SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31,1994 Commission file number
0-16878
CBT CORPORATION
(Exact name of registrant as specified in its charter)
Kentucky 61-1030727
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
333 Broadway, Paducah, Kentucky 42001
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (502) 575-5100.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filled 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 of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at April 26,1994
Common Stock, No Par Value 2,767,519 shares
CBT CORPORATION
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
March 31, 1994 and December 31, 1993 1
Consolidated Condensed Statements of
Income Three Months Ended March 31, 2
1994 and 1993
Consolidated Condensed Statements of
Cash Flows 3
Three Months Ended March 31, 1994 and
1993
Notes to Consolidated Financial 4-7
Statements
Management's Discussion and Analysis
of Consolidated Condensed Financial
Condition and Results of Operation 8-14
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote
of Security Holder 15
EXHIBIT INDEX 17-18
CBT CORPORATION AND SUBSIDIARIES
PART 1 - FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited) (audited)
(Dollars in thousands) March 31 December 31
ASSETS 1994 1993
Cash and due from banks $20,802 $19,365
Federal funds sold 1,671 2,571
Money market investments 1,894 2,010
Total cash and cash equivalents 24,367 23,946
Investment securities (fair value -
March 31, 1994, $42,068
December 31, 1993, $43,302) 41,291 40,332
Securities available for sale (fair value -
December 31,1993, $148,085) 143,548 144,728
Total investments 184,839 185,060
Loans (net of unearned interest) 386,063 377,726
Less: allowance for loan loss (8,770) (8,483)
Loans, net 377,293 369,243
Premises and equipment, net 11,660 11,963
Accrued interest receivable 3,896 3,974
Other 5,945 6,311
Total assets $608,000 $600,497
LIABILITIES
Deposits:
Non-interest bearing $43,561 $44,598
Interest bearing 421,536 423,696
Total deposits 465,097 468,294
Short-term borrowings:
Federal funds purchased and securities
sold under agreements to repurchase 37,075 36,446
Notes payable-U.S. Treasury 2,000 2,000
Revolving lines of credit and other short- 5,100 1,240
term borrowings
Total short-term borrowings 44,175 39,686
Accrued interest payable 2,082 1,659
Term debt 5,000 5,000
FHLBB Advances 18,535 15,535
Other 4,063 3,384
Total liabilities 538,952 533,558
STOCKHOLDERS' EQUITY
Common stock, no par value, authorized
6,000,000 shares; issued and outstanding
2,767,519 shares 4,100 4,100
Capital surplus 13,298 13,298
Retained earnings 51,104 49,541
Unrealized gain on securities available for 546 -
sale, net of deferred tax
Total stockholders' equity 69,048 66,939
Total liabilities and stockholders' $608,000 $600,497
equity
See notes to consolidated financial statements.
CBT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Dollars in thousands except per share amounts)
Three Months Ended
March 31
1994 1993
INTEREST INCOME:
Loans, including fees:
Taxable $8,629 $8,022
Tax-exempt 76 81
Investment securities:
Taxable 1,763 2,085
Tax-exempt 865 755
Other 46 23
Total interest income 11,379 10,966
INTEREST EXPENSE:
Deposits 3,987 4,303
Short-term borrowings 490 399
Term debt 81 81
Total interest expense 4,558 4,783
NET INTEREST INCOME 6,821 6,183
PROVISION FOR LOAN LOSSES 284 355
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,537 5,828
NON-INTEREST INCOME:
Trust and investment advisory fees 351 399
Service charges on deposit accounts 501 381
Insurance commissions 188 153
Investment securities gains (losses) (4) 16
Gain on sale of finance receivables - 553
Other 310 317
Total non-interest income 1,346 1,819
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,648 2,447
Net occupancy 211 176
Depreciation and amortization 329 306
Data processing 199 177
Federal Deposit Insurance 266 242
Bank shares tax 209 173
Other 1,184 1,037
Total non-interest expense 5,046 4,558
INCOME BEFORE INCOME TAXES 2,837 3,089
INCOME TAX EXPENSE 703 859
NET INCOME $2,134 $2,230
PER COMMON SHARE:
Net Income $ 0.77 $ 0.81
Dividends $ 0.20 $ 0.18
See notes to consolidated financial statements.
