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, 1997
CNB BANCSHARES, INC. 0-11510
(Exact name of registrant as specified in its charter) (Commission file number)
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, 1997, there were 19,620,743 outstanding shares, without par
value, of the registrant.
Exhibit index is on page 23.
Page
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet 1
Consolidated 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 10-20
PART II. Other Information 21
Signatures 22
Exhibit Index 23
Page
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
<TABLE>
CNB BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
(In thousands, except for share data)
(Unaudited)
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1997 1996 1996
---- ---- ----
<S> <C> <C> <C>
ASSETS
- ------
Cash and due from banks $101,137 $114,469 $102,535
Federal funds sold and other short-term money
market investments 7,883 34,628 34,138
-------- ------- -------
TOTAL CASH AND CASH EQUIVALENTS 109,020 149,097 136,673
Real estate loans held for sale 4,252 6,457 12,912
Investment securities available for sale 1,423,159 1,379,872 1,192,212
Investment securities held to maturity
(Market value $244,321 at March 31, 1997, $249,150 at
December 31, 1996, and $210,930 at March 31, 1996) 245,521 248,088 211,988
Loans, net of unearned income 2,305,271 2,275,089 2,050,198
Less: Allowance for loan losses 32,044 31,262 29,601
--------- --------- ---------
NET LOANS 2,273,227 2,243,827 2,020,597
Premises and equipment 72,273 71,468 68,545
Intangible assets 32,589 32,847 27,739
Interest receivable 29,547 30,863 29,662
Other assets 56,308 54,056 34,228
---------- ---------- ----------
TOTAL ASSETS $4,245,896 $4,216,575 $3,734,556
========== ========== ==========
LIABILITIES
- -----------
Deposits:
Non-interest bearing $332,471 $359,146 $319,390
Interest bearing 2,759,847 2,755,584 2,556,495
--------- --------- ---------
TOTAL DEPOSITS 3,092,318 3,114,730 2,875,885
Securities sold under repurchase agreements 522,464 530,261 273,006
Federal funds purchased and other short-term 81,705 29,608 85,572
borrowings
FHLB advances and other long-term debt 196,980 176,730 159,094
Interest payable and other liabilities 35,560 39,832 31,863
--------- --------- ---------
TOTAL LIABILITIES 3,929,027 3,891,161 3,425,420
SHAREHOLDERS' EQUITY
- --------------------
Common stock, $1 stated value
Shares authorized: 50,000,000
Shares issued: 19,728,353 at March 31, 1997,
19,887,107 at December 31, 1996, and
18,506,074 at March 31, 1996 19,728 19,887 18,506
Capital surplus 264,192 271,001 249,821
Retained earnings 43,130 35,779 42,776
Net unrealized losses on investment securities
available for sale (10,181) (1,253) (1,967)
----------- ----------- -----------
TOTAL SHAREHOLDERS' EQUITY 316,869 325,414 309,136
----------- ----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $4,245,896 $4,216,575 $3,734,556
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
Page
<TABLE>
CNB BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except for share data)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
INTEREST INCOME
Loans, including fees:
Taxable $51,925 $46,537
Tax exempt 369 382
Real estate loans held for sale 94 3,232
Investment securities:
Taxable 24,727 19,038
Tax exempt 2,641 1,747
Federal funds sold and other short-term
money market investments 255 674
---------- ----------
Total interest income 80,011 71,610
INTEREST EXPENSE
Deposits 31,565 29,710
Short-term borrowings 7,293 4,293
FHLB advances and other long-term debt 2,753 2,450
---------- ----------
Total interest expense 41,611 36,453
---------- ----------
NET INTEREST INCOME 38,400 35,157
Provision for loan losses 2,758 1,662
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 35,642 33,495
NON-INTEREST INCOME
Service charges on deposit accounts 3,163 2,825
Insurance premiums and commissions 2,047 1,990
Trust and plan administration fees 1,995 1,409
Credit card and other non-interest fees on loans 1,220 1,097
Mortgage banking revenue 1,113 3,812
Investment products fees 830 1,083
Net securities gains 324 406
Other 2,454 1,414
---------- ----------
Total non-interest income 13,146 14,036
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits 17,345 15,795
Data processing and other services 2,931 2,954
Occupancy 2,272 2,100
Equipment 1,885 1,740
Advertising and promotion 977 1,170
Professional fees 974 935
Printing and supplies 950 893
Postage and freight 877 1,013
Other 3,116 5,523
---------- ----------
Total non-interest expense 31,327 32,123
---------- ----------
INCOME BEFORE INCOME TAXES 17,461 15,408
Income taxes 5,909 5,564
---------- ----------
NET INCOME $11,552 $9,844
========== ==========
NET INCOME PER SHARE $0.58 $0.50
========== ==========
AVERAGE COMMON AND EQUIVALENT SHARES OUTSTANDING 20,023,251 19,662,251
=========== ===========
</TABLE>
See notes to consolidated financial statements.
