-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M8wW4w5eeFyZDGoM78dOprluc8upLKA3roakQgU0/74zRYzWnyPuynsdn2L8gA9t c/Z/o6td5dXtK72DeiDHaw== 0000357130-97-000013.txt : 19970507 0000357130-97-000013.hdr.sgml : 19970507 ACCESSION NUMBER: 0000357130-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970506 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CB&T INC CENTRAL INDEX KEY: 0000357130 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 621121054 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10669 FILM NUMBER: 97596219 BUSINESS ADDRESS: STREET 1: 101 E MAIN ST CITY: MCMINNVILLE STATE: TN ZIP: 37110 BUSINESS PHONE: 6154732148 10-Q 1 FORM 10-Q FOR MARCH 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 [ ] TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from ____________________ _ to _________________________________ Commission file number 0-10669 CB&T, Inc. (Exact name of registrant as specified in its charter) Tennessee 62-1121054 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 101 East Main Street, McMinnville, Tennessee (Address of principal executive offices) (Zip Code) 37110 (Registrant's telephone number, including area code) (615) 473-2148 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 APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of March 31, 1997 264,507 shares. This filing contains 13 pages. 1 C B & T, INC. AND WHOLLY-OWNED SUBSIDIARY INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements 3 Consolidated Balance Sheets for the periods ended March 31, 1997 and December 31, 1996 (Unaudited) 4 Consolidated Statements of Income for the three (3) month period and year-to-date ended March 31, 1997 and 1996, respectively (Unaudited) 5 Consolidated Statements of Cash Flows for the year-to- date ended March 31, 1997 and 1996, respectively (Unaudited) 6 Management's Statement 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II. OTHER INFORMATION 12 Signatures 13 2 C B & T, INC. AND WHOLLY-OWNED SUBSIDIARY PART 1. FINANCIAL INFORMATION Item 1. Financial Statements 3 C B & T, INC. AND WHOLLY-OWNED SUBSIDIARY McMinnville, Tennessee 37110 CONSOLIDATED BALANCE SHEETS March 31, December 31, 1997 1996 (Dollars in Thousands) ASSETS Cash and due from banks $9,441 7,021 Federal funds sold 3,475 1,175 Investment securities (amortized cost $98,341 and $101,026, respectively) 98,873 102,070 Loans, net of unearned income and allowance for possible credit losses 144,022 142,096 Interest receivable 3,345 3,116 Bank premises and equipment, less allowances for depreciation 2,245 2,333 Other assets 4,026 3,648 TOTAL ASSETS $265,427 261,459 ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Non-interest bearing $28,910 28,178 Interest-bearing deposits (other than time) 71,548 69,826 Time deposits less than $100M 90,993 90,610 Time deposits of $100M or more 29,818 28,943 TOTAL DEPOSITS $221,269 217,557 Accounts payable and accrued liabilities 2,985 3,097 FHLB borrowings 7,384 7,203 Federal funds purchased/repurchase agreements 2,120 1,362 TOTAL LIABILITIES $233,758 229,219 SHAREHOLDERS' EQUITY: Common Stock of 2.50 par value: Authorized 1,000,000 shrs, issued 331,814 shrs including 67,307 and 67,229 Treasury shrs in March `97 and December `96, respectively $ 830 830 Surplus 5,000 5,000 Retained earnings 30,935 31,179 Less cost of treasury shares (5,425) (5,416) Net unrealized gains (losses) on available for sale securities, net of tax 329 647 TOTAL SHAREHOLDERS' EQUITY $31,669 32,240 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $265,427 261,459 ====== ====== 4 C B & T, INC. AND WHOLLY-OWNED SUBSIDIARY McMinnville, Tennessee 37110 CONSOLIDATED STATEMENTS OF INCOME Fiscal Year-to-date Three Months Ended Three Months Ended March 31 March 31 1997 1996 1997 1996 INTEREST INCOME: Interest and fees on loans $3,432 3,379 3,432 3,379 Interest on investment securities: Taxable income 1,160 1,163 1,160 1,163 Tax-exempt income 388 308 388 308 Other interest income 32 79 32 79 TOTAL INTEREST INCOME $5,012 4,929 5,012 4,929 INTEREST EXPENSE: Interest on deposits other than time $ 502 502 502 502 Time deposits less than $100M 1,194 1,196 1,194 1,196 Time deposits of $100M or more 421 388 421 388 Interest on FHLB borrowings 111 114 111 114 Interest on federal funds purchased/ repurchase agreements 17 5 17 5 TOTAL INTEREST EXPENSE $2,245 2,205 2,245 2,205 TOTAL NET INTEREST INCOME $2,767 2,724 2,767 2,724 PROVISION FOR POSSIBLE CREDIT LOSSES ( 140) ( 93) ( 140) ( 93) NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE CREDIT LOSSES $2,627 2,631 2,627 2,631 OTHER