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 September 30, 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 October 28, 1996
- --------------------- ----------------------------
$5.00 par value 800,000
CNB BANCORP, INC. AND SUBSIDIARY
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
- -------
Item 1 Consolidated interim financial statements (unaudited):
Consolidated statements of income for the three months
ending September 30, 1996 and 1995 and the nine months
ending September 30, 1996 and 1995 1
Consolidated statements of financial condition as of
September 30, 1996 and December 31, 1995 2
Consolidated statements of cash flows for the nine months
ending September 30, 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>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
3 MONTHS ENDED 9 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME: ----------- ----------- ----------- -----------
Interest and fees on loans $2,330,582 $2,352,274 $7,168,550 $7,108,943
Interest on federal funds sold 121,551 93,640 291,039 237,443
Interest on balances due from depository institutions 199 0 2,806 0
Interest and dividends on securities available for sale 884,964 754,766 2,472,899 2,208,279
Interest and dividends on securities held to maturity 531,030 437,417 1,499,896 1,320,407
----------- ----------- ----------- -----------
Total interest income 3,868,326 3,638,097 11,435,190 10,875,072
INTEREST EXPENSE:
Interest on deposits:
Certificates and time deposits of $100,000 or more 557,056 387,757 1,469,255 1,199,909
Regular savings, N.O.W. and money market accounts 519,786 541,501 1,562,864 1,535,812
Other time deposits 699,405 748,027 2,148,027 2,020,320
Interest on securities sold under agreements to repurchase 2,181 2,281 9,004 17,909
Interest on other borrowed money 0 406 0 1,622
----------- ----------- ----------- -----------
Total interest expense 1,778,428 1,679,972 5,189,150 4,775,572
Net interest income 2,089,898 1,958,125 6,246,040 6,099,500
Provision for loan losses 80,000 65,000 140,000 215,000
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 2,009,898 1,893,125 6,106,040 5,884,500
OTHER INCOME:
Income from fiduciary activities 26,725 25,013 81,052 92,492
Service charges on deposit accounts 93,718 83,617 264,453 244,468
Other income 83,409 80,837 197,083 252,632
----------- ----------- ----------- -----------
Total other income 203,852 189,467 542,588 589,592
OTHER EXPENSES:
Salaries and employee benefits 573,902 533,531 1,666,932 1,583,670
Occupancy expense, net 63,710 68,079 208,850 185,722
Furniture and equipment expense 66,494 72,339 216,832 227,443
External data processing expense 102,163 100,044 312,870 303,189
F.D.I.C. insurance expense 500 (8,873) 1,500 174,130
Printing, stationery and supplies 28,978 30,004 105,005 109,824
Other expenses 227,297 206,379 710,623 638,322
----------- ----------- ----------- -----------
Total other expenses 1,063,044 1,001,503 3,222,612 3,222,300
----------- ----------- ----------- -----------
Income before income taxes 1,150,706 1,081,089 3,426,016 3,251,792
Applicable income taxes 340,813 323,703 1,022,137 969,098
----------- ----------- ----------- -----------
NET INCOME $809,893 $757,386 $2,403,879 $2,282,694
=========== =========== =========== ===========
Net income and dividends per common share(800,000 shares):
Net income $1.01 $0.94 $3.00 $2.85
Dividends 0.37 0.34 1.11 1.02
See accompanying notes to consolidated interim financial statements
</TABLE>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<CAPTION>
ASSETS 9/30/96 12/31/95
- ------ ------------ ------------
<S> <C> <C>
Cash and due from banks:
Non-interest bearing $5,919,951 $8,090,358
Interest bearing 18,386 0
Federal funds sold 9,000,000 8,300,000
Available for sale securities, at fair value
U.S. Treasury and Other U.S. Government agencies 36,498,337 31,205,424
Collateralized mortgage obligations:
U.S. Government agencies 9,487,637 9,090,097
Privately-issued 2,646 286,288
Obligations of states & political subdivisions 10,317,342 10,168,336
Nonmarketable equity securities 834,800 150,000
------------ ------------
Total available for sale securities 57,140,762 50,900,145
Held to maturity securities(approximate fair value at 9/30/96 -
$34,160,601; at 12/31/95 - $27,653,665)
U.S. Government agencies 20,890,281 15,198,065
Obligations of states & political subdivisions 12,936,867 11,565,393
------------ ------------
Total held to maturity securities 33,827,148 26,763,458
Loans 113,686,841 111,457,153
Unearned income (8,002,039) (6,982,989)
Allowance for loan losses (1,585,436) (1,505,159)
------------ ------------
Net loans 104,099,366 102,969,005
Premises and equipment 2,635,659 2,109,868
Accrued interest receivable 1,790,874 1,497,789
Other assets 1,052,176 885,560
------------ ------------
Total assets $215,484,322 $201,516,183
LIABILITIES ============ ============
- -----------
Deposits:
Demand (non interest bearing) $18,844,131 $17,119,532
Regular savings, N.O.W. and money market accounts 74,591,988 74,407,969
Certificates and time deposits of $100,000 or more 41,554,459 28,520,079
Other time deposits 52,478,826 54,300,627
------------ ------------
Total deposits 187,469,404 174,348,207
Securities sold under agreements to repurchase 138,227 825,137
Other liabilities 600,768 363,461
------------ ------------
Total liabilities 188,208,399 175,536,805
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 19,120,541 17,604,662
