Corporation's non-performing loans as of March 31, 1996, totaled
$20,299,000, a decrease of $562,000 from December 31, 1995. The non-performing
loans to total loans ratio was 1.01 percent on March 31, 1996, as compared to
.67 percent on March 31, 1995, and 1.06 percent on December 31, 1995. During the
third quarter of 1995, a $4,500,000 commercial loan was placed on non-accrual
status as the borrower filed for protection under Chapter 11 of bankruptcy laws.
The balance of this loan was charged down to $3,600,000 at year-end 1995.
Management is closely monitoring this loan and does not expect to incur any
significant additional loss. Non-accrual real estate mortgage loans include two
loans with balances totaling $5,400,000. Based on collateral value on these
loans, the loss is not expected to exceed $1,000,000. In addition to loans
classified as non-performing, there were other loans totaling $5,575,000, at
March 31, 1996, where the borrowers are experiencing difficulties and management
is closely monitoring the borrowers' abilities to comply with payment terms.
However, conditions at this time do not warrant classification as non-
performing.
DEPOSITS AND OTHER SOURCES OF FUNDS
- -----------------------------------
Total deposits were $2,786,211,000 at March 31, 1996, compared to
$2,612,140,000 and $2,789,989,000 at March 31, 1995, and December 31, 1995,
respectively. Non-interest bearing deposits increased from March 31, 1995 by
$29.0 million while interest bearing deposits were increased by $145.1 million.
Since December 31, 1995, non-interest bearing deposits, which were seasonally
high at year-end, declined by $8.2 million and interest bearing deposits
increased by $4.4 million. The mix of interest bearing deposits is continuing to
shift to certificates of deposit as competitive pricing on these products
modified customers' previous preferences of interest bearing checking, savings
and money market deposit accounts.
Securities sold under repurchase agreements are acquired in national markets
as well as from the Corporation's commercial customers as part of a cash
management service. Repurchase agreements were $273,006,000, $299,366,000, and
$325,271,000 at March 31, 1996, March 31, 1995, and December 31, 1995,
respectively, and play a key role in funding earning assets. A portion of these
repurchase agreements, acquired to fund certain fixed rate earning assets, is
being hedged by interest rate caps.
Long-term debt totaled $159,094,000 at March 31, 1996, compared to
$207,817,000 at March 31, 1995, and $158,046,000 at December 31, 1995. The $48.7
million decrease in borrowings from one year ago is primarily due to the
repayment of FHLB advances as more cost-effective sources of funding became
available.
INVESTMENT SECURITIES
- ---------------------
Total investment securities available for sale and held to maturity
represented 40.6 percent of earning assets at March 31, 1996, compared to 33.6
percent and 34.7 percent at March 31, 1995, and December 31, 1995, respectively.
This increase in the investment portfolio is primarily the result of the
Corporation securitizing approximately $162 million of fixed rate residential
mortgage loans, as discussed previously. The portfolio has continued to shift
toward investments in mortgage-backed
Page 17 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
INVESTMENT SECURITIES (CONTINUED)
- ---------------------
securities, predominately underwritten to the standards of, and guaranteed by
government sponsored agencies. These securities generally yield 70-100 basis
points more than comparable U.S. Treasury securities. Mortgage-backed securities
differ from traditional debt securities in that they have uncertain maturity
dates and are priced based on estimated prepayment rates on the underlying
mortgages. Prepayment rates generally can be expected to increase during periods
of lower interest rates as the underlying mortgages are refinanced at lower
market rates. Conversely, the average lives of these securities generally are
extended as interest rates increase. The estimated average life of these
securities and the overall portfolio was 3.9 years and 4.3 years, respectively,
at March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity is a measure of the Corporation's ability to meet its customers'
present and future deposit withdrawals and increased loan demand without unduly
penalizing earnings. The Corporation manages its liquidity needs through a
coordinated asset/liability management program directed by the Funds Management
and Investment Committee.
Liquidity is provided by projecting credit demand and other financial needs
and then maintaining sufficient cash and assets readily convertible into cash or
available federal funds lines to meet these requirements. The Corporation has
provided for its liquidity needs through growth in core deposits, maturing loans
and investments in its securities portfolio, and by maintaining adequate
balances in other short-term securities and money market assets. At March 31,
1996, the Corporation had $156,526,000 in investment securities maturing within
one year. The Corporation additionally has federal funds lines and other
borrowing sources available to it and its banks. Investment securities maturing
within one year and unused borrowing sources were considered by management to
provide adequate liquidity in view of projected needs.