Page
<TABLE>
CNB BANCSHARES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
BEGINNING BALANCE $325,414 $311,331
Net income 11,552 9,844
Cash dividends declared (4,202) (3,753)
Issuance of common stock for:
Dividend reinvestment plan 949 923
Stock options exercised 358 163
Exercise and conversion of stock purchase
contracts and debentures 143 62
Other 196
Purchase and retirement of common stock (8,417) (3,946)
Change in unrealized gains/losses on
investment securities available for sale (8,928) (5,684)
-------- --------
ENDING BALANCE $316,869 $309,136
======== ========
</TABLE>
See notes to consolidated financial statements.
Page
<TABLE>
CNB BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $11,552 $9,844
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 3,222 3,874
Provision for loan losses 2,758 1,662
Amortization of premiums and discounts on securities 1,036 534
Net gains on securities (324) (406)
Loans originated for sale (18,022) (25,089)
Proceeds from sale of loans 20,227 24,482
Decrease in interest receivable and other assets, net of amortization 5,111 4,232
Decrease in interest payable and other liabilities (4,272) (617)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 21,288 18,516
--------- --------
INVESTING ACTIVITIES:
Proceeds from the maturity of investment securities available for sale 40,088 73,549
Proceeds from the sale of investment securities available for sale 135,442 141,713
Purchase of investment securities available for sale (233,941) (255,546)
Proceeds from the maturity of investment securities held to maturity 2,421 3,595
Purchase of investment securities held to maturity (17,423)
Net (increase) decrease in loans (33,203) 11,300
Purchase of premises and equipment (2,623) (3,580)
--------- --------
NET CASH USED BY INVESTING ACTIVITIES (91,816) (46,392)
--------- --------
FINANCING ACTIVITIES:
Net decrease in deposits (22,527) (5,949)
Net increase in short-term borrowings 43,899 7,204
Payment and maturity of long-term debt (36,819) (8,914)
Proceeds of long-term borrowings 57,210 10,000
Proceeds from exercise of stock options 358 163
Proceeds from common stock issued for dividend reinvestment plan 949 923
Purchase and retirement of common stock (8,417) (3,946)
Cash dividends paid (4,202) (3,753)
--------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 30,451 (4,272)
--------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (40,077) (32,148)
CASH AND CASH EQUIVALENTS AT JANUARY 1, 149,097 168,821
--------- --------
CASH AND CASH EQUIVALENTS AT MARCH 31, $109,020 $136,673
========= =========
Supplemental disclosure:
Cash paid for:
Interest $40,529 $38,139
Income taxes 60 953
Non-cash investing and financing activities:
Stock issued in exchange of debentures and equity contracts
and pursuant to employee benefit plans 150 261
</TABLE>
See notes to consolidated financial statements.
Page
CNB BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except for share data)
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 consolidated financial 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 complete
description of the Corporation's accounting policies and footnotes are contained
in the 1996 Annual Report to Shareholders.
NOTE 2: BUSINESS COMBINATIONS
On February 14, 1997, the Corporation issued 718,867 shares of its common
stock in exchange for all of the outstanding shares of BMC Bancshares, Inc.,
parent company for Bank of Mt. Carmel, Mt. Carmel, Illinois. The acquisition
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 operating results of this
acquisition.
Separate operating results of the combined entities for the periods prior to
the merger were as follows:
<TABLE>
<CAPTION>
Three Months
Ended
March 31, 1996
<S> <C>
Net Interest Income:
CNB Bancshares, Inc. $34,392
BMC Bancshares, Inc. 765
- --------------------------------------------------------------------------------
Combined $35,157
================================================================================
Net Income:
CNB Bancshares, Inc. $ 9,685
BMC Bancshares, Inc. 159
- --------------------------------------------------------------------------------
Combined $ 9,844
================================================================================
</TABLE>
Page
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
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, 1997:
U.S. Treasury $998 $(7) $991
Federal agencies:
Bonds and notes 262,845 $ 122 (3,108) 259,859
Mortgage-backed securities 995,357 2,027 (14,814) 982,570
State and municipal 60,988 928 (286) 61,630
Collateralized mortgage obligations 93,696 505 (1,976) 92,225
Other securities 25,926 84 (126) 25,884
- ------------------------------------------------------------------------------------------------
Total $1,439,810 $3,666 $(20,317) $1,423,159
================================================================================================
Held to Maturity at March 31, 1997:
Federal agencies:
Mortgage-backed securities $76,229 $83 $(2,472) $73,840
State and municipal 139,843 2,542 (962) 141,423
Collateralized mortgage obligations 29,449 (391) 29,058
- ------------------------------------------------------------------------------------------------
Total $245,521 $2,625 $(3,825) $244,321
================================================================================================
</TABLE>
The amortized cost and estimated market value of investment securities at
March 31, 1997, 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.
