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 June 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 July 22, 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 June 30, 1996 and 1995 and the six months
ending June 30, 1996 and 1995 1
Consolidated statements of financial condition as of
June 30, 1996 and December 31, 1995 2
Consolidated statements of cash flows for the six months
ending June 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 6 MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $2,396,811 $2,437,338 $4,837,968 $4,756,669
Interest on federal funds sold 88,433 84,343 169,488 143,803
Interest on balances due from depository institutions 2,607 0 2,607 0
Interest and dividends on securities available for sale 820,115 725,603 1,587,935 1,453,513
Interest and dividends on securities held to maturity 509,429 458,548 968,866 882,990
Total interest income 3,817,395 3,705,832 7,566,864 7,236,975
INTEREST EXPENSE:
Interest on deposits:
Certificates and time deposits of $100,000 or more 502,273 444,911 912,199 812,152
Regular savings, N.O.W. and money market accounts 512,691 498,610 1,043,078 994,311
Other time deposits 708,977 703,351 1,448,622 1,272,293
Interest on securities sold under agreements to repurchase 2,523 3,616 6,823 15,628
Interest on other borrowed money 0 149 0 1,216
Total interest expense 1,726,464 1,650,637 3,410,722 3,095,600
Net interest income 2,090,931 2,055,195 4,156,142 4,141,375
Provision for loan losses 30,000 75,000 60,000 150,000
Net interest income after provision for loan losses 2,060,931 1,980,195 4,096,142 3,991,375
OTHER INCOME:
Income from fiduciary activities 27,347 34,204 54,327 67,479
Service charges on deposit accounts 91,679 82,442 170,735 160,851
Other income 53,761 118,285 113,674 171,795
Total other income 172,787 234,931 338,736 400,125
OTHER EXPENSES:
Salaries and employee benefits 545,287 525,136 1,093,030 1,050,139
Occupancy expense, net 62,530 57,342 145,140 117,643
Furniture and equipment expense 73,284 89,127 150,338 155,104
External data processing expense 108,708 101,655 210,707 203,145
F.D.I.C. insurance expense 500 92,007 1,000 183,003
Printing, stationery and supplies 36,841 41,920 76,027 79,820
Other expenses 228,832 223,130 483,326 431,943
Total other expenses 1,055,982 1,130,317 2,159,568 2,220,797
Income before income taxes 1,177,736 1,084,809 2,275,310 2,170,703
Applicable income taxes 354,967 322,665 681,324 645,395
NET INCOME $822,769 $762,144 $1,593,986 $1,525,308
Net income and dividends per common share (800,000 shares):
Net income $1.03 $0.96 $1.99 $1.91
Dividends 0.37 0.34 0.74 0.68
See accompanying notes to consolidated interim financial statements
</TABLE>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<CAPTION>
ASSETS 6/30/96 12/31/95
<S> <C> <C>
Cash and due from banks:
Non-interest bearing $6,072,179 $8,090,358
Interest bearing 10,062 0
Federal funds sold 3,600,000 8,300,000
Available for sale securities, at fair value
U.S. Treasury and Other U.S. Government agencies 36,326,452 31,205,424
Collateralized mortgage obligations
U.S. Government agencies 9,515,003 9,090,097
Privately-issued
Obligations of states & political subdivisions 10,313,759 10,168,336
Nonmarketable equity securities 834,800 150,000
Total available for sale securities 57,042,895 50,900,145
Held to maturity securities(approximate fair value at 6/30/96 -
$34,064,463; at 12/31/95 - $27,653,665)
U.S. Government agencies 20,481,568 15,198,065
Obligations of states & political subdivisions 13,370,077 11,565,393
Total held to maturity securities 33,851,645 26,763,458
Loans 112,421,270 111,457,153
Unearned income (7,264,356) (6,982,989)
Allowance for loan losses (1,541,165) (1,505,159)
Net loans 103,615,749 102,969,005
Premises and equipment 2,476,417 2,109,868
Accrued interest receivable 1,720,902 1,497,789
Other assets 890,135 885,560
Total assets $209,279,984 $201,516,183
LIABILITIES
Deposits:
Demand (non interest bearing) $15,672,589 $17,119,532
Regular savings, N.O.W. and money market accounts 72,520,393 74,407,969
Certificates and time deposits of $100,000 or more 40,339,892 28,520,079
Other time deposits 53,170,184 54,300,627
Total deposits 181,703,058 174,348,207
Securities sold under agreements to repurchase 408,762 825,137
Other liabilities 429,669 363,461
Total liabilities 182,541,489 175,536,805
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 18,606,648 17,604,662
Net unrealized gain on available for sale securities (net of tax effect) 131,847 374,716
Total stockholders' equity 26,738,495 25,979,378
Total liabilities and stockholders' equity $209,279,984 $201,516,183
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
6 MONTHS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $1,593,986 $1,525,308
Adjustments to reconcile net income to cash provided by operating activities:
(Increase) decrease in interest receivable (223,113) 33,645
Decrease in other assets 153,460 131,831
(Increase) decrease in prepaid expenses 38,588 (42,601)
