Exhibit 99
Quarterly Shareholder Brochure of CNB Corporation
February 10, 2010
Dear Shareholder,
As we come to the close of another year end, included is a comparison of our financial performance for the years 2009, 2008 and 2007.
As we come to the close of another year end, included is a comparison of our financial performance for the years 2009, 2008 and 2007.
CNB Corporation’s net income for 2009 was $2,115,000, or $1.74 basic earnings per share, compared to a net loss of $5,225,000 for 2008. As reported in the Corporation’s 2008 annual report, the primary reason for the net loss in 2008 was the temporary impairment charge of $7.1 million related to auction rate securities. Increases in FDIC premiums, non-accrual loans and provision for loan losses were factors in both 2008 and 2009.
For the year ended 2009, FDIC deposit insurance expense increased to $623,000; over four times the $149,000 paid in 2008. Additionally, on December 31, 2009, the FDIC required all banks to pre-pay an estimated three years of FDIC premiums, amounting to $1,900,000 for Citizens National Bank, which will be expensed over the next three years.
As reported in June, the increases in the stock market had a positive effect on some of the preferred shares acquired in 2009 from the auction rate securities. As a result, shares were liquidated in both the second and fourth quarters and in early October a net gain of $1,179,000, or $0.97 per share, was realized. Gains from the sales of these preferred shares for the year 2009 totaled $1,762,000, or $1.45 per share.
The provision expense for the year 2009 was $1,725,000, a decline from $1,831,000 recorded for the year 2008. Reserve for loan losses as of December 31, 2009 was $2,863,000, or 1.9% of total loans, compared to 1.2% at December 31, 2008. As reflected in the third quarter Statement of Condition dated November 12, 2009, $1.2 million of the 2009 provision is attributable to a single borrower and management continues to work diligently with the borrower to mitigate any potential loss.
Credits and problem loans continue to be aggressively managed in order to minimize future losses, recognizing that high unemployment is projected well into 2011 throughout Michigan. I look forward to seeing you on May 18th at our annual meeting where we can begin to discuss the positive initiatives underway in our market area.
Sincerely,
Susan A. Eno
President & CEO
President & CEO
Consolidated Balance Sheets
(UNAUDITED)
in thousands of dollars
(UNAUDITED)
in thousands of dollars
December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 4,055 | $ | 5,188 | ||||
Interest-bearing deposits with other financial institutions | 13,192 | 0 | ||||||
Federal funds sold | 0 | 18,098 | ||||||
Total cash and cash equivalents | 17,247 | 23,286 | ||||||
Time deposits with other financial institutions | 8,669 | 5,757 | ||||||
Securities available for sale | 46,073 | 37,438 | ||||||
Securities held to maturity (market value of $10,837 in 2009 and $11,119 in 2008) | 10,302 | 10,883 | ||||||
Other securities | 1,008 | 1,008 | ||||||
Total investment securities | 57,383 | 49,329 | ||||||
Loans | 151,034 | 161,766 | ||||||
Less allowance for loan losses | (2,863 | ) | (1,996 | ) | ||||
Loans, Net | 148,171 | 159,770 | ||||||
Premises and equipment, net | 5,921 | 6,019 | ||||||
Other assets | 12,507 | 9,755 | ||||||
Total assets | $ | 249,898 | $ | 253,916 | ||||
LIABILITIES | ||||||||
Deposits | ||||||||
Noninterest-bearing demand | $ | 40,016 | $ | 37,163 | ||||
Interest-bearing deposits | 184,542 | 193,380 | ||||||
Total deposits | 224,558 | 230,543 | ||||||
Other liabilities | 4,624 | 5,833 | ||||||
Total liabilities | 229,182 | 236,376 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common Stock | 3,034 | 3,034 | ||||||
Surplus | 19,509 | 19,509 | ||||||
Retained Earnings and Accumulated other Comprehensive Loss | (1,827 | ) | (5,003 | ) | ||||
Total shareholders’ equity | 20,716 | 17,540 | ||||||
Total liabilities and shareholders’ equity | $ | 249,898 | $ | 253,916 | ||||
Consolidated Statement of Income
(Unaudited)
in thousands of dollars
Twelve months ended December 31,
(Unaudited)
in thousands of dollars
Twelve months ended December 31,
2009 | 2008 | 2007 | ||||||||||
INTEREST INCOME | ||||||||||||
Interest and fees on loans | $ | 10,097 | $ | 11,653 | $ | 12,977 | ||||||
Interest on securities: | ||||||||||||
Taxable | 1,295 | 1,718 | 2,054 | |||||||||
Tax exempt | 541 | 553 | 489 | |||||||||
Other interest income | 235 | 433 | 660 | |||||||||
Total interest income | 12,168 | 14,357 | 16,180 | |||||||||
INTEREST EXPENSE ON DEPOSITS | 3,500 | 4,871 | 5,858 | |||||||||
NET INTEREST INCOME | 8,668 | 9,486 | 10,322 | |||||||||
Provision for loan losses | 1,725 | 1,831 | 275 | |||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 6,943 | 7,655 | 10,047 | |||||||||
NON-INTEREST INCOME | ||||||||||||
Service charges and fees | 1,118 | 1,200 | 1,194 | |||||||||
Net realized gains from sale of loans | 429 | 128 | 154 | |||||||||
Loan servicing fees, net of amortization | (31 | ) | 117 | 127 | ||||||||
Gain on the sale of othr real estate owned | 3 | 304 | 0 | |||||||||
Gain(loss) on sale of premises and equipment | (2 | ) | 0 | 12 | ||||||||
Other income | 355 | 283 | 217 | |||||||||
Total noninterest income | 1,872 | 2,032 | 1,704 | |||||||||
NONINTEREST EXPENSE | ||||||||||||
Salaries and benefits | 4,130 | 4,398 | 4,397 | |||||||||
Deferred compensation | 321 | 344 | 311 | |||||||||
Occupancy | 1,053 | 1,098 | 1,152 | |||||||||
Securities impairment write-down | (1,762 | ) | 7,107 | 0 | ||||||||
FDIC insurance premiums | 623 | 149 | 26 | |||||||||
ORE losses and carrying costs | 739 | 605 | 73 | |||||||||
Other expenses | 1,832 | 1,729 | 1,622 | |||||||||
Total noninterest expense | 6,936 | 15,430 | 7,581 | |||||||||
INCOME BEFORE INCOME TAXES | 1,879 | (5,743 | ) | 4,170 | ||||||||
Income tax expense | (236 | ) | (518 | ) | 1,082 | |||||||
NET INCOME | $ | 2,115 | ($5,225 | ) | $ | 3,088 | ||||||
BASIC NET INCOME PER SHARE | $ | 1.74 | ($4.31 | ) | $ | 2.51 | ||||||