CBT CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS(unaudited)(Dollars in thousands) Three Months Ended
March 31
OPERATING ACTIVITIES: 1994 1993
Net income $2,134 $2,230
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 284 355
Depreciation and amortization 329 306
Amortization and accretion of securities 378 333
Loss (gain) on sale of securities 4 (16)
Gain on sale of fixed assets (52) (12)
Changes in assets and liabilities:
Accrued interest receivable 78 46
Other assets 20 260
Accrued interest payable 423 329
Other liabilities 680 1,232
Net cash provided by operating activities 4,278 5,063
INVESTING ACTIVITIES:
Proceeds from maturities of investment 140 2,250
securities
Proceeds from sales of securities available 19,520 13,332
for sale
Proceeds from maturities of securities 1,077 -
available for sale
Principal collected on mortgage-backed
securities, including mortgage-backed 11,736 10,479
securities classified as available for sale
Payment for purchases of securities (31,794) (22,085)
Net increase in loans (8,334) (6,165)
Sale of finance receivables - 7,083
Proceeds from sales of premises and equipment 471 24
Payment for purchases of premises and (394) (238)
equipment
Net cash provided by (used in) investing (7,578) 4,680
activities
FINANCING ACTIVITIES:
Net decrease in deposits (3,197) (7,833)
Net increase (decrease) in other short term (411) (1,996)
borrowings
Proceeds from term debt 3,000 -
Cash advanced on revolving lines of credit 4,900 -
Principal payments on revolving lines of - (6,200)
credit
Cash dividends paid (553) (454)
Stock options exercised 15 -
Purchase of common stock (33) -
Net cash provided by (used in) investing 3,721 (16,483)
activities
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 421 (6,740)
CASH AND CASH EQUIVALENTS, JANUARY 1 23,946 27,187
CASH AND CASH EQUIVALENTS, MARCH 31 $24,367 $20,447
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest $4,135 $4,454
Federal income taxes - 78
See notes to consolidated financial statements.
CBT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1994
NOTE A: BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule
10-1 of Regulation S-X. Accordingly, they 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
(consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.
Operating results for the three month period ending March
31, 1994 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1994. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the
Corporation's annual report on Form 10-K for the year ended
December 31, 1993.
Cash and Cash Equivalents
For purpose of reporting cash flows, cash and cash
equivalents include cash and due from banks, federal funds
sold and money market investments. Generally, federal funds
are purchased and sold for one-day periods.
Income Taxes
The provision for income taxes in interim periods has been
allocated using the anticipated effective tax rate for the
respective calendar year, taking into consideration certain
tax exempt loan and interest income.
Statement of Financial Accounting Standards (SFAS) No. 109
"Accounting for Income Taxes", was issued by the FASB in
February 1992. SFAS No. 109 requires a change from the
deferred method under APB Opinion No. 11 to the asset and
liability method of accounting for income taxes. Under the
asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to differences between financial
statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income in the period that includes the
enactment date. Effective January 1, 1994, the Corporation
adopted SFAS No. 109. The cumulative effect of the change
in the method of accounting for income taxes was not
material.
Loans and Interest Income
Loans are stated at the principal balance outstanding, net
of unearned interest. Interest on loans is based upon the
principal balance outstanding, except interest on some
consumer installment loans, which is recognized on the sum-
of-the-years-digits method, which does not differ materially
from the interest method.
Per Common Share Data
Net income per common share is based on 2,767,519 shares
outstanding during each period covered within these interim
financial statements. Common stock options are not included
in net income per common share data since their effect is
not significant.