INCOME: Service charges on deposit accounts$ 295 281 295 281 Other service charges, commissions and fees 53 63 53 63 Net realized gains (losses) on investment securities 12 12 Other income 85 66 85 66 TOTAL OTHER INCOME $ 445 410 445 410 OTHER EXPENSES: Salaries and employee benefits $ 800 786 800 786 Net occupancy expense 87 71 87 71 Furniture and equipment expense 209 183 209 183 FDIC Assessment 6 1 6 1 Other 405 361 405 361 TOTAL OTHER EXPENSES $1,507 1,402 1,507 1,402 INCOME BEFORE INCOME TAXES $1,565 1,639 1,565 1,639 Income taxes ( 486) ( 519) ( 486) ( 519) NET INCOME $1,079 1,120 1,079 1,120 ===== ===== ===== ===== Common shares outstanding ended March 31 264,507 269,667 264,507 269,667 Net income per share of common stock $ 4.08 4.15 4.08 4.15 Dividends per share of common stock $ 5.00 4.46 5.00 4.46 5 C B & T, INC. AND WHOLLY-SUBSIDIARY MCMINNVILLE, TENNESSEE 37110 CONSOLIDATED STATEMENTS OF CASH FLOWS For the Period Ended March 31 1997 1996 (Dollars in thousands) Operating activities: Net income $1,079 1,120 Adjustments to reconcile net income to net cash provided by operating activities: Provision for possible credit losses 140 93 Provision for depreciation and amortization 133 116 Decrease (increase) in interest receivable ( 229) ( 108) Decrease (increase) in other assets ( 378) ( 401) Increase (decrease) in accounts payable and accrued liabilities ( 112) 283 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 633 1,103 Investing activities: Purchases of investment securities $(9,964) (4,572) Proceeds from sales of investment securities 4,970 Proceeds from maturities, calls and principal collections of investment securities 7,678 7,138 Net decrease (increase) in unrealized gains on investment securities 513 389 Net decrease (increase) in loans (2,066) 104 Purchase of premises and equipment ( 45) ( 108) NET CASH USED BY INVESTING ACTIVITIES $ 1,086 2,951 Financing activities: Net increase (decrease) in noninterest- bearing and interest-bearing deposits $ 3,712 169 Net increase (decrease) in federal funds purchased/repurchase agreements 758 1,578 Cash dividends (1,323) (1,203) Purchase of Treasury Stock ( 9) 0 Net increase (decrease) in FHLB borrowings 181 (2,562) Increase (decrease) in after-tax unrealized gains on securities ( 318) ( 241) NET CASH PROVIDED BY FINANCING ACTIVITIES $ 3,001 (2,259) DECREASE IN CASH AND CASH EQUIVALENTS $ 4,720 1,795 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,196 13,296 CASH AND CASH EQUIVALENTS AT END OF QUARTER $12,916 15,091 ===== ====== 6 The unaudited consolidated financial statements have been prepared on a consistent basis and in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation have been included. These adjustments were normal reoccurring adjustments. For further information, refer to the consolidated financial statements and footnotes included in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1996. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION At March 31, 1997, average total assets were $260.7 million compared to $253.4 million at March 31, 1996 and $257.3 million at December 31, 1996. Average earning assets at the period ended March 31, 1997 totaled $244.2 million as compared to $237.3 million at March 31, 1996 and $241.3 million at December 31, 1996, respectively. The following discussion examines the significant factors relative to changes in the Corporation's balance sheets. SECURITIES The investment portfolio is comprised of U.S. Treasury and other U.S. Government agency-backed securities, collateralized mortgage- backed securities, tax-exempt obligations of states and political subdivisions and certain other investments. The quality of obligations of states and political subdivisions will be A, AA, or AAA, the majority of which will be AA or AAA, as rated by a nationally recognized service. As a matter of policy, in support of the local service area, certain unrated bonds of local municipalities may be purchased provided they are of reasonable credit risk. On November 15, 1995, the Financial Accounting Standards Board issued a guide for the implementation of SFAS 115 which allows a bank to reassess the appropriateness of the classification of all securities held at November 15, 1995 and until December 31, 1995, and account for any resulting changes in classifications as a transfer. Changes in classification from the held-to-maturity category that result from this one-time reassessment will not call into question the intent of a bank to hold other debt securities to maturity in the future. As a result of this one- time