Total shareholders' equity at March 31, 1996, was $295,585,000, compared to
$297,693,000 at December 31, 1995. The Federal Reserve Board has established a
minimum leverage ratio of 3.0 percent for the most highly rated bank holding
companies that do not anticipate significant growth. All other institutions are
required to maintain a ratio of 4.0 to 5.0 percent depending on their particular
circumstances and risk profile. This ratio is defined as shareholders' equity
less non-qualifying intangible assets, as a percentage of the sum of quarter to
date total average assets less non-qualifying intangible assets. The
Corporation's leverage ratio at March 31, 1996, was 7.68 percent as compared to
7.56 percent at the end of 1995. The Federal Reserve Board has also adopted
risk-based capital guidelines which assign various risk weightings to assets and
off-balance sheet items and set minimum capital requirements. Banks are required
to have core capital (Tier 1) of at least 4.0 percent of risk weighted assets
and total capital of 8.0 percent of risk weighted assets. Tier 1 capital
consists primarily of shareholders' equity less intangible assets; and total
capital consists of Tier 1 capital, certain long-term debt and convertible
debentures and a portion of the allowance for loan losses. Under the provisions
of the Federal Deposit Insurance Corporation Improvement Act of 1991,
institutions must have a leverage ratio of 5.0 percent or above, Tier 1 capital
to risk-based assets of 6.0 percent or above, and total capital to risk-based
assets of 10.0 percent or above in order to qualify as well capitalized. The
Federal Reserve has proposed regulations which would revise the current risk-
based capital guidelines to include a measurement of interest rate risk. The
proposed change would not have a material impact to the
Page 18 of 24
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- -------------------------------
Corporation's capital ratios based on its interest rate sensitivity position. At
March 31, 1996, the Corporation's leverage, Tier 1 and total capital ratios were
7.68 percent, 12.65 percent, and 14.30 percent, respectively, well above all
regulatory minimums. Furthermore, each of the Corporation's subsidiary banks has
been rated as "well capitalized" by the Federal Deposit Insurance Corporation.
The Corporation is not aware of any current recommendations by its regulatory
authorities or any other known trends, events, or uncertainties that will have
or that are reasonably likely to have a material effect on its liquidity,
capital resources, or operations.
Page 19 of 24
<PAGE>
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
On April 16, 1996, the Corporation held its Annual Meeting of Shareholders.
The election of directors was voted upon. There were 17,845,131 shares
outstanding on the March 4, 1996, record date. The following directors received
votes as noted and were elected to terms to expire in 1999:
<TABLE>
<CAPTION>
Withheld (including Broker
Affirmative Broker Non-Votes) Non-Votes
------------- ---------------------- ----------
<S> <C> <C> <C>
H. Lee Cooper 14,495,924 450,350 378,562
John D. Engelbrecht 14,515,578 430,696 378,420
Robert K. Ruxer 14,513,723 432,551 378,562
</TABLE>
Continuing directors and the date of the expiration of their term in office
is as follows:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C>
James J. Giancola Jerry A. Lamb
Robert L. Koch, II Burkley F. McCarthy
Paul G. Wade Thomas W. Traylor
Lawrence J. Kremer
</TABLE>
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Exhibits
--------
a. The following exhibit is submitted herewith:
27 - Financial Data Schedule
Reports on Form 8-K
-------------------
b. No reports were filed.
===========================================================================
No other information is required to be filed under Part II of the form.
Page 20 of 24
<PAGE>
CNB BANCSHARES, INC.
FORM 10-Q
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.
CNB Bancshares, Inc.
---------------------------------
(Registrant)
Date May 10, 1996 by /s/ James J. Giancola
----------------------------- ---------------------------------
James J. Giancola,
President and Chief Executive
Officer
Date May 10, 1996 by /s/ Ralph L. Alley
----------------------------- ---------------------------------
Ralph L. Alley, Senior Vice
President and Controller,
Treasurer
(Principal Accounting Officer)
Page 21 of 24
<PAGE>
EXHIBIT INDEX
Reg. S-K
Exhibit No. Description of Exhibit Page
- ----------- ---------------------- ----
27 Financial Data Schedule 23
Page 22 of 24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from
CNB Bancshares Inc.'s consolidated balance sheet as of March 31, 1996 and the
consolidated statement of income for the three months ended March 31, 1996,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 101,678
<INT-BEARING-DEPOSITS> 347
<FED-FUNDS-SOLD> 8,075
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,167,682
<INVESTMENTS-CARRYING> 211,988
<INVESTMENTS-MARKET> 210,930
<LOANS> 2,013,612
<ALLOWANCE> 28,897
<TOTAL-ASSETS> 3,630,706
<DEPOSITS> 2,786,211
<SHORT-TERM> 358,578
<LIABILITIES-OTHER> 31,238
<LONG-TERM> 159,094
<COMMON> 17,821
0
0
<OTHER-SE> 277,764
<TOTAL-LIABILITIES-AND-EQUITY> 3,630,706
<INTEREST-LOAN> 49,108
<INTEREST-INVEST> 20,361
<INTEREST-OTHER> 316
<INTEREST-TOTAL> 69,785
<INTEREST-DEPOSIT> 28,651
<INTEREST-EXPENSE> 35,393
<INTEREST-INCOME-NET> 34,392
<LOAN-LOSSES> 1,602
<SECURITIES-GAINS> 406
<EXPENSE-OTHER> 31,627
<INCOME-PRETAX> 15,140
<INCOME-PRE-EXTRAORDINARY> 15,140
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,685
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54
<YIELD-ACTUAL> 4.21
<LOANS-NON> 19,315
<LOANS-PAST> 3,841
<LOANS-TROUBLED> 984
<LOANS-PROBLEM> 5,575
<ALLOWANCE-OPEN> 28,806
<CHARGE-OFFS> 2,084
<RECOVERIES> 573
<ALLOWANCE-CLOSE> 28,897
<ALLOWANCE-DOMESTIC> 24,439
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,458
</TABLE>
