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, 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 July 29, 1997
- --------------------- ----------------------------
$2.50 par value 1,600,000
<TABLE>
CNB BANCORP, INC. AND SUBSIDIARY
INDEX
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION
- -------
Item 1 Consolidated interim financial statements (unaudited):
Consolidated statements of income for the three months ending June 30, 1997 and 1996 1
and the six months ending June 30, 1997 and 1996
Consolidated statements of financial condition as of June 30, 1997 and December 31, 1996 2
Consolidated statements of cash flows for the six months ending June 30, 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>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Interest and fees on loans $2,506,667 $2,396,811 $4,948,221 $4,837,968
Interest on federal funds sold 72,594 88,433 119,608 169,488
Interest on balances due from depository institutions 202 2,607 627 2,607
Interest on securities available for sale 874,583 808,585 1,751,475 1,573,908
Interest on investment securities 498,723 509,429 994,058 968,866
Dividends on FRB and FHLB stock 13,640 11,530 26,837 14,027
Total interest and dividend income 3,966,409 3,817,395 7,840,826 7,566,864
INTEREST EXPENSE:
Interest on deposits:
Certificates and time deposits of $100,000 or more 529,129 502,273 931,140 912,199
Regular savings, N.O.W. and money market accounts 472,166 512,691 978,692 1,043,078
Other time deposits 765,195 708,977 1,508,835 1,448,622
Interest on securities sold under agreements to repurchase 1,686 2,523 2,633 6,823
Interest on other borrowed money 532 0 1,246 0
Total interest expense 1,768,708 1,726,464 3,422,546 3,410,722
Net interest income 2,197,701 2,090,931 4,418,280 4,156,142
Provision for loan losses 45,000 30,000 105,000 60,000
Net interest income after provision for loan losses 2,152,701 2,060,931 4,313,280 4,096,142
OTHER INCOME:
Income from fiduciary activities 31,535 27,347 60,146 54,327
Service charges on deposit accounts 84,476 91,679 173,745 170,735
Other income 65,825 53,761 149,323 113,674
Total other income 181,836 172,787 383,214 338,736
OTHER EXPENSES:
Salaries and employee benefits 624,716 545,287 1,265,499 1,093,030
Occupancy expense, net 77,285 62,530 162,278 145,140
Furniture and equipment expense 78,598 73,284 160,450 150,338
External data processing expense 126,520 108,708 226,368 210,707
F.D.I.C. insurance expense 5,915 500 11,338 1,000
Printing, stationery and supplies 43,688 36,841 83,643 76,027
Other expenses 289,081 228,832 590,885 483,326
Total other expenses 1,245,803 1,055,982 2,500,461 2,159,568
Income before income taxes 1,088,734 1,177,736 2,196,033 2,275,310
Applicable income taxes 325,500 354,967 657,631 681,324
NET INCOME $ 763,234 $ 822,769 $1,538,402 $1,593,986
Net income and dividends per common share(1,600,000 shares):<F1>
Net income $ 0.48 $ 0.52 $ 0.96 $ 1.00
Dividends 0.20 0.185 0.40 0.370
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>
6/30/97 12/31/96
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Non-interest bearing $ 6,197,621 $ 8,323,677
Interest bearing 29,050 38,296
Federal funds sold 10,000,000 8,000,000
Total cash and cash equivalents 16,226,671 16,361,973
Securities available for sale, at fair value 52,992,857 56,120,310
Investment securities (approximate fair value at 6/30/97-
$29,987,166; at 12/31/96 - $31,477,028) 29,470,173 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 121,026,748 115,048,050
Unearned income (8,793,358) (8,062,831)
Allowance for loan losses (1,632,443) (1,620,078)
Net loans 110,600,947 105,365,141
Premises and equipment 2,619,318 2,747,681
Accrued interest receivable 1,364,533 1,403,082
Other assets 949,193 998,001
Total assets $215,107,992 $214,761,753
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand (non interest bearing) $ 16,532,182 $ 18,616,607
Regular savings, N.O.W. and money market accounts 74,264,039 84,212,947
Certificates and time deposits of $100,000 or more 37,483,604 28,305,295
Other time deposits 57,459,730 55,287,632
Total deposits 185,739,555 186,422,481
Securities sold under agreements to repurchase 54,166 593
Other liabilities 637,420 591,858
Total liabilities 186,431,141 187,014,932
STOCKHOLDERS' EQUITY
Common stock, $2.50 par value, 5,000,000 shares authorized, 1,600,000
shares issued and outstanding in 1997 - $5.00 par value, 2,000,000
shares authorized, 800,000 shares issued and outstanding in 1996<F1> 4,000,000 4,000,000
Surplus 8,000,000 4,000,000
Undivided profits 16,364,222 19,465,820