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
<S> <C> <C> <C> <C>
Maturity distribution
at March 31, 1997:
Due in one year or less $7,855 $7,935 $571 $576
Due after one year through five years 141,599 140,791 21,841 22,404
Due after five years through ten years 143,060 141,331 40,832 41,435
Due after ten years 33,222 33,313 76,599 77,008
Mortgage-backed securities 995,357 982,570 76,229 73,840
Collateralized mortgage obligations 93,696 92,225 29,449 29,058
- ------------------------------------------------------------------------------------------------
Total debt securities 1,414,789 1,398,165 245,521 244,321
Equity securities 25,021 24,994
- ------------------------------------------------------------------------------------------------
Total $1,439,810 $1,423,159 $245,521 $244,321
================================================================================================
</TABLE>
Proceeds from sales of investment securities available for sale during the
three months ended March 31, 1997, were $135,442. Gross gains and losses
realized on those sales were $534 and $210, respectively.
Page
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 4: IMPAIRED LOANS
At March 31, 1997, impaired loans totaled $14,334. An allowance for loan
losses of $1,448 was recorded for impaired loans totaling $10,520. At December
31, 1996, impaired loans totaled $18,172. An allowance of $1,653 was recorded
for impaired loans totaling $7,420. The average balance for impaired loans was
$14,099 for the three months ended March 31, 1997 .
NOTE 5: 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 $524
and $324 for the three months ended March 31, 1997 and 1996, respectively. This
expense was offset by counterparty reimbursements of $145 and $226 for the three
months ended March 31, 1997 and 1996, respectively.
At March 31, 1997, the notional amount of the interest rate caps was $215,000.
The caps are indexed to LIBOR with contract strike prices ranging from 5.50% to
6.00% and mature through the first quarter of 1999. The carrying value and
estimated market value of the caps at March 31, 1997, was $1,810 and $1,884,
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, 1997, the
Corporation had swaps with a notional value of $55,000. The agreements require
the Corporation to pay a fixed rate of interest ranging from 5.77% to 6.12% and
receive a variable rate based on three-month LIBOR. The agreements terminate on
or prior to January 12, 2001. The Corporation paid $822 while receiving $773
from these agreements during the three months ended March 31, 1997.
The Corporation is exposed to losses if a counterparty fails to make its
payments under a contract in which the Corporation is in a receiving status.
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, 1997, option forward contracts, if exercised, committed the
Corporation to sell $1,000 par value of U.S. Treasury securities at prices not
less than their carrying values during the second quarter of 1997. Fees
received from these contracts have been deferred until expiration, termination
or exercise of the contract.
Page
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 6: LONG-TERM DEBT
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1997 1996 1996
---- ---- ----
<S> <C> <C> <C>
Parent Company:
Convertible subordinated debentures, 7.50%, redemptions of
$1,125 annually beginning in 2001, balance due 2011 $5,879 $6,029 $6,473
Redeemable subordinated debentures, 9.50%, redeemed
August 1996 2,187
Notes payable, unsecured:
9.81%, payable $600 annually through 1996, balance due in
1997 2,400 2,400 3,000
Variable rate adjusted with changes in LIBOR, payable
$250 quarterly through 2000 (6.04%, 6.69% and 6.63%
at March 31, 1997, December 31, 1996, and
March 31, 1996, respectively) 4,250 4,500 5,200
Variable rate adjusted with changes in LIBOR, due 1997
(6.04% at March 31, 1997) 10,000
Subsidiaries:
Federal Home Loan Bank advances, due at various dates
through 2016 (weighted average rates of 5.58%, 5.56% and
5.89% at March 31, 1997, December 31, 1996 and
March 31, 1996, respectively) 168,640 158,640 122,813
Notes payable, revolving credit agreement, secured by finance
receivables, variable rate adjusted with changes in LIBOR
(6.06% at March 31, 1996, paid in October 1996) 14,247
Other, including capitalized leases 5,811 5,161 5,124
- -------------------------------------------------------------------------------------------------------
Total $196,980 $176,730 $159,094
=======================================================================================================
</TABLE>
Qualifying, unencumbered mortgage assets equal to at least 170 percent of the
aggregate amount of advances and Federal Home Loan Bank stock have been pledged
as collateral for the Federal Home Loan Bank advances.
Page
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 7: 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 material dilutive effect on net income per share. All
share data included in the consolidated financial statements, notes and
Management's Discussion and Analysis has been adjusted for stock dividends.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 "Earnings per Share." This statement simplifies the computation of
earnings per share and requires dual presentation of basic and diluted earnings
per share on the face of the income statement. This statement is effective for
financial statements issued for periods ending after December 15, 1997, with
earlier application not permitted.
The application of this standard would have resulted in earnings per share as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
Proforma basic net income per share $.58 $.51
Proforma diluted net income per share .57 .50
Reported net income per share .58 .50
</TABLE>
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollar amounts in thousands, except for share data)
OVERVIEW
- --------
Net income for the three months ended March 31, 1997, was $11,552, an increase
of 17.4% over the $9,844 earned in the same period of 1996. Net income per
share increased by 16.0% to $.58 for the three months ended March 31, 1997,
compared to $.50 for the three months ended March 31, 1996. The increased
earnings was due to growth in earning assets and revenues and control over
operating expenses. Net interest income increased $3,243, or 9.2%, over the
first three months of 1996 due to growth in earning assets of 13.7%. However,
the net interest margin declined from 4.16% for the first quarter of 1996 to
4.03% for the first quarter of 1997, primarily due to reduced loan yields.