NOTE B: INVESTMENT SECURITIES
Investment securities are stated at cost adjusted for
amortization of premium and accretion of discount. The
Corporation has the ability and positive intent to hold
these securities to maturity. Gains and losses on
disposition of securities are computed by the specific
identification method at adjusted cost. The amortized cost
of investment securities to be held to maturity as of March
31, 1994, and December 31, 1993, are as follows:
(Dollars in Thousands) March 31,1994
Amortized Estimated Gross Unrealized
Cost Fair Gain Loss
Value
U. S. Treasury Securities
and obligations of other
U. S. Government agencies $ 4,719 $ 4,740 $ 66 $ 45
State and political 36,552 37,319 1,554 787
subdivisions
Other 20 9 - 11
Total securities $ 41,291 $ 42,068 $ 1,620 $ 843
December 31,1993
Amortized Estimated Gross Unrealized Gain
Cost Fair Gain Loss
Value
U. S. Treasury Securities
and obligations of other
U. S. Government agencies $ 4,499 $ 4,625 $ 126 $ -
State and political 35,813 38,670 2,977 120
subdivisions
Other 20 7 - 13
Total securities $40,332 $43,302 $ 3,103 $ 133
Investment securities having an estimated fair value of
approximately $17.9 million and $18.5 million on March 31,
1994, and December 31, 1993, respectively, were pledged to
secure public deposits, securities sold under agreements to
repurchase, and for other purposes, as required or permitted
by law.
NOTE C: SECURITIES AVAILABLE FOR SALE
Prior to 1992, the Corporation accounted for all investments
at cost adjusted for amortization of premiums and accretion
of discounts. In 1992 and 1993, in anticipation of a new
accounting standard, the Corporation revised its investment
policy by reclassifying investment securities having an
amortized cost of $51.7 million and $21 million,
respectively, to securities available for sale. Securities
available for sale are carried at the aggregate of the lower
of amortized cost or fair value. Amortization of premiums
and accretion of discounts are recorded primarily on the
interest method. Securities available for sale include
securities that management intends to use as part of its
asset/ liability management strategy and that may be sold in
response to changes in interest rates, resultant prepayment
risk and other factors related to interest rate and
resultant prepayment risk. Gains and losses on disposition
of securities available for sale are computed by the
specific identification method.
In May 1993, the Financial Accounting Standards Board(FASB)
issued Statement of Financial Accounting Standards(SFAS) No.
115 "Accounting for Certain Investments in Debt and Equity
Securities" that addresses the accounting and reporting for
investments in equity securities that have readily
determinable fair values and for all investments in debt
securities. Such investments are to be classified into
three categories: held to maturity securities (reported at
amortized cost), trading securities (reported at fair value,
with unrealized gains and losses included in earnings), and
available for sale securities (reported at fair value, with
unrealized gains and losses excluded from earnings and
reported as a separate component of equity). SFAS No. 115
is effective for fiscal years beginning after December 15,
1993. The Corporation adopted SFAS No. 115 on January 1,
1994. At March 31, 1994, the Corporation has adjusted the
available for sale securities balance by $840,000 to fair
value and recorded a $546,000, unrealized gain on securities
available for sale, net of deferred income taxes of
$294,000, as a separate component of stockholders' equity.
<S
SECURITIES AVAILABLE FOR SALE
(Dollars in Thousands) Estimated
Amortized Fair Gross Unrealized
Cost VAlue Gain Loss
U. S. Treasury Securities
and obligations of other $ 17,634 $ 18,130 $ 533 $ 37
U.S. Government agencies
State and other political 15,959 17,281 1,375 53
subdivisions
Mortgage-backed 107,078 106,100 657 1,635
securities
Other 2,037 2037 - -
Total securities $142,708 $143,548 $2,565 $1,725
December 31,1993
Estimated
Amortized Fair Gross Unrealized
Cost Value Gain Loss
U. S. Treasury Securities
and obligations of other $ 16,652 $ 17,471 $ 819 $ -
U.S. Government agencies
State and other political 15,247 17,035 1,811 23
subdivisions
Mortgage-backed 110,921 111,670 1,123 374
securities
Other 1,908 1,909 1 -
Total securities $144,728 $148,085 $3,754 $ 397
Securities available for sale having an estimated fair value
of approximately $76.6 million and $73.6 million, on March
31, 1994, and December 31, 1993, respectively, were pledged
to secure public deposits, securities sold under agreements
to repurchase, and for other purposes, as required or
permitted by law.
In the above tables the "other" category of investment
securities include corporate bonds, of which, none could be
classified as being issued by a highly leveraged entity.