Net unrealized gain on available for sale securities(net of tax effect) 312,629 281,001
Total stockholders' equity 28,676,851 27,746,821
Total liabilities and stockholders' equity $215,107,992 $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>
<TABLE>
CNB BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
6 MONTHS ENDED
JUNE 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,538,402 $ 1,593,986
Adjustments to reconcile net income to cash and cash
equivalents provided by operating activities:
(Increase) decrease in interest receivable 38,549 (223,113)
Decrease in other assets 110,471 192,048
Increase in other liabilities 45,562 66,208
(Benefit) expense for deferred taxes 42,664 (23,899)
Depreciation 158,209 136,205
Amortization of premiums/discounts on securities, net 65,268 82,631
Provision for loan losses 105,000 60,000
Total adjustments 565,723 290,080
Net cash provided by operating activities 2,104,125 1,884,066
Cash flows from investing activities:
Purchase of investment securities (2,032,841) (11,402,061)
Purchase of securities available for sale (6,273,905) (14,016,595)
Purchase of FRB and FHLB stock (49,500) (684,800)
Proceeds from matured investment securities 3,466,172 4,281,858
Proceeds from matured securities available for sale 9,414,852 8,099,535
Net increase in loans (5,465,006) (713,842)
Capital expenditures (29,846) (502,754)
Net cash used by investing activities (970,074) (14,938,659)
Cash flows from financing activities:
Net increase (decrease) in deposits (682,926) 7,354,851
Increase (decrease) in securities sold under agreement to repurchase 53,573 (416,375)
Payment of dividends (640,000) (592,000)
Net cash provided (used) by financing activities (1,269,353) 6,346,476
Net decrease in cash and cash equivalents (135,302) (6,708,117)
Cash and cash equivalents beginning of period 16,361,973 16,390,358
Cash and cash equivalents end of period $16,226,671 $ 9,682,241
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $ 3,471,752 $ 3,344,908
Income taxes 659,500 733,767
Supplemental schedule of noncash investing activities:
Net reduction in loans resulting from the transfer to real estate owned 124,200 7,098
Change in net unrealized gain on securities available for sale (net of a
deferred tax increase of $19,874 at 6/30/97 and a reduction of $165,627
at 6/30/96) 31,628 (242,869)
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,
1997 and December 31, 1996, and the results of operations and the
changes in cash flows for the six months ended June 30, 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.
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 29, 1997 By /s/ William N. Smith
------------------ ----------------------------------
Date William N. Smith
Chairman of the Board, President
and Chief Executive Officer
July 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 six months of 1997. Funds from repayment of
loans, maturing investment securities and securities available for
sale are available to satisfy any normal needs that may arise.
Capital Resources:
Stockholder's equity to total assets increased slightly during the
first six months of 1997 from 12.9% at December 31, 1996 to 13.3% at
June 30, 1997. The subsidiary Bank has experienced loan growth of
approximately $5.5 million during the first six months of 1997. This
growth in loans was partially funded by a reduction in the securities
available for sale and a reduction in the investment securities
portfolio. The balance was funded through growth in the Bank's
stockholders' equity.
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
6/30/97 12/31/96 Guidelines
<S> <C> <C> <C>
Tier 1 risk based capital to net risk weighted assets 25.1% 25.0% 4.0%
Total risk based capital to net risk weighted assets 26.3 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 six 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 second quarter of 1997
increased $149,014 or 3.9% from the corresponding period of 1996,
while total interest expense increased $42,244 or 2.4% from the
corresponding period of 1996. Net interest income increased $106,770
or 5.1% 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 $15,000 or 50.0% from the prior year period. Net charge-offs
increased $9,417 to $22,850 from the prior year period, an increase of
70.1%. The allowance for loan losses as a percent of loans
outstanding at June 30, 1997 was 1.45% as compared to 1.51% at
December 31, 1996. Non-interest income increased $9,049 or 5.2% from
the corresponding period of 1996. This increase was primarily due to
increases in fiduciary income and merchant income on credit cards.