Net unrealized gain on available for sale securities(net of tax effect) 155,382 374,716
------------ ------------
Total stockholders' equity 27,275,923 25,979,378
------------ ------------
Total liabilities and stockholders' equity $215,484,322 $201,516,183
============ ============
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
9 MONTHS ENDED
SEPTEMBER 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $2,403,879 $2,282,694
Adjustments to reconcile net income to cash provided by
operating activities:
Increase in interest receivable (293,085) (413,059)
Decrease in other assets 166,392 131,495
(Increase) decrease in prepaid expenses 27,841 (127,526)
Increase in interest payable 155,361 57,311
Decrease in accrued taxes (1,140) (28,992)
Increase in other liabilities 83,086 47,007
Benefit for deferred taxes (45,014) (14,845)
Depreciation 201,041 182,474
Amortization of premiums/discounts on securities, net 121,390 138,966
Provision for loan losses 140,000 215,000
----------- -----------
Total adjustments 555,872 187,831
Net cash provided by operating activities 2,959,751 2,470,525
Cash flows from investing activities:
Purchase of securities held to maturity (12,670,535) (6,488,985)
Purchase of securities available for sale (18,601,235) (8,681,286)
Proceeds from matured securities held to maturity 5,560,315 5,998,088
Proceeds from matured securities available for sale 11,916,546 6,038,504
Net increase in federal funds sold (700,000) (4,100,000)
Net increase in loans (1,436,318) (1,710,150)
Capital expenditures (726,832) (332,908)
----------- -----------
Net cash used by investing activities (16,658,059) (9,276,737)
Cash flows from financing activities:
Net increase in deposits 13,121,197 6,247,626
Increase (decrease) in securities sold under agreement to repurchase (686,910) 1,363,769
Payment of dividends (888,000) (816,000)
----------- -----------
Net cash provided by financing activities 11,546,287 6,795,395
----------- -----------
Net decrease in cash and cash equivalents (2,152,021) (10,817)
Cash and cash equivalents beginning of period 8,090,358 6,656,723
----------- -----------
Cash and cash equivalents end of period $5,938,337 $6,645,906
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $5,033,789 $4,718,261
Income taxes 1,054,622 1,000,737
Supplemental schedule of noncash investing activities:
Net reduction in loans resulting from the transfer to real estate owned 165,957 $122,537
Net decrease in the unrealized loss on available for sale securities
(net of deferred tax reduction of $692,297 at 9/30/95) 0 1,012,441
Net decrease in the unrealized gain on available for sale securities
(net of deferred tax reduction of $149,878 at 9/30/96) 219,334 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
September 30, 1996 and December 31, 1995, and the results
of operations and the changes in cash flows for the three months and
nine months ended September 30, 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 therero, 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.
October 28, 1996 By /s/ William N. Smith
------------------ -----------------------------
Date William N. Smith
Chairman of the Board, President
and Chief Executive Officer
October 28, 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 nine 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 $600,000. 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
nine months of 1996 from 12.9% at December 31, 1995
to 12.7% at September 30, 1996. The subsidiary Bank has experienced loan
growth of approximately $1.4 million during the first
nine months of 1996. This growth in loans was funded by an increase in
deposits of $13.1 million. The remaining growth in
deposits was used to fund the purchases of available for sale securities
and held to maturity securities and increase the level
of Federal Funds Sold.
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>
<CAPTION>
Regulatory
9/30/96 12/31/95 Guidelines
------- -------- ----------
<S> <C> <C> <C>
Total risk based capital to net risk weighted assets 26.5% 25.6% 8.0%
Tier 1 risk based capital to net risk weighted assets 25.2 24.4 4.0
Leverage ratio (Tier 1/adjusted total assets) 12.7 12.7 3.0
</TABLE>
No significant events have occurred during the first nine months of 1996
to materially impact the Companys' capital.
Results of Operations:
Most Recent Quarter and Same Quarter in Preceding Year:
Total interest income for the third quarter of 1996 increased $230,229 or
6.3% from the corresponding period of 1995, while
total interest expense increased $98,456 or 5.9% from the corresponding
period of 1995. Net interest income increased $131,773 or
6.7% from the prior year period reflecting the continued effect of narrower
net margins being earned on higher volumes of interest
earning assets and interest bearing liabilities. The provision for loan
losses was up $15,000 or 23.1% from the prior year period.
Net charge-offs increased $22,700 to $35,729 from the prior year period, an
increase of 174.2%. The allowance for loan losses as
a percent of loans outstanding at September 30, 1996 was 1.50% as compared
to 1.48% at September 30, 1995. Non-interest income
increased $14,385 or 7.6% from the corresponding period of 1995. This
increase was primarily due to increases in service charges
on deposit accounts. Non-interest expense increased $61,541 or 6.1% due
primarily to the higher salaries and employee benefits.
