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, 1997 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, 1997
- --------------------- ----------------------------
$2.50 par value 1,600,000
CNB BANCORP, INC. AND SUBSIDIARY
INDEX
PART I FINANCIAL INFORMATION Page No.
- ------- --------
Item 1 Consolidated interim financial statements (unaudited):
Consolidated statements of income for the three months
ending March 31, 1997 and 1996 1
Consolidated statements of financial condition as of
March 31, 1997 and December 31, 1996 2
Consolidated statements of cash flows for the three
months ending March 31, 1997 and 1996 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
MARCH 31,
1997 1996
INTEREST AND DIVIDEND INCOME: ----------- -----------
<S> <C> <C>
Interest and fees on loans $2,441,554 $2,441,157
Interest on federal funds sold 47,014 81,055
Interest on balances due from depository institutions 425 0
Interest on securities available for sale 876,892 765,323
Interest on investment securities 495,335 459,437
Dividends on FRB and FHLB stock 13,197 2,497
----------- -----------
Total interest and dividend income 3,874,417 3,749,469
INTEREST EXPENSE:
Interest on deposits:
Certificates and time deposits of $100,000 or more 402,011 409,926
Regular savings, N.O.W. and money market accounts 506,526 530,387
Other time deposits 743,640 739,645
Interest on securities sold under agreements to repurchase 947 4,300
Interest on other borrowed money 714 0
----------- -----------
Total interest expense 1,653,838 1,684,258
Net interest income 2,220,579 2,065,211
Provision for loan losses 60,000 30,000
----------- -----------
Net interest income after provision for loan losses 2,160,579 2,035,211
OTHER INCOME:
Income from fiduciary activities 28,611 26,980
Service charges on deposit accounts 89,269 79,056
Other income 83,498 59,913
----------- -----------
Total other income 201,378 165,949
OTHER EXPENSES:
Salaries and employee benefits 640,783 547,743
Occupancy expense, net 84,993 82,610
Furniture and equipment expense 81,852 77,054
External data processing expense 99,848 101,999
F.D.I.C. insurance expense 5,423 500
Printing, stationery and supplies 39,955 39,186
Other expenses 301,804 254,494
----------- -----------
Total other expenses 1,254,658 1,103,586
----------- -----------
Income before income taxes 1,107,299 1,097,574
Applicable income taxes 332,131 326,357
----------- -----------
NET INCOME $ 775,168 $ 771,217
=========== ===========
Net income and dividends per common share(1,600,000 shares):<F1>
Net income $ 0.48 $ 0.48
Dividends 0.20 0.185
See accompanying notes to consolidated interim financial statements
<FN>
<F1> Per share figures have been adjusted to reflect the 2 for 1 stock split
effected through the 100% stock dividend declared in January 1997.
</TABLE>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<CAPTION>
ASSETS 3/31/97 12/31/96
- ------ ------------ ------------
<S> <C> <C>
Cash and cash equivalents:
Non-interest bearing $ 6,108,582 $ 8,323,677
Interest bearing 18,808 38,296
Federal funds sold 7,000,000 8,000,000
------------ ------------
Total cash and cash equivalents 13,127,390 16,361,973
Securities available for sale, at fair value 55,771,553 56,120,310
Investment securities (approximate fair value at 3/31/97-
$31,111,129; at 12/31/96 - $31,477,028) 30,948,971 30,930,765
Investments required by law, stock in Federal Home Loan
Bank of New York and Federal Reserve Bank of New York,
at cost 884,300 834,800
Loans 120,226,638 115,048,050
Unearned income (8,210,865) (8,062,831)
Allowance for loan losses (1,610,293) (1,620,078)
------------ ------------
Net loans 110,405,480 105,365,141
Premises and equipment 2,695,132 2,747,681
Accrued interest receivable 1,613,965 1,403,082
Other assets 1,105,127 998,001
------------ ------------
Total assets $216,551,918 $214,761,753
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Demand (non interest bearing) $ 16,216,798 $ 18,616,607
Regular savings, N.O.W. and money market accounts 77,288,812 84,212,947
Certificates and time deposits of $100,000 or more 37,209,200 28,305,295
Other time deposits 57,087,767 55,287,632
------------ ------------
Total deposits 187,802,577 186,422,481
Securities sold under agreements to repurchase 70,707 593
Other liabilities 691,483 591,858
------------ ------------
Total liabilities 188,564,767 187,014,932
STOCKHOLDERS' EQUITY
- --------------------
Common stock, $5 par value, 2,000,000 shares authorized,
1,600,000 shares issued and outstanding in 1997 and 800,000 shares
issued and outstanding in 1996<F1> 8,000,000 4,000,000
Surplus 4,000,000 4,000,000
Undivided profits 15,920,987 19,465,820
Net unrealized gain on available for sale securities(net of tax effect) 66,164 281,001
------------ ------------
Total stockholders' equity 27,987,151 27,746,821
------------ ------------
Total liabilities and stockholders' equity $216,551,918 $214,761,753
============ ============
<FN>
<F1> On April 15, 1997 the stockholders approved a reduction in the par
value of the common stock to $2.50 per share.