Non-interest expense increased $189,821 or 18.0% from the
corresponding period of 1996 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. Increases in occupancy expense, furniture
and equipment expense, data processing and stationery and supplies
were attributable to the new office in Perth and the new Installment
Loan Department building. Net income decreased $59,535 or 7.2% as
compared to the same period of 1996. This decrease was due to the
increase in the provision for loan losses and total other expenses
more than offsetting the increase in the net interest income increase
and the gain in other income.
Most Recent Year to Date and Corresponding Year to Date Period:
Total interest and dividend income for the first six months of
1997 increased $273,962 or 3.6% from the corresponding period of
1996, while total interest expense increased $11,824 or 0.3% from the
corresponding period of 1996. Net interest income increased $262,138
or 6.3% 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 $45,000 or 75% from the prior year period. Net charge-offs
increased $68,641 to $92,635 from the prior year period, an increase
of 286.1%. Non-interest income increased $44,478 or 13.1% from the
corresponding period of 1996. This increase was primarily due to
increases in fiduciary income, service charges on deposit accounts
and merchant income on credit cards. Non-interest expense increased
$340,893 or 15.8% from the corresponding period of 1996. This
increase was primarily due to higher salaries and employee benefits,
higher occupancy expense, higher furniture and equipment expense,
higher data processing expense and higher stationery and supplies
expense associated with the opening of the new branch office in Perth
in October of 1996. Normal salary adjustments and increases in
insurance expense also increased the salaries and employee benefits
expense. Net income decreased $55,584 or 3.5% as compared to the same
period of 1996. This decrease was due to the increase in the
provision for loan losses and total other expenses more than
offsetting the increase in the net interest income increase and the
gain in other income.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
CNB BANCORP, INC.
FINANCIAL DATA SCHEDULE
(UNAUDITED)
JUNE 30, 1997
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,197,621
<INT-BEARING-DEPOSITS> 29,050
<FED-FUNDS-SOLD> 10,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 52,992,857
<INVESTMENTS-CARRYING> 29,470,173
<INVESTMENTS-MARKET> 29,987,166
<LOANS> 112,233,390
<ALLOWANCE> 1,632,443
<TOTAL-ASSETS> 215,107,992
<DEPOSITS> 185,739,555
<SHORT-TERM> 54,166
<LIABILITIES-OTHER> 637,420
<LONG-TERM> 0
0
0
<COMMON> 4,000,000
<OTHER-SE> 24,676,851
<TOTAL-LIABILITIES-AND-EQUITY> 215,107,992
<INTEREST-LOAN> 2,506,667 4,948,221
<INTEREST-INVEST> 1,386,946 2,772,370
<INTEREST-OTHER> 72,796 120,235
<INTEREST-TOTAL> 3,966,409 7,840,826
<INTEREST-DEPOSIT> 1,766,490 3,418,667
<INTEREST-EXPENSE> 1,768,708 3,422,546
<INTEREST-INCOME-NET> 2,197,701 4,418,280
<LOAN-LOSSES> 45,000 105,000
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 1,245,803 2,500,461
<INCOME-PRETAX> 1,088,734 2,196,033
<INCOME-PRE-EXTRAORDINARY> 1,088,734 2,196,033
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 763,234 1,538,402
<EPS-PRIMARY> 0.48 0.96
<EPS-DILUTED> 0.48 0.96
<YIELD-ACTUAL> 4.33
<LOANS-NON> 687,849
<LOANS-PAST> 305,186
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,992,598
<ALLOWANCE-OPEN> 1,620,078
<CHARGE-OFFS> 103,940
<RECOVERIES> 11,305
<ALLOWANCE-CLOSE> 1,632,443
<ALLOWANCE-DOMESTIC> 1,460,702
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 171,741
</TABLE>
