CNB CORPORATION
and
THE CONWAY NATIONAL BANK
FINANCIAL REPORT
MARCH 31, 2008
www.conwaynationalbank.com
TO OUR SHAREHOLDERS AND FRIENDS:
Conway National experienced solid financial performance in the first quarter of 2008. Net income for the quarter ended March 31, 2008 totaled $2,540,000, up 4.1% from $2,441,000 earned for the same period in 2007. On a per share basis, earnings, adjusted for the effect of the 10% stock dividend distributed in September 2007, have grown 6.0% from $2.83 in 2007 to $3.00 in 2008. Total assets grew to $854.2 million at March 31, 2008, with capital at $83.9 million.
As of March 31, 2008, total assets were $854,234,000, an increase of 2.6% over March 31, 2007; total deposits amounted to $710,098,000, an increase of 3.1% over the previous year; loans totaled $583,759,000, an increase of 3.4% from 2007; and investment securities were $206,300,000, an increase of 11.8% from the prior year. Total federal funds purchased and securities sold under agreement to repurchase were $49,508,000 at March 31, 2008 as compared to $54,001,000 at March 31, 2007, a decline of 8.3%. Stockholders' equity totaled $83,853,000 at March 31, 2008, resulting in a book value of $99.75 per share.
Net income for the quarter ended March 31, 2008 of $2,540,000 represents an annualized return on average assets of 1.16% and an annualized return on average stockholders' equity of 12.24%, which compare favorably to peer and to historical returns experienced by the Bank. Bank earnings are primarily the result of the Bank's net interest income, which increased 4.1% from $7,673,000 for the quarter ended March 31, 2007 to $7,986,000 for the quarter ended March 31, 2008. Other factors which affect earnings include the provision for possible loan losses, other expense, and other income. The provision for possible loan losses decreased slightly, 1.6%, from $365,000 for the first quarter of 2007 to $359,000 for the first quarter of 2008. The allowance for loan losses, as a percentage of net loans, remained stable at 1.15% at March 31, 2007 and 2008. Noninterest expenses increased 10.6% from $5,096,000 to $5,637,000 and noninterest income increased 18.6% from $1,556,000 to $1,845,000 during the same period. Noninterest expenses increased overall due to additional staffing, increased compensation, fixed asset expenditures, increased health care costs, and a decline in deferred loan costs. Noninterest income increased due to an increase in service charges on deposit accounts and increased noninterest miscellaneous income.
Conway National maintained solid earnings for the first quarter of 2008, although local economic activity softened significantly during the second half of 2007 and the first quarter of 2008 and despite a decline in market interest rates of 200 basis points during the period.
We are proud to announce the opening of our Little River office on April 1, 2008. We cordially invite you to visit with our staff at this, your new banking facility located at the corner of Highways 9 and 57, just west of the interchange of Highways 31 and 9. During the first quarter of 2008 we also implemented branch capture. This process provides the technology for branch offices to image banking transactions on site and will facilitate the movement of the Bank's business day end from 2:00 p.m. to 5:00 p.m. We anticipate implementing the 5:00 p.m. business day end during the second quarter of this year.
We are very appreciative of your continued support, and we look forward to the future and continuing to build your Bank steeped in our traditions of exceptional customer service, trust, and dedication to all of the communities we serve.