See accompanying notes to consolidated interim financial statements
</TABLE>
-2-
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
3 MONTHS ENDED
MARCH 31,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 775,168 $ 771,217
Adjustments to reconcile net income to cash and cash
equivalents provided by operating activities:
Increase in interest receivable (210,883) (259,042)
Decrease in other assets 160,948 54,096
Increase in other liabilities 99,625 250,261
(Benefit) expense for deferred taxes 153 (15,573)
Depreciation 80,680 75,778
Amortization of premiums/discounts on securities, net 41,608 38,372
Provision for loan losses 60,000 30,000
----------- -----------
Total adjustments 232,131 173,892
Net cash provided by operating activities 1,007,299 945,109
Cash flows from investing activities:
Purchase of investment securities (1,040,214) (7,121,394)
Purchase of securities available for sale (4,013,037) (3,328,246)
Purchase of FRB and FHLB stock (49,500) 0
Proceeds from matured investment securities 1,005,477 2,148,926
Proceeds from matured securities available for sale 3,977,852 3,736,681
Net increase in loans (5,224,539) (2,484,477)
Capital expenditures (28,131) (235,283)
----------- -----------
Net cash used by investing activities (5,372,092) (7,283,793)
Cash flows from financing activities:
Net increase in deposits 1,380,096 6,475,219
Increase (decrease) in securities sold under agreement to repurchase 70,114 (320,766)
Payment of dividends (320,000) (296,000)
----------- -----------
Net cash provided by financing activities 1,130,210 5,858,453
----------- -----------
Net decrease in cash and cash equivalents (3,234,583) (480,231)
Cash and cash equivalents beginning of period 16,361,973 16,390,358
----------- -----------
Cash and cash equivalents end of period $13,127,390 $15,910,127
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $ 1,781,943 $ 1,670,482
Income taxes 73,125 109,209
Supplemental schedule of noncash investing activities:
Net reduction in loans resulting from the transfer to real estate owned 124,200 61,342
Change in net unrealized gain on securities available for sale (net of
deferred tax reduction of $144,026 at 3/31/97 and $68,852 at 3/31/96) (214,837) (98,241)
See accompanying notes to consolidated interim financial statements
</TABLE>
-3-
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,
1997 and December 31, 1996, and the results of operations and the
changes in cash flows for the three months ended March 31, 1997 and
1996. 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 1996
Annual Report and Form 10-K.
2. CHANGES IN FINANCIAL DISCLOSURE
-------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" (SFAS No. 128), which establishes standards for computing and
presenting earnings per share (EPS). This Statement simplifies
the standards for computing EPS making them comparable to
international EPS standards and supersedes Accounting Principals
Board Opinion No. 15, "Earnings per Share" and related
interpretations. SFAS No. 128 replaces the presentation of
primary EPS with the presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the
consolidated income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation.
Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then
shared in the earnings of the entity. This Statement is effective
for financial statements issued for periods ending after December
15, 1997, including interim periods. Earlier application is not
permitted. This Statement requires restatement of all
prior-period EPS data presented.
Management does not anticipate that the adoption of SFAS No. 128
will be material.
-4-
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, 1997 By /s/ William N. Smith
- ------------------ ----------------------------------
Date William N. Smith
Chairman of the Board, President
and Chief Executive Officer
April 29, 1997 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 1997. Funds from repayment of
loans, maturing investment securities and securities available for
sale, and growth of deposit accounts are available to satisfy any
normal needs that may arise.