The higher staff expenses were due to higher insurance expenses, normal
salary adjustments and the hiring of staff for the new
Perth office. Net income increased $52,507 or 6.9% over the comparable
period of 1995 due to the increase in the net interest
income as a result of higher volumes in 1996 and the increase in other
non-interest income, partially offset by the increase in
the provision for loan losses and the increase in total other expenses.
-1-
- ------------------------------------------------------------------------
Most Recent Year to Date and Corresponding Year to Date Period:
Total interest income for the first nine months of 1996 increased
$560,118 or 5.2% from the corresponding period of 1995,
while total interest expense increased $413,578 or 8.7% from the
corresponding period of 1995. Net interest income increased
$146,540 or 2.4% from the corresponding period of 1995. This small
increase was due to the narrower margins between loans and
investments and interest bearing deposit accounts and the lack of loan
demand so far in 1996 as compared to 1995. The provision
for loan losses for the first nine months of 1996 decreased $75,000 or
34.9% as compared to the corresponding period of 1995,
while net charge-offs increased $21,407 or 55.9% from the prior year
period. Non-interest income decreased $47,004 or 8.0% from
the corresponding period of 1995 due primarily to the one time gain on the
sale of the subsidiary Banks' credit card receivables
in 1995. Non-interest expense was virtually unchanged with an increase
of $312 from the corresponding period of 1995 primarily
due to the reduction in the F.D.I.C. insurance assessment which was offset
by higher salaries and employee benefits, higher
occupancy expenses and higher other operating expenses. The higher staff
expenses were due to higher insurance expenses, normal
salary adjustments and the hiring of staff for the new Perth office. The
higher occupancy expenses were due to higher utility
bills, higher depreciation and higher maintenance and repair costs of bank
premises. Net income increased $121,185 or 5.3% from
the same period of the prior year due mainly to the increase in the net
interest income, the reduction in the provision for loan
losses and the reduction in the F.D.I.C. insurance assessment. This
improvement in the net income was partially offset by the
gain on the credit card receivables in 1995 with no comparable item in 1996.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> [BLANK] DEC-31-1996
<PERIOD-END> [BLANK] SEP-30-1996
<CASH> [BLANK] 5,919,951
<INT-BEARING-DEPOSITS> [BLANK] 18,386
<FED-FUNDS-SOLD> [BLANK] 9,000,000
<TRADING-ASSETS> [BLANK] 0
<INVESTMENTS-HELD-FOR-SALE> [BLANK] 57,140,762
<INVESTMENTS-CARRYING> [BLANK] 33,827,148
<INVESTMENTS-MARKET> [BLANK] 34,160,601
<LOANS> [BLANK] 105,684,802
<ALLOWANCE> [BLANK] 1,585,436
<TOTAL-ASSETS> [BLANK] 215,484,322
<DEPOSITS> [BLANK] 187,469,404
<SHORT-TERM> [BLANK] 138,227
<LIABILITIES-OTHER> [BLANK] 600,768
<LONG-TERM> [BLANK] 0
[BLANK] 0
[BLANK] 0
<COMMON> [BLANK] 4,000,000
<OTHER-SE> [BLANK] 23,275,923
<TOTAL-LIABILITIES-AND-EQUITY> [BLANK] 215,484,322
<INTEREST-LOAN> 2,330,582 7,168,550
<INTEREST-INVEST> 1,415,994 3,972,795
<INTEREST-OTHER> 121,750 293,845
<INTEREST-TOTAL> 3,868,326 11,435,190
<INTEREST-DEPOSIT> 1,776,247 5,180,146
<INTEREST-EXPENSE> 1,778,428 5,189,150
<INTEREST-INCOME-NET> 2,089,898 6,246,040
<LOAN-LOSSES> 80,000 140,000
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 1,063,044 3,222,612
<INCOME-PRETAX> 1,150,706 3,426,016
<INCOME-PRE-EXTRAORDINARY> 1,150,706 3,426,016
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 809,893 2,403,879
<EPS-PRIMARY> 1.01 3.00
<EPS-DILUTED> 1.01 3.00
<YIELD-ACTUAL> [BLANK] 4.19
<LOANS-NON> [BLANK] 679,914
<LOANS-PAST> [BLANK] 356,459
<LOANS-TROUBLED> [BLANK] 0
<LOANS-PROBLEM> [BLANK] 1,702,671
<ALLOWANCE-OPEN> [BLANK] 1,505,159
<CHARGE-OFFS> [BLANK] 76,906
<RECOVERIES> [BLANK] 17,183
<ALLOWANCE-CLOSE> [BLANK] 1,585,436
<ALLOWANCE-DOMESTIC> [BLANK] 1,163,692
<ALLOWANCE-FOREIGN> [BLANK] 0
<ALLOWANCE-UNALLOCATED> [BLANK] 421,744
</TABLE>