Increase in interest payable 65,814 55,015
Decrease in accrued taxes (39,039) (20,386)
Increase in other liabilities 39,433 37,716
Benefit for deferred taxes (23,899) (5,075)
Depreciation 136,205 125,982
Amortization of premiums/discounts on securities, net 82,631 86,473
Provision for loan losses 60,000 150,000
Total adjustments 290,080 552,600
Net cash provided by operating activities 1,884,066 2,077,908
Cash flows from investing activities:
Purchase of securities held to maturity (11,402,061) (4,382,282)
Purchase of securities available for sale (14,701,395) (4,101,104)
Proceeds from matured securities held to maturity 4,281,858 4,153,142
Proceeds from matured securities available for sale 8,099,535 4,081,612
Net decrease in federal funds sold 4,700,000 2,900,000
Net increase in loans (713,842) (3,048,542)
Capital expenditures (502,754) (308,764)
Net cash used by investing activities (10,238,659) (705,938)
Cash flows from financing activities:
Net increase (decrease) in deposits 7,354,851 (1,123,382)
Increase (decrease) in securities sold under agreement to repurchase (416,375) 76,331
Payment of dividends (592,000) (544,000)
Net cash provided by financing activities 6,346,476 (1,591,051)
Net decrease in cash and cash equivalents (2,008,117) (219,081)
Cash and cash equivalents beginning of period 8,090,358 6,656,723
Cash and cash equivalents end of period $6,082,241 $6,437,642
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $3,344,908 $3,040,585
Income taxes 733,767 665,156
Supplemental schedule of noncash investing activities:
Net reduction in loans resulting from the transfer to real estate owned 7,098 0
Net decrease in the unrealized loss on available for sale securities
(net of deferred tax reduction of $652,864 at 6/30/95) 0 954,231
Net decrease in the unrealized gain on available for sale securities
(net of deferred tax reduction of $165,627 at 6/30/96) 242,869 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 June 30, 1996
and December 31, 1995, and the results of operations and the changes in
cash flows for the three months and six months ended June 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.
July 26, 1996 By /s/ William N. Smith
----------------- -----------------------
Date William N. Smith
Chairman of the Board, President
and Chief Executive Officer
July 26, 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 six 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
six months of 1996 from 12.9% at December 31, 1995 to 12.8% at June 30,
1996. The subsidiary Bank has experienced loan growth of approximately
$0.7 million during the first six months of 1996. This growth in loans
was funded by an increase in deposits of $7.4 million. The remaining
growth in deposits and the reduction in Federal Funds Sold was used to
fund the purchases of available for sale securities and held to maturity
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 Company's current ratios, December 31, 1995 ratios and the current
regulatory guideline ratios as established by the Federal Reserve Board.
Regulatory
6/30/96 12/31/95 Guidelines
Total risk based capital to
net risk weighted assets 26.6% 25.6% 8.0%
Tier 1 risk based capital to
net risk weighted assets 25.3 24.4 4.0
Leverage ratio (Tier 1/
adjusted total assets) 12.7 12.7 3.0
No significant events have occurred during the first six 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 second quarter of 1996 increased $111,563
or 3.0% from the corresponding period of 1995, while total interest expense
increased $75,827 or 4.6% from the corresponding period of 1995. Net
interest income increased $35,736 or 1.7% 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 down $45,000 or 60.0% from the prior year
period. Net charge-offs increased $2,841 to $13,433 from the prior year
period, an increase of 26.8%. The allowance for loan losses as a percent
of loans outstanding at June 30, 1996 was 1.47% as compared to 1.41% at
June 30, 1995. Non-accrual loans increased $263,122 during the second
quarter of 1996 to $942,068. This increase was due to the addition of one
borrower relationship during the second quarter of 1996. Management
considered this relationship when determining the adequacy of the allowance
for loan losses at June 30, 1996. Non-interest income decreased
$62,144 or 26.5% from the corresponding period of 1995. This decrease was
primarily due to the one time gain in 1995 of the sale of our credit
card receivables. Non-interest expense decreased $74,335 or 6.6% due primarily
to the reduction in F.D.I.C. insurance expense, partially offset by
higher salaries and employee benefits. The higher staff expenses were due to
higher insurance expenses and normal salary adjustments. Net income increased
$60,625 or 8.0% over the comparable period of 1995 due to the
increase in the net interest income as a result of higher volumes in 1996,
the reduction in the provision for loan losses and the reduction in
total other expenses, partially offset by the reduction in total other income.