The Corporation's total assets at March 31, 1997 were $4,245,896, which were
$29,321 greater than the $4,216,575 at December 31, 1996, and $511,340, or
13.7%, greater than total assets at March 31, 1996. Total loans of $2,305,271
at March 31, 1997, increased from $2,275,089 at December 31, 1996 and from
$2,050,198 one year ago.
Annualized returns on average assets and average shareholders' equity for the
three months ended March 31, 1997, were 1.10% and 14.27%, respectively, compared
with 1.06% and 12.85% for the same period of 1996.
Cash dividends of $.22 per share were declared during the first quarter of
1997, representing an increase of 10%, compared with $.20 per share, adjusted
for the 5% stock dividend declared September 10, 1996, during the same period of
1996. Total dividends declared for the first quarters of 1997 and 1996 were
$4,202 and $3,753, 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 $38,400 for the three months ended March 31, 1997, compared with
$35,157 for the same period in 1996. The increased net interest income was the
result of a 13.7% increase in average earning assets compared to the first
quarter of 1996, partially offset by a 13 basis point decline in the net
interest margin over the same period. Net interest income for the most recent
quarter was $227 less than the $38,627 recorded in the fourth quarter of 1996
due to the effects of a lower net interest margin offsetting a $96.9 million
increase in average earning assets.
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 margins were 4.03% and 4.16%,
respectively, for the three months ended March 31, 1997 and 1996. Average
earning assets for the three months ended March 31, 1997, increased to
$3,952,287 from $3,475,394 for the same period in 1996.
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NET INTEREST INCOME, CONTINUED:
- -------------------------------
Average loans increased $277 million to $2,289,459 for the first three months of
1997 compared to 1996 and represented 57.9% of earning assets in both periods.
Average investment securities increased $386 million during the first three
months of 1997 compared to 1996 and represented 41.5% and 36.1% of earning
assets for similar periods of 1997 and 1996, respectively. The securitization
of $235 million of residential mortgage loans during 1996 accounted for a
significant portion of the increase in the investment portfolio.
The decline in the net interest margin from the first and fourth quarters of
1996 was primarily due to declining yields on earning assets. Interest income
as a percentage of earning assets decreased 12 basis points to 8.24% during the
first quarter of 1997 compared to 8.36% during the same period one year prior
and 8.38% in fourth quarter 1996. Yields on loans declined 19 basis points to
9.17% during the first quarter of 1997 from the first quarter of 1996 as a
result of more competitive pricing. The yield on investment securities
increased from 6.89% for the first quarter of 1996 to 6.97% for the first
quarter of 1997. Interest expense as a percentage of earning assets increased
by 1 basis point from 4.20% to 4.21% from first quarter 1996 to first quarter
1997, respectively.
<TABLE>
NET INTEREST MARGIN
- --------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED
MARCH 31, DECEMBER 31, MARCH 31,
1997 1996 1996
<S> <C> <C> <C>
Yields (FTE)
Loans 9.17% 9.39% 9.36%
Securities 6.97 7.01 6.89
Other earning assets 6.05 5.99 7.48
---- ---- ----
Total earning assets 8.24 8.38 8.36
Cost of funds
Interest bearing deposits 4.64 4.60 4.65
Other interest bearing liabilities 5.34 5.32 5.52
---- ---- ----
Total interest bearing liabilities 4.81 4.77 4.80
---- ---- ----
Total interest expense to earning assets 4.21 4.23 4.20
- --------------------------------------------------------------------------------------
Net interest margin 4.03% 4.15% 4.16%
======================================================================================
</TABLE>
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 negative gap on March 31, 1997, of $95,879 which represented
2.4% of the $3,986,086 in earning assets at that date and, in the opinion of
management, represented a balanced position. Net interest income at financial
institutions with negative gaps tends to decrease in periods of rising interest
rates and increase
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NET INTEREST INCOME, CONTINUED:
- -------------------------------
as interest rates decline. Management also utilizes a simulation model to
measure the Corporation's net interest income volatility to changes in the level
of interest rates, interest rate spreads, the shape of the yield curve and
changing product growth patterns and investment strategies. Results of the
simulation model indicate that the Corporation's net interest income would be
affected by 2.20% or less should interest rates increase or decrease by up to
200 basis points.
NON-INTEREST INCOME
- -------------------
During the first three months of 1997, non-interest income was $13,146
compared to $14,036 reported for the same period in 1996. The first quarter of
1996 included net gains of $2,578 from the securitization of residential
mortgage loans and net securities gains of $324 were recorded during the first
three months of 1997 compared to $406 for the same period of 1996. Excluding net
loan securitization and securities gains, first quarter 1997 non-interest income
totaled $12,822, which represented an increase of 16.0% compared to the same
period of 1996. First quarter 1997 non-interest income was $784 less than
fourth quarter 1996 due to reduced net securities gains and seasonal factors.
