UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1996 Commission File Number: 0-17501
CNB BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 14-1709485
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
10-24 North Main Street, P.O. Box 873, Gloversville, New York, 12078
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 773-7911
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding in each Issuer's classes of
common stock, as of the latest practicable date:
Number of Shares Outstanding
Class of Common Stock as of April 29, 1996
$5.00 par value 800,000
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1 Consolidated interim financial statements (unaudited):
Consolidated statements of income for the three months
ending March 31, 1996 and 1995 1
Consolidated statements of financial condition as of
March 31, 1996 and December 31, 1995 2
Consolidated statements of cash flows for the three
months ending March 31, 1996 and 1995 3
Notes to consolidated financial statements 4
Item 2 Management's discussion and analysis
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 - none
Item 5 Other information - none
Item 6 (a) Exhibits - not applicable
(b) Reports on Form 8-K - none
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
3 MONTHS ENDED
MARCH 31,
1996 1995
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $2,441,157 $2,319,331
Interest on federal funds sold 81,055 59,460
Interest and dividends on securities available for sale 767,820 727,910
Interest and dividends on securities held to maturity 459,437 424,442
Total interest income 3,749,469 3,531,143
INTEREST EXPENSE:
Interest on deposits:
Certificates and time deposits of $100,000 or more 409,926 367,241
Regular savings, N.O.W. and money market accounts 530,387 495,701
Other time deposits 739,645 568,942
Interest on securities sold under agreements to repurchase 4,300 12,012
Interest on other borrowed money 0 1,067
Total interest expense 1,684,258 1,444,963
Net interest income 2,065,211 2,086,180
Provision for loan losses 30,000 75,000
Net interest income after provision for loan losses 2,035,211 2,011,180
OTHER INCOME:
Income from fiduciary activities 26,980 33,275
Service charges on deposit accounts 79,056 78,409
Other income 59,913 53,510
Total other income 165,949 165,194
OTHER EXPENSES:
Salaries and employee benefits 547,743 525,003
Occupancy expense, net 82,610 60,301
Furniture and equipment expense 77,054 65,977
External data processing expense 101,999 101,490
F.D.I.C. insurance expense 500 90,996
Printing, stationery and supplies 39,186 37,900
Other expenses 254,494 208,813
Total other expenses 1,103,586 1,090,480
Income before income taxes 1,097,574 1,085,894
Applicable income taxes 326,357 322,730
NET INCOME $771,217 $763,164
Net income and dividends per common share(800,000 shares):
Net income $0.96 $0.95
Dividends 0.37 0.34
See accompanying notes to consolidated interim financial statements
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<CAPTION>
ASSETS 3/31/96 12/31/95
<S> <C> <C>
Cash and due from banks:
Non-interest bearing $ 6,710,127 $ 8,090,358
Federal funds sold 9,200,000 8,300,000
Available for sale securities, at fair value
U.S. Treasury and Other U.S. Government agencies 31,287,483 31,205,424
Collateralized mortgage obligations:
U.S. Government agencies 8,752,986 9,090,097
Privately-issued 175,027 286,288
Obligations of states & political subdivisions 9,842,643 10,168,336
Nonmarketable equity securities 240,000 150,000
Total available for sale securities 50,298,139 50,900,145
Held to maturity securities(approximate fair value at
3/31/96 - $32,260,844; at 12/31/95 - $27,653,665)
U.S. Government agencies 18,864,253 15,198,065
Obligations of states & political subdivisions 12,859,779 11,565,393
Total held to maturity securities 31,724,032 26,763,458
Loans 113,927,154 111,457,153
Unearned income (7,040,416) (6,982,989)
Allowance for loan losses (1,524,598) (1,505,159)
Net loans 105,362,140 102,969,005
Premises and equipment 2,269,373 2,109,868
Accrued interest receivable 1,756,831 1,497,789
Other assets 977,231 885,560
Total assets $208,297,873 $201,516,183
LIABILITIES
Deposits:
Demand (non interest bearing) $18,206,075 $17,119,532
Regular savings, N.O.W. and money market accounts 76,042,305 74,407,969
Certificates and time deposits of $100,000 or more 32,762,054 28,520,079
Other time deposits 53,812,992 54,300,627
Total deposits 180,823,426 174,348,207
Securities sold under agreements to repurchase 504,371 825,137
Other liabilities 613,722 363,461
Total liabilities 181,941,519 175,536,805
STOCKHOLDERS' EQUITY
Common stock, $5 par value, 2,000,000 shares
authorized, 800,000 shares issued and outstanding