Furthermore, management has determined that any decline in
market value of the securities to a level below book value
is temporary as outlined within Topic 5M of the Staff
Accounting Bulletin. This determination is based on the
fact that due to the nature of the securities, upon
maturity, the Corporation will receive full par value.
PART I - FINANCIAL INFORMATION
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
CBT Corporation (the Corporation) is a bank holding company
located in Paducah, Kentucky. The Corporation provides
banking services through its banking subsidiaries, Citizens
Bank & Trust Company (Citizens) and Pennyrile Citizens Bank
& Trust Company (Pennyrile) and consumer finance services
through its subsidiary, Fidelity Credit Corporation (FCC).
On September 1, 1993, the Corporation completed the purchase
of all assets and assumption of all liabilities of three
branches of Security Trust Federal Savings and Loan
Association (Security). In the transaction the Corporation
assumed approximately $62.2 million in deposits, acquired
approximately $4.2 million in loans, premises and equipment,
and other assets and received approximately $58 million in
cash. This transaction was accounted for under the purchase
method; therefore, 1993 amounts reflect four months of
operations. Historical data was not affected by this
transaction.
On November 30,1993, the Corporation completed the
acquisition of Pennyrile Bancshares, Inc. and its wholly
owned subsidiary Pennyrile Citizens Bank and Trust Company
(Pennyrile). At the time of the acquisition Pennyrile had
consolidated assets of approximately $46.5 million, total
deposits of approximately $38.5 million, and total
stockholders' equity of approximately 44.3 million. This
transaction was accounted for under the pooling of interests
method; therefore, 1993 and all historical data have been
adjusted for the effects of this acquisition. At March 31,
1994, the Corporation had total consolidated assets of
$608.0 million, net loans of $386.1 million and total
stockholders' equity of $69.0 million.
Citizens and Pennyrile provide a full range of corporate and
retail banking services, including the acceptance of
deposits for checking, savings and time deposit accounts;
making of secured and unsecured loans to corporations,
individuals, and others; issuance of letters of credit;
rental of safe deposit boxes; and financial counseling for
individuals and institutions. Interest on domestic,
commercial and industrial loans constitutes the largest
contribution to the operating revenue of Citizens and
Pennyrile.
Citizens and Pennyrile also provides a wide variety of
personal and corporate trust and trust related services
including serving as executor of estates; as trustee under
testamentary and inter vivos trusts; as guardian of the
estates of minors and incompetents; and as financial advisor
to and custodian for individuals, corporations and others.
FCC makes loans primarily to individuals in the form of
secured and unsecured loans.
Citizens has eight offices, six located in Paducah, Kentucky
and two located elsewhere in McCracken County. Pennyrile
has three offices located in Christian County, Kentucky.
Fidelity is primarily a regional finance company offering
secured and unsecured loans to individual consumers.
Fidelity has sixteen offices located in Kentucky.
Results of Operations
Net income for the first three months of 1994 was $2,134,000
or $0.77 per common share which was $96,000 less than first
quarter 1993 net income of $2,230,000 or $0.81 per share.
1993's numbers however, included a $553,000 gain related to
the sale of all the Tennessee offices of Fidelity.
Adjusting for the after tax effect of this item, net income
in 1994 would have been $236,000 or 12% higher than the
previous year period.
Return on average stockholders' equity and average assets,
not annualizing investment security transactions and the
sale of assets described above, for the first three months
of 1994 and 1993 were 12.70%, 12.88%, 1.44% and 1.47%,
respectively.
Net Interest Income
Net interest income is the difference between interest
earned on earning assets and interest expensed on interest
bearing liabilities. Net interest spread is the difference
between the average rate earned on earning assets and the
average rate of interest paid on interest bearing
liabilities. The net yield on earning assets is net
interest income divided by average earning assets. For
computational purposes, non-accrual loans are included in
earning assets. The following table summarizes the above
for the three months ended March 31, 1994, and 1993.