W. Jennings Duncan, President
CNB Corporation and The Conway National Bank
CNB CORPORATION AND SUBSIDIARY
Conway, South Carolina
CONSOLIDATED BALANCE SHEET
(Unaudited) |
|
ASSETS: | March 31, 2008 | March 31, 2007 |
| Cash and due from banks............................................... | $ 19,068,000 | $ 35,012,000 |
| Investment securities: | | |
| Obligations of United States government
sponsored enterprises............................................... |
176,121,000
|
161,456,000
|
| Obligations of states and political subdivisions............... | 27,783,000 | 21,160,000 |
| Other securities............................................................ | 2,396,000 | 1,982,000 |
| Total investment securities................................... | 206,300,000 | 184,598,000 |
| Federal funds sold and securities purchased under
agreement to resell....................................................... |
17,500,000
|
18,000,000
|
| Loans............................................................................. | 583,759,000 | 564,835,000 |
| Less allowance for loan losses...................................... | (6,639,000) | (6,418,000) |
| Net loans............................................................ | 577,120,000 | 558,417,000 |
| Bank premises and equipment......................................... | 23,078,000 | 22,809,000 |
| Other assets................................................................... | 11,168,000 | 13,612,000 |
| Total assets........................................................ | $854,234,000 | $832,448,000 |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY: | | |
| Liabilities: | | |
| Deposits: | | |
| Noninterest-bearing................................................... | $113,733,000 | $142,292,000 |
| Interest-bearing......................................................... | 596,365,000 | 546,378,000 |
| Total deposits..................................................... | 710,098,000 | 688,670,000 |
| | | |
| Federal funds purchased and securities sold under
agreement to repurchase............................................ |
49,508,000
|
54,001,000
|
| Other short-term borrowings.......................................... | 1,430,000 | 1,932,000 |
| Other liabilities................................................................ | 9,345,000 | 8,499,000 |
| Total Liabilities................................................... | 770,381,000 | 753,102,000 |
| | | |
| Stockholders' Equity: | | |
| Common stock, par value $10.00 per share:
Authorized 1,500,000; issued 789,774 in
2007 and 868,422 in 2008........................................ |
8,684,000
|
7,898,000
|
| Surplus........................................................................ | 55,939,000 | 43,555,000 |
| Undivided profits......................................................... | 21,587,000 | 29,457,000 |
| Net unrealized holding gains/(losses) on
available-for-sale securities........................................ |
2,086,000
|
(820,000)
|
| Less treasury stock.................................................... | (4,443,000) | (744,000) |
| Total stockholders' equity................................... | 83,853,000 | 79,346,000 |
| Total liabilities and stockholders' equity............... | $854,234,000 | $832,448,000 |
| | | |
CNB CORPORATION AND SUBSIDIARY
Conway, South Carolina
CONSOLIDATED STATEMENT OF INCOME
(Unaudited) |
| Three Months Ended |
INTEREST INCOME | March 31, 2008 | March 31, 2007 |
| Interest and fees on loans.................................................. | $ 10,587,000 | $ 11,049,000 |
| Interest on investment securities: | | |
| Taxable investment securities.......................................... | 2,466,000 | 1,534,000 |
| Tax-exempt investment securities................................... | 273,000 | 228,000 |
| Other securities.............................................................. | 34,000 | 28,000 |
| Interest on federal funds sold and securities
purchased under agreement to resell............................... |
320,000
|
337,000
|
| Total interest income............................................. | 13,680,000 | 13,176,000 |
| | | |
INTEREST EXPENSE: | | |
| Interest on deposits | 5,103,000 | 4,799,000 |
| Interest on federal funds purchased and securities
sold under agreement to repurchase .............................. |
479,000
|
691,000
|
| Interest on other short-term borrowings............................. | 112,000 | 13,000 |
| Total interest expense........................................... | 5,694,000 | 5,503,000 |
Net interest income.............................................................. | 7,986,000 | 7,673,000 |
Provision for loan losses....................................................... | 359,000 | 365,000 |
Net interest income after provision for loan losses................. | 7,627,000 | 7,308,000 |
Noninterest income: | | |
| Service charges on deposit accounts................................. | 940,000 | 919,000 |
| Gains/(losses) on securities................................................ | 0 | 9,000 |
| Other operating income..................................................... | 905,000 | 628,000 |
| Total other income................................................ | 1,845,000 | 1,556,000 |
Noninterest expenses: | | |
| Salaries and employee benefits.......................................... | 3,721,000 | 3,161,000 |
| Occupancy expense.......................................................... | 839,000 | 820,000 |
| Other operating expenses.................................................. | 1,077,000 | 1,115,000 |
| Total other expenses.............................................. | 5,637,000 | 5,096,000 |
Income before income taxes................................................. | 3,835,000 | 3,768,000 |
| Income tax provision ........................................................ | 1,295,000 | 1,327,000 |
Net income.......................................................................... | $ 2,540,000 | $ 2,441,000 |
| | |
*Per share: | | |
| Net income per weighted average shares outstanding......... | $ 3.00 | $ 2.83 |
| | | |
| Cash dividend paid per share............................................ | $ 0 | $ 0 |
| | | |
| Book value per actual number of shares outstanding.......... | $ 99.75 | $ 91.90 |
| | | |
| Weighted average number of shares outstanding................ | 847,936 | 863,499 |
| | | |
| Actual number of shares outstanding.................................. | 840,661 | 863,420 |
| | | |
| *Adjusted for the effect of a 10% stock dividend during 2007. |
| |
| Member Federal Reserve System - Member FDIC |
| | | |