in 1996 and 1995 4,000,000 4,000,000
Surplus 4,000,000 4,000,000
Undivided profits 18,079,879 17,604,662
Net unrealized gain on available for sale
securities(net of tax effect) 276,475 374,716
Total stockholders' equity 26,356,354 25,979,378
Total liabilities and stockholders' equity $208,297,873 $201,516,183
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
3 MONTHS ENDED
MARCH 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 771,217 $ 763,164
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Increase in interest receivable (259,042) (168,748)
(Increase) decrease in other assets 36,293 (584,656)
(Increase) decrease in prepaid expenses 17,803 (166,586)
Increase in interest payable 13,776 141,837
Increase in accrued taxes 228,744 223,179
Increase in other liabilities 7,741 25,660
(Benefit) expense for deferred taxes (15,573) 4,423
Depreciation 75,778 53,791
Amortization of premiums/discounts on securities, net 38,372 44,434
Provision for loan losses 30,000 75,000
Total adjustments 173,892 (351,666)
Net cash provided by operating activities 945,109 411,498
Cash flows from investing activities:
Purchase of securities held to maturity (7,121,394) (1,956,925)
Purchase of securities available for sale (3,328,246) (1,205,440)
Proceeds from matured securities held to maturity 2,148,926 551,386
Proceeds from matured securities available for sale 3,736,681 1,926,329
Net increase in federal funds sold (900,000) (600,000)
Net increase in loans (2,484,477) (2,474,615)
Capital expenditures (235,283) (222,030)
Net cash used by investing activities (8,183,793) (3,981,295)
Cash flows from financing activities:
Net increase in deposits 6,475,219 2,659,669
Increase (decrease) in securities sold under agreement to repurchase (320,766) 183,187
Payment of dividends (296,000) (272,000)
Net cash provided by financing activities 5,858,453 2,570,856
Net decrease in cash and cash equivalents (1,380,231) (998,941)
Cash and cash equivalents beginning of period 8,090,358 6,656,723
Cash and cash equivalents end of period $6,710,127 $5,657,782
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $1,670,482 $1,303,126
Income taxes 109,209 92,695
Supplemental schedule of noncash investing activities:
Net reduction in loans resulting from the transfer to real estate owned 61,342 0
Net decrease in the unrealized loss on available for sale securities
(net of deferred tax reduction of $371,125 at 3/31/95) 0 538,346
Net decrease in the unrealized gain on available for sale securities
(net of deferred tax reduction of $68,852 at 3/31/96) 98,241 0
See accompanying notes to consolidated interim financial statements
</TABLE>
CNB BANCORP, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
1. FINANCIAL STATEMENT PRESENTATION
The accounting and reporting policies of CNB Bancorp, Inc. (the
Company) and City National Bank and Trust Company (subsidiary Bank)
conform to generally accepted accounting principles in a consistent
manner and are in accordance with the general practices within the
banking field. Amounts in the prior period's consolidated financial
statements are reclassified, whenever necessary, to conform to the
presentation in the current period's consolidated financial
statements.
In the opinion of CNB Bancorp, Inc., the accompanying unaudited
consolidated financial statements contain all adjustments necessary
to present fairly the consolidated financial position as of March 31,
1996 and December 31, 1995, and the results of operations and the
changes in cash flows for the three months ended March 31, 1996 and
1995. All accounting adjustments made for these periods were of a
normal recurring nature. The accompanying interim consolidated
financial statements should be read in conjunction with CNB Bancorp,
Inc.'s consolidated year-end financial statements including notes
thereto, which are included in CNB Bancorp, Inc.'s 1995 Annual Report
and Form 10-K.
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 duly authorized.
CNB BANCORP, INC.
April 29, 1996 By /s/ William N. Smith
Date William N. Smith
Chairman of the Board, President
and Chief Executive Officer
April 29, 1996 By /s/ George A. Morgan
Date George A. Morgan
Vice President and Secretary
(Principal Financial Officer)
CNB BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL REVIEW:
Liquidity:
There have been no trends or demands that have affected the Company's
or the subsidiary Bank's liquidity position in any material way
during the first three months of 1996. Funds from repayment of loans,
maturing and available for sale securities, and growth of deposit
accounts are available to satisfy any normal needs that may arise.