Three Months Ended
March 31
(Dollars in Thousands) 1994 1993
Total Interest Income $11,379 $10,966
Total Interest Expense 4,558 4,783
Net interest income $ 6,821 $ 6,183
(Fully Tax Equivalent)
Net interest spread 4.27% 4.16%
Net yield on average 5.11% 5.12%
earning assets
Total interest income on a fully tax equivalent basis
increased $450,000 or 4.1% in the first quarter of 1994
compared to the corresponding quarter of 1993. Average
earning assets increased significantly, $56.5 million or
11.0% as Citizens assumed $62.2 million in deposits during
the third quarter of 1993 from Security. These deposits
were assumed, along with a $2.0 million purchase of loans.
This event has helped fund loan growth of $51.2 million, or
15.5%, which has been experienced in all categories of
loans. Commercial loans are up $12.9 million or 9.5%,
residential real estate loans are up $14.0 million or 17.0%
and installment loans are up $17.4 million or 28.2%. Loan
yields have fallen along with the general decline in rates
to 8.85% from 9.59% in the first quarter of 1993. Security
balances have remained largely the same although yields have
dropped 27 basis points to 6.66%.
Average interest bearing liabilities have increased by $49.9
million or 11.5% as the assumption of deposits has been
offset by a small decline in average deposit levels as
Citizens has more aggressively lowered its pricing on
deposit products. This has been possible as Citizens has
turned to the Federal Home Loan Bank (FHLBB) as an
alternative source of funds. Average borrowed funds
including the FHLBB borrowings have increased $14.5 million
or 108.2%. The Paducah deposit market has higher pricing
than other areas of the state and nation and the ability to
use FHLBB advances affords Citizens the opportunity to
lower its deposit cost. The overall rate on interest
bearing liabilities dropped from 4.48% to 3.82%.
The effect of the move to lower funding costs has increased
the interest spread by 11 basis points although the net
yield on average earning assets declined by 1 basis point to
5.11%. This is a result of the corporation's free funds
(the difference between earning assets and interest bearing
liabilities) being less valuable as they are invested in
assets with a lower earning yields.
Provision for Loan Losses
Management continues its efforts to take a conservative
posture in providing assurances the Corporation, through the
allowance for loan losses, will be able to absorb potential
loan losses without negatively impacting earnings. The
Corporation's allowance for loan losses at March 31, 1994,
was 2.27% of total loans as compared to 2.32% one year ago.
The allowance for loan losses has risen during this period
even though the provision for loan losses declined 20% and
net charge- offs were reduced. At March 31, 1994, the
provision for loan losses to average net loans was 0.30%,
down from 0.43% at March 31, 1993. Net charge-offs for the
three months of 1994 and 1993 were insignificant as noted in
the table below.
The amount charged to operations and the related balance in
the reserve for possible loan losses is based upon periodic
evaluations of the loan portfolio by management. These
evaluations consider several factors including, but not
limited to, general economic conditions, loan portfolio
comparison, prior loan loss experience and management's
estimate of future potential losses. At March 31, 1994, the
allowance for loan losses to total non performing assets was
871% compared to 832% at December 31, 1993.
Three Months Ended
March 31
1994 1993
Balance, beginning of period $ 8,483 $ 7,658
Provision for loan losses
284 355
Adjustments related to sale of
finance receivables - (177)
Loans charged off
(88) (142)
Less recoveries
91 113
Net charge-offs
3 (29)
Balance at end of period $ 8,770 $ 7,807
Non-performing Assets
Non-performing assets have increased just slightly by
$68,000 since December 31, 1993.
According to Citizens Bank credit policy, credit outstanding
to any SIC group of borrowers in excess of 25% of the
aggregate capital structure of the bank is considered a
concentration of credit. Credit extensions involving
commercial real estate (27.91%) represents a concentration
according to the policy. However, based upon the credit
quality and diversity of the borrower group as a whole it is
not believed that this concentration represents undue credit
risk.
The accrual of interest income is generally reviewed for
discontinuance when a loan becomes 90 days past due as to
principal or interest. Management may elect to continue the
accrual of interest when the estimated net realizable value
of collateral is sufficient to cover the principal balance
and accrued interest or, in the opinion of management, the
interest is collectible.
The Corporation's internal credit review process is designed
to identify potential problem credits in a timely manner.
At March 31, 1994, the Corporation had identified
approximately $6.6 million of such credits. These credits
are not included in the schedule of non-performing assets
below since the borrowers currently meet all applicable loan
agreement terms. The following tables provides a summary of
non-performing loans and other real estate owned.
