Exhibit 99
Quarterly Shareholder Brochure of CNB Corporation
July 10, 2008
Dear Shareholder,
We are pleased to advise you that Vincent Hillesheim was reelected Chairman of the Board of CNB Corporation and Citizens National Bank at the organizational meeting held May 20, 2008.
The local and state economic conditions have had a negative effect on many of our customers but, as previously reported, we continue to take an aggressive approach to identify and work through problem credits. Financial performance for the second quarter ended June 30, 2008 resulted in net income of $929,000, and basic earnings per share were $0.77, both down from the same period last year; net income by 35.1% and basic earnings per share down from $1.15.
The decline in 2008 is due in part to the increased provision for loan losses to $731,000 for the six months ended June 30, 2008, compared to $138,000 for the same period in 2007. Loan losses for the six months ended June 30, 2008 were $774,000 compared to $43,000 for the same period in 2007. In response, our primary focus during the second quarter was loan losses and the ongoing expenses of working through credits with insufficient collateral or customers who are unable to meet their obligations. Efforts continue to identify and take appropriate action in resolving problems as promptly as possible.
In consideration of the net income decline, at its June meeting the board of directors declared a dividend of $.30 per share, payable July 10 to shareholders of record on June 26, 2008. This is a reduction from the $0.42 per share dividend paid in the previous quarter.
Deposits as of June 30, 2008 decreased 0.76% to $228.8 million, compared with $230.6 million for the same time last year. Assets at the end of the first six months were $257.9 million, compared with $261.2 million last year, a decrease of 1.26%. The loan portfolio declined from $174.3 million to $169.8 million and interest income from the loan portfolio decreased $346,000 over the same period last year; however, due to the declining rate environment interest paid on deposits also decreased by $430,000, helping to offset the interest income loss.
We are optimistic about the future of the economy and although income for 2008 will be down from past years, we believe once we are through these difficult times our profitability will return to a level consistent with our past performance.
Sincerely,
Susan A. Eno, President & CEO
CNB Corporation
Consolidated Balance Sheets
(UNAUDITED)
Consolidated Balance Sheets
(UNAUDITED)
in thousands of dollars
| June 30, | ||||||||
| 2008 | 2007 | |||||||
ASSETS | ||||||||
| Cash and due from banks | $ | 7,632 | $ | 6,548 | ||||
| Interest-bearing deposits with other financial institutions | 5,078 | 1,246 | ||||||
| Federal funds sold | 8,799 | 7,328 | ||||||
| Total cash and cash equivalents | 21,509 | 15,122 | ||||||
| Securities available for sale | 41,557 | 51,813 | ||||||
| Securities held to maturity (market value of $9,947 in 2008 and $5,472 in 2007) | 9,792 | 5,431 | ||||||
| Other securities | 1,008 | 1,008 | ||||||
| Total investment securities | 52,357 | 58,252 | ||||||
| Loans | 169,838 | 174,250 | ||||||
| Less allowance for loan losses | (1,642 | ) | (1,606 | ) | ||||
| Loans, Net | 168,196 | 172,644 | ||||||
| Premises and equipment, net | 6,198 | 6,483 | ||||||
| Other assets | 9,609 | 8,656 | ||||||
| Total assets | $ | 257,869 | $ | 261,157 | ||||
LIABILITIES | ||||||||
| Deposits | ||||||||
| Noninterest-bearing demand | $ | 39,223 | $ | 41,643 | ||||
| Interest-bearing deposits | 189,585 | 188,907 | ||||||
| Total deposits | 228,808 | 230,550 | ||||||
| Other liabilities | 4,985 | 5,179 | ||||||
| Total liabilities | 233,793 | 235,729 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
| Common Stock | 3,034 | 3,099 | ||||||
| Surplus | 19,509 | 20,482 | ||||||
| Retained Earnings and Accumulated other Comprehensive Income/(Loss) | ||||||||
| 1,533 | 1,847 | |||||||
| Total shareholders’ equity | 24,076 | 25,428 | ||||||
| Total liabilities and shareholders’ equity | $ | 257,869 | $ | 261,157 | ||||
Consolidated Statement of Income
(Unaudited)
(Unaudited)
in thousands of dollars
Six months ended June 30,
Six months ended June 30,
| 2008 | 2007 | 2006 | ||||||||||
INTEREST INCOME | ||||||||||||
| Interest and fees on loans | $ | 6,040 | $ | 6,386 | $ | 5,829 | ||||||
| Interest on securities: | ||||||||||||
| Taxable | 927 | 932 | 909 | |||||||||
| Tax exempt | 280 | 238 | 237 | |||||||||
| Other interest income | 220 | 450 | 160 | |||||||||
| Total interest income | 7,467 | 8,006 | 7,135 | |||||||||
INTEREST EXPENSE ON DEPOSITS | 2,556 | 2,986 | 2,126 | |||||||||
NET INTEREST INCOME | 4,911 | 5,020 | 5,009 | |||||||||
| Provision for loan losses | 731 | 138 | 60 | |||||||||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 4,180 | 4,882 | 4,949 | |||||||||
NONINTEREST INCOME | ||||||||||||
| Service charges and fees | 491 | 572 | 469 | |||||||||
| Net realized gains from sale of loans | 83 | 63 | 82 | |||||||||
| Loan servicing fees, net of amortization | 60 | 67 | 59 | |||||||||
| Gain on sale of premises and equipment | 7 | 0 | 509 | |||||||||
| Gain on life Insurance | 0 | 39 | 0 | |||||||||
| Other income | 205 | 97 | 92 | |||||||||
| Total noninterest income | 846 | 838 | 1,211 | |||||||||
NONINTEREST EXPENSES | ||||||||||||
| Salaries and benefits | 2,198 | 2,129 | 2,163 | |||||||||
| Occupancy | 551 | 586 | 537 | |||||||||
| Supplies | 89 | 113 | 111 | |||||||||
| Other expenses | 1,043 | 900 | 976 | |||||||||
| Total noninterest expenses | 3,881 | 3,728 | 3,787 | |||||||||
INCOME BEFORE INCOME TAXES | 1,145 | 1,992 | 2,373 | |||||||||
| Income tax expense | 216 | 561 | 683 | |||||||||
NET INCOME | $ | 929 | $ | 1,431 | $ | 1,690 | ||||||
BASIC NET INCOME PER SHARE | $ | 0.77 | $ | 1.15 | $ | 1.37 | ||||||