Most Recent Year to Date and Corresponding Year to Date Period:
Total interest income for the first six months of 1996 increased $329,889
or 4.6% from the corresponding period of 1995, while total interest expense
increased $315,122 or 10.2% from the corresponding period of 1995.
Net interest income was virtually unchanged from the corresponding period of
1995 with an increase of $14,767 or 0.4%. 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 six months of 1996 decreased
$90,000 or 60.0% as compared to the corresponding period of 1995, while net
charge-offs decreased $1,293 or 5.1% from the prior year period.
Non-interest income decreased $61,389 or 15.3% 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
decreased $61,229 or 2.8% from the corresponding period of 1995 primarily due
to the reduction in the F.D.I.C. insurance assessment. This
reduction in F.D.I.C. insurance expense was partially 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 and normal salary adjustments. The higher occupancy expenses
were due to higher utility bills and higher maintenance and repair costs of
bank premises. Net income increased $68,678 or 4.5% from the same period of
the prior year due mainly to the reduction in the provision for loan
losses and the reduction in the F.D.I.C. insurance assessment. These
reductions were 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 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 JUN-30-1996
<CASH> [BLANK] 6,072,179
<INT-BEARING-DEPOSITS> [BLANK] 10,062
<FED-FUNDS-SOLD> [BLANK] 3,600,000
<TRADING-ASSETS> [BLANK] 0
<INVESTMENTS-HELD-FOR-SALE> [BLANK] 57,042,895
<INVESTMENTS-CARRYING> [BLANK] 33,851,645
<INVESTMENTS-MARKET> [BLANK] 34,064,463
<LOANS> [BLANK] 105,156,914
<ALLOWANCE> [BLANK] 1,541,165
<TOTAL-ASSETS> [BLANK] 209,279,984
<DEPOSITS> [BLANK] 181,703,058
<SHORT-TERM> [BLANK] 408,762
<LIABILITIES-OTHER> [BLANK] 429,669
<LONG-TERM> [BLANK] 0
[BLANK] 0
[BLANK] 0
<COMMON> [BLANK] 4,000,000
<OTHER-SE> [BLANK] 22,738,495
<TOTAL-LIABILITIES-AND-EQUITY> [BLANK] 209,279,984
<INTEREST-LOAN> 2,396,811 4,837,968
<INTEREST-INVEST> 1,329,544 2,556,801
<INTEREST-OTHER> 91,040 172,095
<INTEREST-TOTAL> 3,817,395 7,566,864
<INTEREST-DEPOSIT> 1,723,941 3,403,899
<INTEREST-EXPENSE> 1,726,464 3,410,722
<INTEREST-INCOME-NET> 2,090,931 4,156,142
<LOAN-LOSSES> 30,000 60,000
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 1,055,982 2,159,568
<INCOME-PRETAX> 1,177,736 2,275,310
<INCOME-PRE-EXTRAORDINARY> 1,177,736 2,275,310
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 822,769 1,593,986
<EPS-PRIMARY> 1.03 1.99
<EPS-DILUTED> 1.03 1.99
<YIELD-ACTUAL> [BLANK] 4.25
<LOANS-NON> [BLANK] 942,068
<LOANS-PAST> [BLANK] 369,598
<LOANS-TROUBLED> [BLANK] 0
<LOANS-PROBLEM> [BLANK] 1,410,198
<ALLOWANCE-OPEN> [BLANK] 1,505,159
<CHARGE-OFFS> [BLANK] 35,621
<RECOVERIES> [BLANK] 11,627
<ALLOWANCE-CLOSE> [BLANK] 1,541,165
<ALLOWANCE-DOMESTIC> [BLANK] 1,149,000
<ALLOWANCE-FOREIGN> [BLANK] 0
<ALLOWANCE-UNALLOCATED> [BLANK] 392,165
</TABLE>