<TABLE>
NON-INTEREST INCOME
- ----------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED
MARCH 31, INCREASE
1997 1996 (DECREASE)
<S> <C> <C> <C>
Service charges on deposit accounts $3,163 $2,825 $338
Insurance premiums and commissions 2,047 1,990 57
Trust and plan administration fees 1,995 1,409 586
Credit card and other non-interest fees on loans 1,220 1,097 123
Mortgage banking revenue 1,113 3,812 (2,699)
Investment products fees 830 1,083 (253)
Net securities gains 324 406 (82)
Other 2,454 1,414 1,040
- ----------------------------------------------------------------------------------------
Total non-interest income $13,146 $14,036 $(890)
========================================================================================
</TABLE>
Service charges on deposit accounts increased $338 or l2.0% due to increased
volumes and improved efforts to collect a greater percentage of assessable fees
but were $255 lower than in the fourth quarter of 1996. Insurance commissions
increased $57 for the first quarter of 1997 compared to 1996. Income from the
sale of credit life and disability insurance offered by the Corporation's
banking subsidiaries increased $46 or 5.7% due to improved sales penetration to
new loan customers. Casualty insurance premiums increased $100 or 12.1%.
Profit sharing bonuses received from insurance underwriters during the first
quarter of 1997, which are experience related and associated with policies
written during the prior year, were $108 less than payments received one year
prior. Trust fees increased $586 or 41.6% compared to the first three months of
1996 primarily due to benefit plan administration fees of $510
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NON-INTEREST INCOME, CONTINUED:
- -------------------------------
resulting from the May 31, 1996 acquisition of Small Parker & Blossom. Credit
card and other non-interest fees on loans increased $123 during the first three
months of 1997 compared to 1996 primarily due to increased credit card
transaction volumes. This revenue, which was seasonally higher in the fourth
quarter, was $342 lower than for the last quarter of 1996. Mortgage banking
revenues declined by $2,699 during the first three months of 1997 compared to
the same period of 1996. The Corporation securitized $162 million of
residential mortgage loans during the first quarter of 1996 resulting in net
gains of $2,578. Investment products fees decreased 23.4% to $830 due to
decreased brokered CD, annuity and mutual fund sales activity. Other income
increased to $2,454 during the three months ended March 31, 1997, from $1,414
for the comparable period of 1996. This increase is due in part to increased
revenues of $371 from the expiration of interest rate option contracts, $411
from a corporate-owned life insurance program and $188 from non-customer ATM
access fees, a new revenue source beginning in May 1996.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense, which includes personnel, occupancy costs, equipment and
other operating expenses was $31,327 for the three months ended March 31, 1997,
compared to $32,123 for the same period of 1996, a decrease of 2.5%. Non-
recurring charges of $2.3 million, primarily related to office closures, were
included in non-interest expenses for the first quarter of 1996. Excluding
these charges, non-interest expenses increased $1,487 or 5.0% from the three
months ended March 31, 1996. Non-interest expense was $1,378 lower than that
recorded in the fourth quarter of 1996.
<TABLE>
NON-INTEREST EXPENSE
- -------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED
MARCH 31, INCREASE
1997 1996 (DECREASE)
<S> <C> <C> <C>
Salaries and employee benefits $17,345 $15,795 $1,550
Data processing and other services 2,931 2,954 (23)
Occupancy 2,272 2,100 172
Equipment 1,885 1,740 145
Advertising and promotion 977 1,170 (193)
Professional fees 974 935 39
Printing and supplies 950 893 57
Postage and freight 877 1,013 (136)
Other 3,116 5,523 (2,407)
- -------------------------------------------------------------------------------------
Total non-interest expense $31,327 $32,123 $(796)
=====================================================================================
</TABLE>
Salaries and employee benefits increased $1,550 or 9.8% for the three month
period in 1997 over 1996. Performance-based incentives and commissions
increased $228 to $727 during the first three
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NON-INTEREST EXPENSE, CONTINUED:
- --------------------------------
months of 1997 and represented 4.2% of salaries and employee benefits expense
compared to 3.2% for the same period of 1996. The Corporation continues to
emphasize performance-based awards tied to net income per share and sales of
fee-based services. A portion of the salary expense increase is due to
increased staff from May 1996 acquisitions where prior periods were not
restated, including DuQuoin Bancorp, Small Parker & Blossom and Money One. The
remaining increase is generally due to normal salary increases and related
expenses associated with increased business activity. Occupancy and equipment
expenses increased 8.2% and 8.3%, respectively, during the first three months of
1997 as the Corporation was operating four additional finance offices and two
new non-banking subsidiaries compared to the same period of 1996. Reduced
credit card promotions resulted in advertising expense being reduced $193 or
16.5% from one year ago. Postage and freight expense decreased $136 or 13.4%
during the three months ended March 31, 1997, compared to the same period one
year ago. Other expenses decreased $2,407 during the first three months of 1997
compared to the same period of 1996. One-time charges of $1,983 related to the
closure of five offices recorded during first quarter 1996 accounted for most of
the decrease. FDIC assessments decreased $760 during the three months ended
March 31, 1997, compared to the same period of 1996 as a result of assessment
rate modifications approved in September 1996. Operating expenses as a
percentage of revenues, commonly referred to as the efficiency ratio, improved
from 63% during the first three months of 1996 to 60% during the first three
months of 1997.