reassessment, on November 30, 1995, the Bank transferred securities with a book value of approximately $42.8 million and related unrealized gains and losses of approximately $0.8 million and $0.2 million, respectively (net unrealized gain of approximately $0.6 million), from held-to-maturity to available- for-sale. As of December 31, 1995, all investment securities were classified as available-for-sale. Management classified all securities as available-for-sale so that securities may be sold prior to their maturity for purposes of bank asset allocations, rate sensitivity or liquidity and, hence, tend to be more liquid. The Corporation's average debt securities portfolio at March 31, 1997 was $98.5 million which was an increase from average investments of $94.3 million at March 31, 1996 and $97.5 million at December 31, 1996. At March 31, 1997, the liquidity portion of the current portfolio, fixed rate debt securities maturing in the year or less, totaled $19.3 million or 19.5% of total debt securities and is an integral part of asset/liability management. In addition, floating rate securities with a repricing frequency of one year or less totaled $5.5 million or 5.5% of total debt securities. At March 31, 1996, fixed rate securities maturing in one year or less totaled $20.0 million and floating rate debt securities with a repricing frequency of one year or less totaled $15.2 million. LOANS The Corporation's average loan portfolio totaled $143.2 million at March 31, 1997 which was a substantial increase over the corresponding period in 1996 with average loans of $137.1 million and $138.5 million at March 31, 1996 and December 31, 1996, respectively. Average loan growth reflected an increase of $6.1 million or 4.5% over March 31, 1996 and $4.7 million or 3.4 % over December 31, 1996. The increase in the loan portfolio was attributed primarily to the growth in real estate mortgage lending which increased $6.8 million or 9.3% over the period ended March 31, 1996 and $1.2 million or 1.5% over December, 1996. There was no commercial paper included in the loan portfolio at the end of the current reporting period. 8 Upon adoption of the Statement of Financial Accounting Standards Nos. 114 and 118 "Accounting By Creditors for Impairment of a Loan" and "Accounting By Creditors for Impairment of a Loan - Income Recognition and Disclosures", the Corporation's Management defines an impaired loan as one for which it is likely the subsidiary will not collect its principal and interest in accordance with the contracted schedule. Since SFAS 114 states that the classifying of loans as impaired need not be applied individually to "large groups of smaller balance homogeneous loans", Management has taken the position that SFAS 114 does not apply to the Corporation's consumer loan portfolio or residential mortgage loans which are collectively evaluated for impairment. Management may, however, choose to apply the Statement to certain specific larger mortgage loans. As a matter of the Corporation's policy, there is no difference between impaired loans and nonaccruing loans with the exception of those loans which will be evaluated collectively. A loan is placed on nonaccrual status when interest or principal has not been paid for 90 days. Exceptions to this policy are those loans that are in the process of collection and are well secured. A well-secured loan is secured by collateral with sufficient market value to repay principal and all accrued interest. When evaluating a loan, the loan officer first considers the following factors: ability to pay, financial condition of the borrower, management, collateral and guarantors, structure, industry and economics. These factors having been weighed, the loan is then assigned to one of the following ratings: A-Excellent, B-Good, C-Fair, D-Watch (Substandard), E- Doubtful (Impaired). Losses on impaired loans are recognized in a timely manner, as soon as there is a reasonable probability of loss and the amount of loss can be calculated, that loss will be recognized. At March 31, 1997, the recorded investment in loans that were considered to be impaired under SFAS 114 was $33,154, all of which were on a nonaccrual basis. The related allowance for possible credit losses for the impaired loans at March 31, 1997 was $13,586. The average recorded investment in impaired loans at March 31, 1997 was approximately $108,223. Impairment on one loan with a recorded investment of $23,255 was measured based on the fair value of the collateral. Impairment on one loan with a recorded investment of $9,899 was measured using a present value calculation. The Corporation does not recognize interest income on impaired loans and the entire change in the net carrying amount is reported as an adjustment to provision for possible credit losses, but in no event are changes in the net present value used to justify having a loan booked at a value that exceeds its recorded investment value. The Corporation maintains sound credit polices through its loan review committee and various loan committees by evaluating loan and credit quality, reviewing identified problem loans and continually monitoring their status and implementing immediate procedures to minimize any potential negative impact on the Corporation's operations. The following represent risk factors categorically in the loan portfolio at March 31, 1997 (in thousands): Loans accounted for on a nonaccrual basis - $25; Loans past-due ninety days or more as to interest or principal payments - $548; There were no trouble debt restructuring loans; Impaired loans - $33. At December 31, 1996, these risks factors were: Nonaccruing loans - $119; Loans past due ninety days or more - $851; There were no trouble debt restructuring loans; Impaired loans - $310. Any loans classified for regulatory purposes do not represent or result from trends or uncertainties which management reasonably expects will materially affect operating results, liquidity or capital resources nor is management aware of any known trends, events, or uncertainties that will have or that are likely to have material effect on the Corporation's liquidity, capital resources or operations. OTHER EARNING ASSETS At the reporting period ended March 31, 1997, average federal funds sold totaled $2.4 million compared to $5.9 million and $5.2 million, which equates to $3.5 million less than March 1996 and $2.8 million less than December, 1996, respectively. 9 DEPOSITS Average deposits of the Corporation for the period ended March 1997 were $217.8 million compared to $213.2 million and $216.0 million for the corresponding period in 1996 and the year ended December, 1996, respectively. Short and medium term rate increases caused depositors to take advantage of certificates of deposit rates which resulted in an increase in these deposits. Certificates of deposit of less than $100 thousand increased $3 million or 3.7% and $2.5 million or 2.9% over the periods ended March and December, 1996, respectively. Certificates of deposit of $100 thousand or more increased over March 31, 1996 by $2.3 million or 8.6% and December 31, 1996 by $2.2 million or 8.1%. CAPITAL The capital growth rate, exclusive of unrealized net gains or losses on securities, increased $1,614 million or 5.4% over March 31, 1996 and decreased $253 thousand or 0.8% over December 31, 1996. For the period ended March, 1997, the Corporation had an equity capital to assets ratio of 11.7% compared to 11.6% over both March 31, 1996 and December 1996, respectively. Regulatory risk- adjusted capital adequacy standards were revised in 1993. Under risk-adjusted capital requirements, total capital consists of Tier 1 capital which is essentially Common Shareholders' equity less tangible assets, and Tier 2 capital which consists of certain types of preferred stock, subordinated debt, and allowance for possible credit losses not to exceed 1.25% of risk- adjusted assets. The capital ratio is then computed by dividing the sum of Tier 1 and Tier 2 capital by the total of risk- adjusted assets including converted off-balance-sheet risks. The minimum requirement for Tier 1 capital is 4% and total capital (Tier 1 plus Tier 2) is 8%. The Corporation's Tier 1 capital ratio was 20.9% and total capital was 22.2% at March 31, 1997 compared to 21.1% and 22.4% at March 31, 1996 and 21.4% and 22.7% at December 31, 1996. These ratios substantially exceed the Federal Reserve Board's capital guidelines for a "well- capitalized" institution, which are 6% for Tier 1 and 10% for total capital. It is management's intent to maintain a level of capitalization that allows the flexibility to take advantage of opportunities that may arise in the future. The formation of two nonbank subsidiaries resulted in the July, 1996 business opening of CBT Insurance, Inc. and CBT Realty, Inc. Both subsidiaries are wholly owned by CB&T, Inc. with an initial investment in each of $1,000 to purchase one hundred percent (100%) of the stock issued by each of the newly formed subsidiaries. The principal activity of CBT Insurance, Inc. is insurance sales. CBT Realty, Inc. will engage in the holding and