March 31 December 31 March 31
Dollars in Thousands 1994 1993 1993
Non-accrual loans $ 838 $ 668 $ 978
Accruing loans which are
contractually past due
90 days or more 133 235 221
Total non performing loan $ 971 $ 903 $ 1,199
Other real estate owned 35 35 373
Total non performing loans and $ 1,006 $ 938 $ 1,572
other real estate owned
Non-performing loans to total 0.25% 0.24% 0.36%
loans
Non-performing loans and other
real estate owned to total
loans and other real 0.26% 0.25% 0.47%
estate owned
At March 31, 1994, December 31, 1993 and March 31, 1993,
there were no restructured loans in the loan portfolio.
Management is of the opinion that other real estate owned is
being carried on the balance sheet at the lower of book or
market value. It is the policy of the Corporation to obtain
an independent appraisal of property immediately upon the
transfer to other real estate owned. Book value is written
down if it exceeds this appraisal.
Non-Interest Income and Expense
Non-interest income in 1994 decreased by $473,000 due to
1993 figures including $553,000 of gain on the sale of
finance receivables discussed elsewhere. Excluding this
item non-interest income would have been up $80,000 or 6.3%.
Trust and investment advisory fees are down $48,000 or 12.0%
due to slightly lower activity in the corporation's
brokerage business and the fact that 1993 numbers included
trust fees booked upon the settlement of several large
estates. Service charges on deposit accounts have increased
by $120,000 or 31.5% with the addition of deposits assumed
in Security and an increased fee structure. Credit life
commissions are up $35,000 or 22.9% related to increased
volume in consumer loans.
Non-interest expense for the first quarter of 1994 compared
to the first quarter of 1993 increased by $488,000 or 10.7%
with all categories growing by a similar percentage amount.
Much of the increase is due to the increased asset base and
expenses associated with acquisition activity.
Income Taxes
The Corporation had income tax expense of $703,000 and
$859,000 for the first three months of 1994 and 1993,
respectively. These figures represent effective tax rates
of 24.8% and 27.8% respectively. The effective tax rate has
declined due to a higher concentration of tax exempt assets
and the usage of a net operating loss carryover at
Pennyrile.
Liquidity
The liquidity of the Corporation depends primarily on the
dividends paid to it as the sole shareholder of its
subsidiaries. In addition to dividends, other sources of
liquidity for the Corporation include unused credit lines
with correspondent banks as well as access to the discount
window at the Federal Reserve Bank. Additionally, the
current agreement with the Federal Home Loan Bank Board
allows Citizens to borrow approximately $18.8 million. At
March 31, 1994, $18.5 million was borrowed under this
program. This line can be increased upon the purchase of
additional Federal Home Loan Bank stock.
In addition to maintaining a satisfactory level of
liquidity, management must control the degree of interest
rate risk assumed on the balance sheet. Managing this risk
involves regular monitoring of the amount of interest
sensitive assets relative to interest sensitive liabilities
over specific time intervals. The Corporation's one year
cumulative ratio remains close to evenly balanced at 99% at
March 31, 1994 compared to 99% at December 31, 1993.
Capital Resources
Current regulatory guidelines for minimum capital
requirements assign measures of credit risk to balance sheet
and off-balance sheet exposures.
The following tables summarize the Corporation's capital
ratios.
Required Actual
March 31, 1994
Leverage Ratio (Equity to 3% 10.8%
Assets)
Total Risk-Based 8% 17.6%
December 31,1993
Leverage Ratio 3% 11.2%
Total Risk-Based 8% 17.5%
Management is currently not aware of any recommendation by
regulatory authorities which, if implemented, would have a
material effect on the Corporation's liquidity, capital
resources, or operation.
Market Data
At March 31, 1994, the Corporation had issued and
outstanding 2,767,519 shares of common stock which was held
by approximately 1,010 shareholders. Shareholders received
cash dividends per share of common stock quarterly in 1993
and thus far in 1994.
CBT Corporation common stock is traded on the NASDAQ Market
System under the symbol CBTC.