INCOME TAX EXPENSE
- ------------------
Income tax expense was $5,909 for the three months ended March 31, 1997,
compared with $5,564 for the same period in 1996. The effective tax rate was
33.8% and 36.1% for the three months ended March 31, 1997 and 1996,
respectively. The decline in the effective tax rate is attributable to an
increase in income from tax exempt sources, including municipal investments and
corporate owned-life insurance. Tax exempt interest income from municipal
securities increased $894 during the first quarter of 1997 as additional
investments were made. In addition, investments in corporate-owned life
insurance policies on certain officers generated $411 of additional income
during the most recent quarter compared to the same period one year ago.
LOANS
- -----
Loans were $2,305,271 at March 31, 1997, compared to $2,275,089 at December
31, 1996, and $2,050,198 at March 31, 1996. The loan portfolio increased
$30,182 or 5.3% annualized from year-end 1996 and $255,073 or 12.4% from one
year ago. Growth was experienced in all loans categories during the first
quarter of 1997 compared to year-end 1996 and one year prior and the mix of the
loan portfolio remained relatively constant over the last twelve months.
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LOANS, CONTINUED:
- -----------------
Commercial loans increased to $681,247 at March 31, 1997, compared to
$679,609 at December 31, 1996 and $575,450 at March 31, 1996. As a percentage
of total loans, commercial loans accounted for 29.6% of the loan portfolio at
March 31, 1997 compared to 28.1% at March 31, 1996.
<TABLE>
LOANS OUTSTANDING
- ----------------------------------------------------------------------------------------
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1997 1996 1996
<S> <C> <C> <C>
Commercial, industrial and agricultural
production loans $681,247 $679,609 $575,450
Tax exempt loans 22,411 21,756 21,239
Real estate mortgage loans:
Commercial and agricultural 191,759 171,715 129,253
Construction 69,314 67,679 61,174
Residential 744,693 740,647 726,077
Consumer loans 595,847 593,683 537,005
- ----------------------------------------------------------------------------------------
Total loans $2,305,271 $2,275,089 $2,050,198
========================================================================================
</TABLE>
Real estate mortgage loans, which consist of residential, commercial and
agricultural loans secured by real estate and construction loans, totaled
$1,005,766 at March 31, 1997, compared to $916,504 one year prior. Residential
mortgage loans increased $18,616 or 2.6% after the Corporation securitized
approximately $73 million of adjustable loans during the third quarter of 1996.
Residential mortgage loans were 32.3% of total loans at March 31, 1997 compared
to 35.4% one year prior. Demand for new residential mortgage loans remained
strong throughout most of 1996 but the Corporation sold a significant portion of
that production. Most production was also sold in the current quarter but
volume was lower than prior periods. Current asset-liability management policy
dictates that most adjustable rate and fixed rate loans with original maturities
exceeding 15 years are sold in the secondary market or securitized. Fixed rate
balloon and 15-year mortgage loans may be sold, securitized and carried in the
available for sale investment portfolio or held in the loan portfolio, depending
on market conditions at the time the loan is originated. While the Corporation
may sell certain loans in the secondary market, servicing rights are generally
retained. At March 31, 1997, $864,138 of residential mortgage loans originated
by the Corporation's banks and subsequently sold in the secondary market were
being serviced. In addition to residential real estate mortgages reported as
loans, the Corporation held $4,252 and $6,457 of real estate loans for sale at
March 31, 1997, and December 31, 1996, respectively. These loans were $12,912
at March 31, 1996.
Consumer loans, which include installment, home equity and credit card loans,
increased $2,164 and $58,842 from December 31, 1996 and March 31, 1996,
respectively. Of this increase from one year ago, $19.2 million is the result
of 1996 acquisitions. Installment loan balances have continued to increase
during 1997 primarily due to indirect automobile loan applications. Direct
installment loan activity
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LOANS, CONTINUED:
- -----------------
slowed during the first quarter but will be promoted more heavily during the
second quarter. Home equity and other lines of credit outstandings increased
$2,460 and $24,244 from year-end 1996 and one year ago, respectively. Credit
card loans have decreased to $31,423 from $34,523 at December 31, 1996 and
$34,104 at March 31, 1996. Management has decided not to offer any significant
credit card solicitations in light of the increase in credit card delinquencies
being experienced nationally by the credit card industry.
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% of total loans.
ASSET QUALITY
- -------------
The allowance for loan losses is maintained at a level considered adequate by
management to absorb potential loan losses by evaluations of the loan portfolio
on a continuing basis. This evaluation by management includes 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 the financial condition of specific borrowers and current
economic conditions.
