-----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, QhnooSkP/JuKdBxWIWk6iTh+2m1CGWK4iCXS6nQdljeAV2vuP28+OQY0YxEcozoG wMbJ9V8A36cizPFx2j5/FA== 0000357130-97-000017.txt : 19970812 0000357130-97-000017.hdr.sgml : 19970812 ACCESSION NUMBER: 0000357130-97-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970811 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: 97655163 BUSINESS ADDRESS: STREET 1: 101 E MAIN ST CITY: MCMINNVILLE STATE: TN ZIP: 37110 BUSINESS PHONE: 6154732148 10-Q 1 FORM 10-Q FOR JUNE 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 June 30, 1997 [ ] TRANSITION REPORT PURSUANT 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 June 30, 1997 264,163 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 June 30, 1997 and December 31, 1996 (Unaudited) 4 Consolidated Statements of Income for the three (3) month period and year-to-date ended June 30, 1997 and 1996, respectively (Unaudited) 5 Consolidated Statements of Cash Flows for the year-to-date endedJune 30, 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 June 30, December 31, 1997 1996 (Dollars in Thousands) ASSETS Cash and due from banks $7,647 7,021 Federal funds sold 7,500 1,175 Investment securities (amortized cost $105,187 and $101,026, respectively) 106,339 102,070 Loans, net of unearned income and allowance for possible credit losses 143,252 142,096 Interest receivable 3,326 3,116 Bank premises and equipment, less allowances for depreciation 2,213 2,333 Other assets 3,837 3,648 TOTAL ASSETS $274,114 261,459 ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Non-interest bearing $31,418 28,178 Interest-bearing deposits (other than time) 74,813 69,826 Time deposits less than $100M 90,563 90,610 Time deposits of $100M or more 30,748 28,943 TOTAL DEPOSITS $227,542 217,557 Accounts payable and accrued liabilities 3,560 3,097 FHLB borrowings 7,210 7,203 Federal funds purchased/repurchase agreements 3,334 1,362 TOTAL LIABILITIES $241,646 229,219 SHAREHOLDERS' EQUITY: Common Stock of 2.50 par value: Authorized 1,000,000 shrs, issued 331,814 shrs including 67,651 and 67,229 Treasury shrs in June `97 and December `96, respectively $ 830 830 Surplus 5,000 5,000 Retained earnings 31,388 31,179 Less cost of treasury shares (5,465) (5,416) Net unrealized gains (losses) on available for sale securities, net of tax 715 647 TOTAL SHAREHOLDERS' EQUITY $ 32,468 32,240 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $274,114 261,459 ====== ====== 4 C B & T, INC. AND WHOLLY-OWNED SUBSIDIARY McMinnville, Tennessee 37110 CONSOLIDATED STATEMENTS OF INCOME Fiscal Year-to-date Three Months Ended Six Months Ended June 30 June 30 1997 1996 1997 1996 INTEREST INCOME: Interest and fees on loans $3,517 3,416 6,949 6,795 Interest on investment securities: Taxable income 1,189 1,195 2,349 2,358 Tax-exempt income 413 321 801 629 Other interest income 82 94 114 173 TOTAL INTEREST INCOME $5,201 5,026 10,213 9,955 INTEREST EXPENSE: Interest on deposits other than time $ 563 517 1,065 1,019 Time deposits less than $100M 1,216 1,165 2,410 2,361 Time deposits of $100M or more 428 379 849 767 Interest on FHLB borrowings 110 97 221 211 Interest on federal funds purchased/ repurchase agreements 28 16 45 21 TOTAL INTEREST EXPENSE $2,345 2,174 4,590 4,379 TOTAL NET INTEREST INCOME $2,856 2,852 5,623 5,576 PROVISION FOR POSSIBLE CREDIT LOSSES ( 82) ( 85) ( 222) ( 178) NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE CREDIT LOSSES $2,774 2,767 5,401 5,398 OTHER INCOME: Service charges on deposit accounts $ 305 311 600 592 Other service charges, commissions and fees 66 101 119 164 Net realized gains (losses) on investment securities 2 3 14 3 Other income 149 129 234 195 TOTAL OTHER INCOME $ 522 544 967 954 OTHER EXPENSES: Salaries and employee benefits $1,007 1,002 1,807 1,788 Net occupancy expense 83 78 170 149 Furniture and equipment expense 206 194 415 377 FDIC Assessment 7 0 13 1 Other 438 406 843 767 TOTAL OTHER EXPENSES $1,741 1,680 3,248 3,082 INCOME BEFORE INCOME TAXES $1,555 1,631 3,120 3,270 Income taxes ( 442) ( 512) ( 928) (1,031) NET INCOME $1,113 1,119 2,192 2,239 ===== ===== ===== ===== Common shares outstanding ended June 30 264,163 269,654 264,163 269,654 Net income per share of common stock $4.21 4.15 8.30 8.30 Dividends per share of common stock $2.50 2.04 7.51 6.50 5 C B & T, INC. AND WHOLLY-SUBSIDIARY MCMINNVILLE, TENNESSEE 37110 CONSOLIDATED STATEMENTS OF CASH FLOWS For the Period Ended June 30 1997 1996 (Dollars