The following table summarizes transactions in common stock
and cash dividends declared in 1994 and 1993. The trading
price information reflects the range of bid prices for CBT
Corporation common stock as reported by NASDAQ.
Price
Quarter High Low Dividends
March 31, 1994 $46.75 $37.00 $. 20
December 31, 1993 $37.00 $36.25 $. 20
September 30, 1993 $36.50 $33.00 $. 20
June 30, 1993 $35.25 $31.63 $. 20
March 31, 1993 $33.00 $27.00 $ .18
PART - 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
The proposal to amend Article VI of the Corporation's
Articles of Incorporation to authorize 12 Million shares
of Common Stock having no par value was approved by the
following vote:
Shares Voted Shares Voted Shares Voted
"For" "Against" "Abstaining"
2,209,207 195,977 29,123
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
a.) See page 16 for exhibits filed as part of this form
10-Q.
b.) A form 8K was filed by the Corporation dated January
10, 1994, announcing the Corporation's intent to
acquire all of the issued and outstanding shares of BMC
Bancorp.
Pursuant to the requirement 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.
CBT Corporation
Date: May 12, 1994 /s/ William J. Jones
William J. Jones
President and CEO
Date: May 12, 1994 /s/ Eddie L. Holman
Eddie L. Holman
Vice President, Secretary
and Principal Accounting
Officer
EXHIBIT INDEX
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
2(a) Plan of Exchange and Share
Exchange Agreement between CBT
Corporation and Pennyrile
Bancshares, Inc. is
incorporated by reference to
Appendix A-2 and A-1,
respectively, of the
Registration Statement on Form
S-4 of CBT Corporation dated
September 30, 1993.
3(a) Articles of Incorporation of
CBT Corporation incorporated by
reference to Exhibit 3 of the
Registration Statement on Form
S-14 of CBT Corporation
(Registration No. 2-83583).
3(b) Articles of Amendment to
Articles of Incorporation of
CBT Corporation incorporated by
reference to Exhibit 3(b) of
the Form 10-K of CBT
Corporation for the year ended
December 31,1987.
3(c) Articles of Amendment to
Articles of Incorporation of
CBT Corporation incorporated by
reference to Exhibit 3(c) of
the Form 10-K of CBT
Corporation for the year ended
December 31,1989.
3(d) Articles of Amendment to
Articles of Incorporation of
CBT Corporation incorporated by
reference to Exhibit 3(d) of
the Form 10-K of CBT
Corporation for the year ended
December 31,1992.
3(e) Articles of Amendment to 19
Articles of Incorporation of
CBT Corporation.
3(f) Bylaws of CBT Corporation,
incorporated by reference to
Exhibit 3 to the registration
State on Form S-14 of CBT
Corporation (Registration No. 2-
83583).
10(a) **CBT Corporation 1986 Stock
Option Plan incorporated by
reference to Exhibit 4 of
Registration Statement on Form
S-8 of CBT Corporation
(Registration No. 33-28512).
10(b) **CBT Corporation 1993 Stock
Option Plan incorporated by
reference to Form 10-Q of CBT
Corporation dated March 31,
1993.
10(c) ** Salary Continuance
Agreement, incorporated by
reference to Exhibit 10(c) of
the Form 10-K of CBT
Corporation for the year ended
December 31,1990.
10(d) ** Incentive Compensation
Plans, incorporated by
reference to Exhibit 10(d) of
the Form 10-K of CBT
Corporation for the year ended
December 31,1990.
10(e) Agreement to Purchase Assets
and Assume Liabilities entered
into with Union Planters
Corporation and Security Trust
Savings and Loan Association,
incorporated by reference to
Exhibit 10(e) of the Form 10-K
if CBT Corporation for the year
ended December 31, 1992.
21(a) Subsidiaries of CBT
Corporation, incorporated by
reference to Exhibit 21 of the
Form 10-K of CBT Corporation
for the year ended December
31, 1993.
99(a) Board of Directors
authorization to repurchase up
to 5% of the Corporation's
outstanding common stock is
incorporated by reference to
Exhibit 28 on Form 10-Q of CBT
Corporation for the period
ending June 30, 1991 and August
13,1991.
** Incentive Compensation Agreement