Capital Resources:
The subsidiary Bank is currently constructing a new branch office in
the Town of Perth, Fulton County at an approximate total cost of
$500,000. It is not anticipated that the cost of this new branch will
materially effect capital or future earnings of the Company or the
subsidiary Bank.
Stockholder's equity to total assets decreased slightly during the
first three months of 1996 from 12.9% at December 31, 1995 to 12.7%
at March 31, 1996. The subsidiary Bank has experienced loan growth of
approximately $2.4 million during the first three months of 1996.
This growth in loans was funded by an increase in deposits of $6.5
million. The remaining growth in deposits was used to increase
liquidity with increases in federal funds sold and securities.
As of December 31, 1990, banks were required to report new risk-based
capital ratios that require bank holding companies to meet a ratio of
qualifying total capital to risk-weighted assets. The table below
shows the Companys' current ratios, December 31, 1995 ratios and the
current regulatory guideline ratios as established by the Federal
Reserve Board.
<TABLE>
Regulatory
3/31/96 12/31/95 Guidelines
<S> <C> <C> <C>
Total risk based capital to net risk weighted assets 25.3% 25.6% 8.0%
Tier 1 risk based capital to net risk weighted assets 24.1 24.4 4.0
Leverage ratio (Tier 1/adjusted total assets) 12.5 12.7 3.0
</TABLE>
No significant events have occurred during the current quarter to
materially impact the Companys' capital.
Results of Operations:
Most Recent Quarter and Same Quarter in Preceding Year:
Total interest income for the first quarter of 1996 increased 6.2%
from the corresponding period of 1995, while total interest expense
increased by 16.6% from the corresponding period of 1995. Net interest
income decreased 1.0% from the prior year period reflecting the
continued effect of narrower margins between interest earning assets
and interest bearing liabilities. The provision for loan losses was
down 60.0% from the prior year period. Net charge-offs decreased
$4,134 from the prior year period, a decline of 28.1%. The allowance
for loan losses as a percent of loans outstanding at March 31, 1996
was 1.43% compared to 1.36% at March 31, 1995. Non-interest income was
virtually unchanged from the prior year period with lower fiduciary
fees being offset by increases in service charges and other income.
Non-interest expense increased 1.2% due to increases in salaries and
employee benefits, occupancy and furniture and equipment expense and
other expenses partially offset by a reduction in F.D.I.C. insurance
expense. The higher staff expenses were due to higher insurance
expenses and normal salary adjustments. The higher occupancy and
furniture and equipment expenses were due to higher depreciation
amounts and higher utility costs in 1996. The higher other expenses
were due mainly to higher legal and professional fees. Net income was
virtually unchanged showing an increase of 1.1% over 1995's comparable
period.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 6,710,127
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 9,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 50,298,139
<INVESTMENTS-CARRYING> 31,724,032
<INVESTMENTS-MARKET> 32,260,844
<LOANS> 106,886,738
<ALLOWANCE> 1,524,598
<TOTAL-ASSETS> 208,297,873
<DEPOSITS> 180,823,426
<SHORT-TERM> 504,371
<LIABILITIES-OTHER> 613,722
<LONG-TERM> 0
0
0
<COMMON> 4,000,000
<OTHER-SE> 22,356,354
<TOTAL-LIABILITIES-AND-EQUITY> 208,297,873
<INTEREST-LOAN> 2,441,157
<INTEREST-INVEST> 1,227,257
<INTEREST-OTHER> 81,055
<INTEREST-TOTAL> 3,749,469
<INTEREST-DEPOSIT> 1,679,958
<INTEREST-EXPENSE> 1,684,258
<INTEREST-INCOME-NET> 2,065,211
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,103,586
<INCOME-PRETAX> 1,097,574
<INCOME-PRE-EXTRAORDINARY> 1,097,574
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 771,217
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.96
<YIELD-ACTUAL> 4.29
<LOANS-NON> 678,946
<LOANS-PAST> 327,602
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,703,936
<ALLOWANCE-OPEN> 1,505,159
<CHARGE-OFFS> 15,434
<RECOVERIES> 4,873
<ALLOWANCE-CLOSE> 1,524,598
<ALLOWANCE-DOMESTIC> 1,076,963
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 447,635
</TABLE>