disposing of real estate acquired through foreclosure, however, through March 1997, there has been no activity in CBT Realty, Inc. MATERIAL CHANGES IN RESULTS OF OPERATION Year-to-date 1997, interest from investment securities increased by $77 thousand or 5.2% from the corresponding 1996 period. This increase in investment income is attributable to the increase in municipal bonds in the portfolio, therefore resulting in a higher average yield than that of 1996. At year-to-date March 31, 1997, there were net realized gains (losses) on the sales of securities of $12 thousand and none in 1996. At March 31, 1997 net unrealized gains in securities totaled $.5 million and categorically were; Treasuries - $.1 million, Agencies - $(.2) million and Municipals -$.6 million. For the corresponding period in 1996, net unrealized gains totaled $1 million and categorically were; Treasuries - $.2 million, Agencies - $ .1 million and Municipals - $.7 million. The Corporation's interest from loans for the period ended March 31, 1997, increased $53 thousand or 1.6% over the same period in 1996. This increase in loan interest income is primarily a result of the increase in the volume of loans outstanding. 10 Interest income on federal funds sold decreased $48 thousand or 62.1% through the first quarter of 1997 from the corresponding period in 1996. Due to slightly rising interest rates on deposit accounts and growth in higher yielding certificates of deposit, interest expense on interest-bearing deposits increased over the March, 1997 period by $31 thousand or 1.5%. Interest expense for the 1997 reporting period on certificates of deposit of less than $100 thousand decreased by $2 thousand or less than 1% through the first quarter and interest on time certificates of $100 thousand or more increased by $33 thousand or 8.5%. Total interest expense on transaction accounts and savings deposits for the 1997 reporting period remained constant with 1996. Interest expense on F.H.L.B. borrowings decreased $3 thousand or 2.6% from the same year-to-date period in 1996. Non-interest income (excluding securities transaction) increased $23 thousand or 5.6% for the year-to-date 1997 over the corresponding period in 1996. This increase is primarily attributable to an increase in service charges on insufficient funds and returned checks as well as gains on sale of other assets. Through March 31, 1997, non-interest expense increased by $105 thousand or 7.5%. This increase in non-interest expense in 1997 over the corresponding period in 1996 is a result of the rising costs of salaries and employee benefits due to additional employees required to adequately manage growth in the volume of assets and liabilities, and occupancy and furniture and equipment expenses associated with opening a new branch. Year-to-date 1997, provision for possible credit losses reflects an increase of $47 thousand or 51% over the corresponding period in 1996. The net result of operations after federal income taxes for 1997 is a decrease of $41 thousand or 3.7% over same year-to-date period in 1996. It is the opinion of management that during the current reporting period of March 1997, the effect of general inflation was relatively immaterial to the operation of the Corporation and the results thereof. 11 C B & T, INC. AND WHOLLY-OWNED SUBSIDIARY PART II. OTHER INFORMATION Items 1.-5. None applicable to the reporting period for the three (3) months ended March 31, 1997. Item 6. Exhibits and Reports on Form 8-K. (a) - No exhibits were furnished in accordance with Item 601 of Regulation S-K for three (3) months ended March 31, 1997. (b) - No reports on Form 8-K were filed by the Registrant during the three months ended March 31, 1997. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. C B & T, INC. By: /s/ Jeffrey A.Golden Jeffrey A. Golden, Chairman, President and Chief Executive Officer Date: May 6, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Jeffrey A. Golden Jeffrey A. Golden, Chairman, President and Chief Executive Officer (Principal Executive and Financial Officer) Date: May 6, 1997 /s/ Jerry N. Brown______________________________ Jerry N. Brown, Sr Vice-President City Bank & Trust Company (Chief Financial Officer) Date: May 6, 1997 13 EX-27 2
9 1,000 3-MOS DEC-31-1997 MAR-31-1997 9,327 114 3,475 0 0 98,341 98,873 146,060 2,037 265,427 221,269 2,120 2,985 7,384 0 0 830 30,935 265,427 3,432 1,548 32 5,012 2,117 2,245 2,767 140 12 1,507 1,565 1,565 0 0 1,079 4.08 4.08 7.33 25 536 0 33 1,931 78 44 2,037 0 0 0
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