<TABLE>
SUMMARY OF ALLOWANCE FOR LOAN LOSSES
- --------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
<S> <C> <C>
Beginning balance $31,262 $29,406
Provision for loan losses 2,758 1,662
Loans charged-off (2,499) (2,084)
Recoveries 523 617
- --------------------------------------------------------------------------------
Ending balance $32,044 $29,601
================================================================================
- --------------------------------------------------------------------------------
Percent to total loans 1.39% 1.44%
================================================================================
</TABLE>
The allowance for loan losses was $32,044 at March 31, 1997, representing
1.39% of total loans, compared with $31,262 at December 31, 1996, which
represented 1.37% of total loans. At March 31, 1996, the allowance for loan
losses was $29,601 and represented 1.44% of total loans. Annualized net charge-
offs to average loans was .35% during the first three months of 1997 compared to
.29% for the same period of 1996. The provision for loan losses to average
loans was .48% and .33% for the three months ended March 31, 1997 and 1996,
respectively. The allowance for loan losses to non-performing loans was 165% at
March 31, 1997, compared to 144% at December 31, 1996, and 145% at March 31,
1996.
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
ASSET QUALITY, CONTINUED:
- -------------------------
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.
Non-performing loans consist of loans classified as troubled debt
restructurings and loans on non-accrual status. As indicated in the following
table, the Corporation's non-performing loans as of March 31, 1997, totaled
$19,403, a decrease of $2,363 from December 31, 1996. The non-performing loans
to total loans ratio was .84% on March 31, 1997, as compared to .96% on December
31, 1996, and 1.00% on March 31, 1996. Total risk assets equaled 1.09% of loan-
related assets at March 31, 1997, compared to 1.20% at December 31, 1996. In
addition to loans classified as risk assets, there were other loans totaling
$4,879 at March 31, 1997, where the borrowers were 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 risk
assets.
<TABLE>
NON-PERFORMING AND RISK ASSETS
- ------------------------------------------------------------------------------------------
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1997 1996 1996
<S> <C> <C> <C>
Non-accrual loans:
Commercial, agricultural and tax exempt $8,108 $10,112 $11,507
Real estate mortgage 7,750 8,437 4,250
Consumer 2,110 1,960 3,666
---------- ---------- ----------
Total non-accrual 17,968 20,509 19,423
Restructured loans 1,435 1,257 984
---------- ---------- ----------
Total non-performing loans 19,403 21,766 20,407
Foreclosed properties 1,914 1,721 2,954
---------- ---------- ----------
Total non-performing assets 21,317 23,487 23,361
90 days or more past due:
Commercial, agricultural and tax exempt 651 267 433
Real estate mortgage 1,686 2,033 3,138
Consumer 1,454 1,457 1,034
---------- ---------- ----------
Total 90 days or more past due 3,791 3,757 4,605
---------- ---------- ----------
Total risk assets $25,108 $27,244 $27,966
==========================================================================================
- ------------------------------------------------------------------------------------------
Risk assets to loan-related assets 1.09% 1.20% 1.36%
==========================================================================================
</TABLE>
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
DEPOSITS AND OTHER SOURCES OF FUNDS
- -----------------------------------
Total deposits were $3,092,318 at March 31, 1997, compared to $3,114,730 and
$2,875,885 at December 31, 1996, and March 31, 1996, respectively. Since
December 31, 1996, non-interest bearing deposits, which were seasonally high at
year-end, declined by $26,675 and interest bearing deposits increased by $4,263.
Large certificates of deposits declined $24,666 during this period, as market
rates changed and the Corporation replaced this funding source with less
expensive short-term borrowings. Non-interest bearing deposits increased from
March 31, 1996, by $13,081 while interest bearing deposits increased by
$203,352. 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 and savings
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, which play a key role in funding
earning assets, were $522,464, $530,261 and $273,006 at March 31, 1997, December
31, 1996, and March 31, 1996, respectively. 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 $196,980 at March 31, 1997, compared to $176,730 at
December 31, 1996, and $159,094 at March 31, 1996. Advances from the Federal
Home Loan Bank accounted for $168,640 of total long-term debt at March 31, 1997.
INVESTMENT SECURITIES
- ---------------------
Total investment securities available for sale and held to maturity
represented 41.9% of earning assets at March 31, 1997, compared to 41.3% and
40.1% at December 31, 1996, and March 31, 1996, respectively. The portfolio has
continued to shift toward investments in mortgage-backed securities,
predominately underwritten to the standards of, and guaranteed by government
sponsored enterprises. 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 4.1 years and 4.9 years, respectively,
at March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity is a measure of the Corporation's ability to meet its customers'
present and future deposit withdrawals and/or 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.
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED:
- -------------------------------------------
Liquidity is provided by projecting credit demand and other financial needs
and then maintaining sufficient funding sources and assets readily convertible
into cash to meet these requirements. The Corporation has provided for its
liquidity needs by maintaining adequate balances in money market assets, through
growth in core deposits, maturing loans and investments in its securities
portfolio and by maintaining various short-term borrowing sources. At March 31,
1997, the Corporation had $261,022 in investment securities maturing within one
year. The Corporation additionally has federal funds lines and other borrowing
sources available to it and its subsidiary banks. Investment securities
maturing within one year and unused borrowing sources are considered by
management to provide adequate liquidity in view of projected needs. The Parent
Company's liquidity is provided by dividends from its subsidiaries and a $20,000
bank line of credit of which $10,000 was being used at March 31, 1997.