Capital Resources:
Stockholder's equity to total assets at March 31, 1997 was 12.9%,
virtually unchanged during the first three months of 1997 as compared
to December 31, 1996. The subsidiary Bank has experienced loan
growth of approximately $5.2 million during the first three months of
1997. This growth in loans was partially funded by an increase in
deposits of $1.4 million and a decrease in cash and cash equivalents
of $3.2 million. The balance was funded by a reduction in securities
available for sale.
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, 1996
ratios and the current regulatory guideline ratios as established by
the Federal Reserve Board.
<TABLE>
<CAPTION>
Regulatory
3/31/97 12/31/96 Guidelines
------- -------- ----------
<S> <C> <C> <C>
Tier 1 risk based capital to net risk weighted assets 24.6% 25.0% 4.0%
Total risk based capital to net risk weighted assets 25.8 26.2 8.0
Leverage ratio (Tier 1/adjusted total assets) 13.1 12.9 3.0
No significant events have occurred during the first three months
of 1997 to materially impact the Companys' capital.
</TABLE>
Results of Operations:
Most Recent Quarter and Same Quarter in Preceding Year:
Total interest and dividend income for the first quarter of 1997
increased $124,948 or 3.3% from the corresponding period of 1996,
while total interest expense decreased $30,420 or 1.8% from the
corresponding period of 1996. Net interest income increased $155,368
or 7.5% from the prior year period reflecting the effect of improved
net margins being earned on higher volumes of interest earning assets
and interest bearing liabilities. The provision for loan losses was
up $30,000 or 100.0% from the prior year period. Net charge-offs
increased $59,225 to $69,785 from the prior year period, an increase
of 560.8%. The allowance for loan losses as a percent of loans
outstanding at March 31, 1997 was 1.44% as compared to 1.51% at
December 31, 1996. Non-interest income increased $35,429 or 21.3%
from the corresponding period of 1996. This increase was primarily
due to increases in service charges on deposit accounts and merchant
income on credit cards. Non-interest expense increased $151,072 or
13.7% due primarily to higher salaries and employee benefits. The
higher staff expenses were due to higher insurance expenses, normal
salary adjustments and the staffing of the new branch office in
Perth. Net income increased $3,951 or 0.5% over the comparable
period of 1996. This small increase was due to the increase in other
operating expenses and the loan loss provision virtually offsetting
the increase in net interest income.
-1-
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> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,108,582
<INT-BEARING-DEPOSITS> 18,808
<FED-FUNDS-SOLD> 7,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 55,771,553
<INVESTMENTS-CARRYING> 30,948,971
<INVESTMENTS-MARKET> 31,111,129
<LOANS> 112,015,773
<ALLOWANCE> 1,610,293
<TOTAL-ASSETS> 216,551,918
<DEPOSITS> 187,802,557
<SHORT-TERM> 70,707
<LIABILITIES-OTHER> 691,483
<LONG-TERM> 0
0
0
<COMMON> 8,000,000
<OTHER-SE> 19,987,151
<TOTAL-LIABILITIES-AND-EQUITY> 216,551,918
<INTEREST-LOAN> 2,441,554 2,441,554
<INTEREST-INVEST> 1,385,424 1,385,424
<INTEREST-OTHER> 47,439 47,439
<INTEREST-TOTAL> 3,874,417 3,874,417
<INTEREST-DEPOSIT> 1,652,177 1,652,177
<INTEREST-EXPENSE> 1,653,838 1,653,838
<INTEREST-INCOME-NET> 2,220,579 2,220,579
<LOAN-LOSSES> 60,000 60,000
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 1,254,658 1,254,658
<INCOME-PRETAX> 1,107,299 1,107,299
<INCOME-PRE-EXTRAORDINARY> 1,107,299 1,107,299
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 775,168 775,168
<EPS-PRIMARY> 0.48 0.48
<EPS-DILUTED> 0.48 0.48
<YIELD-ACTUAL> 4.39
<LOANS-NON> 687,849
<LOANS-PAST> 515,745
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 885,113
<ALLOWANCE-OPEN> 1,620,078
<CHARGE-OFFS> 75,390
<RECOVERIES> 5,605
<ALLOWANCE-CLOSE> 1,610,293
<ALLOWANCE-DOMESTIC> 1,440,441
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 169,852
</TABLE>