in thousands) Operating activities: Net income $2,192 2,239 Adjustments to reconcile net income to net cash provided by operating activities: Provision for possible credit losses 222 178 Provision for depreciation and amortization 271 241 Decrease (increase) in interest receivable ( 210) ( 131) Decrease (increase) in other assets ( 189) ( 673) Increase (decrease) in accounts payable and accrued liabilities 463 529 NET CASH PROVIDED BY OPERATING ACTIVITIES $2,749 2,383 Investing activities: Purchases of investment securities $( 25,075) ( 23,253) Proceeds from sales of investment securities 4,970 1,504 Proceeds from maturities, calls and principal collectionsof investment securities 15,944 16,773 Net decrease (increase) in unrealized gains on investment securities ( 108) 1,195 Net decrease (increase) in loans ( 1,378) ( 616) Purchase of premises and equipment ( 151) ( 194) NET CASH USED BY INVESTING ACTIVITIES $( 5,798) ( 4,591) Financing activities: Net increase (decrease) in noninterest- bearing and interest-bearing deposits $ 9,985 5,545 Net increase (decrease) in federal funds purchased/repurchase agreements 1,972 1,123 Cash dividends ( 1,983) ( 1,753) Purchase of Treasury Stock ( 49) ( 2) Net increase (decrease) in FHLB borrowings 7 ( 2,713) Increase (decrease) in after-tax unrealized gains on securities 68 ( 741) NET CASH PROVIDED BY FINANCING ACTIVITIES $ 10,000 1,459 INCREASE IN CASH AND CASH EQUIVALENTS $ 6,951 ( 749) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,196 13,296 CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 15,147 12,547 ===== ====== 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 June 30, 1997, average total assets were $265.8 million compared to $256.4 million at June 30, 1996 and $257.3 million at December 31, 1996. Average earning assets at the period ended June 30, 1997 totaled $249.0 million as compared to $240.3 million at June 30, 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. 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 June 30, 1997 was $99.9 million which was an increase from average investments of $95.6 million at June 30, 1996 and $97.5 million at December 31, 1996. At June 30, 1997, the liquidity portion of the current portfolio, fixed rate debt securities maturing in the year or less, totaled $17.8 million or 17.8% 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 $5.4 million or 5.4% of total debt securities. At June 30, 1996, fixed rate securities maturing in one year or less totaled $18.5 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 $143.9 million at June 30, 1997 which was an increase over the corresponding period in 1996 with average loans of $138.1 million and $138.5 million at June 30, 1996 and December 31, 1996, respectively. Average loan growth reflected an increase of $5.9 million or 4.3% over June 30, 1996 and $5.4 million or 3.9 % over December 31, 1996. The increase in the loan portfolio was attributed primarily to the growth in real estate mortgage lending and consumer lending. Real estate loans increased $6.4 million or 8.6% over June 30, 1996 and $4.5 million or 5.9% over December 31, 1996. Consumer loans increased $.5 million or 2.9% and $.3 million or 1.3% over June 30, 1996 and December 31, 1996, respectively. There was no commercial paper included in the loan portfolio at the end of the current reporting period. 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. 8 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 June 30, 1997, the recorded investment in loans that were considered to be impaired under SFAS 114 was $75,222, all of which were on a nonaccrual basis. The related allowance for possible credit losses for the impaired loans at June 30, 1997 was $6,628. The average recorded investment in impaired loans at June 30, 1997 was approximately $75,231. Impairment on two loans with a recorded investment of $75,222 was measured based on the fair value of the collateral. 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 June 30, 1997 (in thousands): Loans accounted for on a nonaccrual basis - $77; Loans past-due ninety days or more as to interest or principal payments - $832; There were no trouble debt restructuring loans; Impaired loans - $75. 