The Corporation continues to maintain a strong capital position which supports
its current needs and provides a sound foundation to support further expansion.
Total shareholders' equity at March 31, 1997, was $316,869, compared to $325,414
at December 31, 1996 and $309,136 at March 31, 1996. The decline in
shareholders' equity from December 31, 1996 of $8,545 was primarily due to an
$8,928 decline in the fair value of investment securities available for sale,
net of taxes. Additionally, the Corporation purchased 214,972 shares of its
stock at a cost of $8,417 during the first quarter of 1997. The Corporation and
its banking subsidiaries are subject to various regulatory capital requirements
administered by the federal banking agencies. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Corporation and
its banking subsidiaries must meet specific capital guidelines that involve
quantitative measures of their respective assets, liabilities, and certain off-
balance-sheet items as calculated under regulatory accounting practices.
Capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Corporation and its banking subsidiaries to maintain minimum amounts
and ratios of total and Tier 1 capital (as defined in the regulations) to risk-
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, that as of March 31, 1997, the
Corporation and its banking subsidiaries met all capital adequacy requirements
to which it was subject.
Page
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED:
- -------------------------------------------
As of December 31, 1996, the most recent notification from regulatory agencies
categorized the subsidiary banks as well capitalized under the regulatory
framework for prompt corrective action. There are no conditions or events since
that notification that management believes have changed the subsidiary banks'
categories. The Corporation's actual and minimum required capital amounts and
ratios as mandated by the regulators at March 31, 1997, include:
<TABLE>
<CAPTION>
REQUIREMENTS TO BE
MINIMUM CLASSIFIED
ACTUAL REQUIREMENTS AS "WELL CAPITALIZED"
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
<S> <C> <C> <C> <C> <C> <C>
Total Capital to risk weighted assets $335,633 13.13% $204,521 8.00% $255,651 10.00%
Tier 1 Capital to risk weighted assets 297,798 11.65% 102,260 4.00% 153,391 6.00%
Tier 1 Capital to average assets 297,798 7.15% 166,523 4.00% 208,154 5.00%
(leverage ratio)
</TABLE>
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 22, 1997, the Corporation held its Annual Meeting of Shareholders.
The election of directors was voted upon. There were 19,813,693 shares
outstanding on the March 6, 1997, record date. The following directors received
votes as noted and were elected to terms to expire in 2000:
Affirmative Withheld
----------- --------
James J. Giancola 16,327,236 56,275
Robert L. Koch, II 16,322,091 61,420
Lawrence J. Kremer 16,244,192 139,319
Paul G. Wade 16,307,974 75,537
Continuing directors and the date of the expiration of their term in office
is as follows:
1998 1999
---- ----
Burkley F. McCarthy H. Lee Cooper
Thomas W. Traylor John D. Engelbrecht
Robert K. Ruxer
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
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 7, 1997 by /s/ James J. Giancola
------------------ -----------------------------------------
James J. Giancola,
President and Chief Executive Officer
Date May 7, 1997 by /s/ Ralph L. Alley
------------------ -----------------------------------------
Ralph L. Alley, Senior Vice President,
Controller and Treasurer
(Principal Accounting Officer)
Page
EXHIBIT INDEX
Reg. S-K
Exhibit No. Description of Exhibit Page
- ----------- ---------------------- ----
27 Financial Data Schedule 24
Page
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
CNB Bancshares, Inc.'s consolidated balance sheet as of March 31, 1997
and the consolidated statement of income for the three months ended
March 31, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 101137
<INT-BEARING-DEPOSITS> 633
<FED-FUNDS-SOLD> 7250
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1423159
<INVESTMENTS-CARRYING> 245521
<INVESTMENTS-MARKET> 244321
<LOANS> 2309523
<ALLOWANCE> 32044
<TOTAL-ASSETS> 4245896
<DEPOSITS> 3092318
<SHORT-TERM> 604169
<LIABILITIES-OTHER> 35560
<LONG-TERM> 196980
0
0
<COMMON> 19728
<OTHER-SE> 297141
<TOTAL-LIABILITIES-AND-EQUITY> 4245896
<INTEREST-LOAN> 52294
<INTEREST-INVEST> 27368
<INTEREST-OTHER> 349
<INTEREST-TOTAL> 80011
<INTEREST-DEPOSIT> 31565
<INTEREST-EXPENSE> 41611
<INTEREST-INCOME-NET> 38400
<LOAN-LOSSES> 2758
<SECURITIES-GAINS> 324
<EXPENSE-OTHER> 31327
<INCOME-PRETAX> 17461
<INCOME-PRE-EXTRAORDINARY> 17461
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11552
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
<YIELD-ACTUAL> 4.03
<LOANS-NON> 17968
<LOANS-PAST> 3791
<LOANS-TROUBLED> 1435
<LOANS-PROBLEM> 4879
<ALLOWANCE-OPEN> 31262
<CHARGE-OFFS> 2499
<RECOVERIES> 523
<ALLOWANCE-CLOSE> 32044
<ALLOWANCE-DOMESTIC> 30675
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1369
</TABLE>