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 June 30, 1997, average federal funds sold totaled $5.1 million compared to $6.5 million and $5.2 million, which equates to $1.4 million less than June 1996 and $.1 million less than December, 1996, respectively. DEPOSITS Average deposits of the Corporation for the period ended June 1997 were $230.9 million compared to $215.7 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 3.4% and $2.5 million or 2.8% over the periods ended June and December, 1996, respectively. Certificates of deposit of $100 thousand or more increased over June 30, 1996 by $3.0 million or 11.2% and December 31, 1996 by $2.7 million or 9.8% 9 CAPITAL The capital growth rate, exclusive of unrealized net gains or losses on securities, increased $1,460 thousand or 4.8% over June 30, 1996 and increased $160 thousand or 0.5% over December 31, 1996. For the period ended June, 1997, the Corporation had an equity capital to assets ratio of 11.9% compared to 11.6% for both June 30, 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 June 30, 1997 compared to 21.5% and 22.8% at June 30, 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 June 1997, there has been no activity in CBT Realty, Inc. MATERIAL CHANGES IN RESULTS OF OPERATION Interest from investment securities for the current quarter increased by $86 thousand or 5.7% 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 June 30, 1997, there were net realized gains (losses) on the sales of securities of $14 thousand compared to $3 thousand in June, 1996 and ($22) thousand in December, 1996. At June 30, 1997 net unrealized gains in securities totaled $1.1 million and categorically were; Treasuries - $.1 million, Agencies - $.1 and Municipals -$.9 million. For the corresponding period in 1996, net unrealized gains totaled $.3 million and categorically were; Treasuries - $.1 million, Agencies - $ (.2) million and Municipals - $.4 million. The Corporation's interest from loans for the quarter ended June 30, 1997, increased $101 thousand or 3.0% 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, especially in the area of real estate lending. Interest income on federal funds sold increased $9 thousand or 9.9% in the second 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 June, 1996 period by $146 thousand or 7.1%. Interest expense for the 1997 reporting period on certificates of deposit of less than $100 thousand increased by $51 thousand or 4.4% for the second quarter and interest on time certificates of $100 thousand or more increased by $49 thousand or 12.9%. Total interest expense on transaction accounts and savings deposits for the 1997 reporting period increased over that of 1996 by $46 thousand or 8.9%. Interest expense on F.H.L.B. borrowings increased $13 thousand or 13.4% from the same quarter in 1996 due to an increase in the balance outstanding to F.H.L.B. during the current year. 10 Non-interest income (excluding securities transaction) decreased $21 thousand or 3.9% for the June 30, 1997 quarter over the corresponding period in 1996. This decrease is primarily attributable to a decrease in insurance commissions and mortgage loan application and closing fees. For the quarter ended June 30, 1997, non-interest expense increased by $61 thousand or 3.6%. 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, occupancy and furniture and equipment expenses associated with the opening a new branch in the fall of 1996, and an increase in FDIC insurance premium assessments. Year-to-date 1997, provision for possible credit losses reflects a increase of $44 thousand or 24.7% over the corresponding period in 1996. The net result of operations after federal income taxes for 1997 is a decrease of $47 thousand or 2.1% over the same year-to-date period in 1996. It is the opinion of management that during the current reporting period of June 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 June 30, 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 June 30, 1997. (b) - No reports on Form 8-K were filed by the Registrant during the three months ended June 30, 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: August 7, 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: August 7, 1997 /s/ Jerry N. Brown Jerry N. Brown, Sr Vice-President City Bank & Trust Company (Chief Financial Officer) Date: August 7, 1997 13 EX-27 2
9 1,000 6-MOS DEC-31-1997 JUN-30-1997 7,528 119 7,500 0 0 105,187 106,339 145,160 (1,908) 274,114 227,542 3,334 3,560 7,210 830 0 0 31,638 274,114 6,949 3,150 114 10,213 4,324 4,590 5,623 222 14 3,248 3,120 3,120 0 0 2,192 8.30 8.30 8.20 77 832 0 75 1,931 308 63 1,908 0 0 0
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