UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 1 0 - K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File Number 0-13396
CNB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1450605
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
County National Bank
Market and Second Streets
P.O. Box 42
Clearfield, Pennsylvania 16830
(Address of principal executive offices)
Registrant's telephone number, including area code, (814) 765-9621
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $4.00 Par Value
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 periods 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 1, 1996.
Common Stock, $4.00 Par Value - $52,977,146
The number of shares outstanding of the issuer's common stock as of March 1,
1996:
Common Stock, $4.00 Par Value - 1,722,834 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Shareholder's Report for the year ended December 31,
1995 are incorporated by reference into Part I and Part II pursuant to Section
13 of the Act.
Portions of the proxy statement for the annual shareholders' meeting on
April 16, 1996 are incorporated by reference into Part II and Part III. The
incorporation by reference herein of portions of the proxy statement shall not
be deemed to specifically incorporate by reference the information referred to
in Item 402(a)(8) of regulation S-K.
Exhibit index is located on sequentially numbered page 14.
INDEX
PART I.
ITEM 1. BUSINESS........................................... 3
ITEM 2. PROPERTIES......................................... 10
ITEM 3. LEGAL PROCEEDINGS.................................. 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS................... 11
ITEM 6. SELECTED FINANCIAL DATA............................ 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..... 11
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........ 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............... 11
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.. 11
ITEM 11. EXECUTIVE COMPENSATION.............................. 11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.............................. 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...... 12
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K............................ 12-13
SIGNATURES.......................................... 14
LETTER OF INDEPENDENT AUDITOR....................... 15
EXHIBIT 3(a)........................................ 17
EXHIBIT 3(b)........................................ 23
PART I.
ITEM 1. BUSINESS
CNB FINANCIAL CORPORATION
CNB Financial Corporation (The Corporation) is a Bank Holding Company
registered under the Bank Holding Company Act of 1956, as amended. It was
incorporated under the laws of the Commonwealth of Pennsylvania in 1983 for the
purpose of engaging in the business of a Bank Holding Company. On April 26,
1984, the Corporation acquired all of the outstanding capital stock of County
National Bank (the Bank), a national banking chartered institution. The
Corporation is subject to regulation, supervision and examination by the Board
of Governors of the Federal Reserve System. In general, The Corporation is
limited to owning or controlling banks and engaging in such other activity as
the Federal Reserve Board may determine to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.
The Corporation does not currently engage in any operating business
activities, other than the ownership and management of County National Bank.
COUNTY NATIONAL BANK
The Bank is a nationally chartered banking institution incorporated in
1934. The Bank's Main Office is located on the Corner of Market and Second
Streets, Clearfield, (Clearfield County) Pennsylvania. The Bank's primary
marketing area consists of the Pennsylvania County of Clearfield (excluding
Sandy, Brady and Huston Townships and the city of DuBois). It also includes
those parts of Centre County consisting of Philipsburg Borough, Rush Township,
Burnside Township and the western portion of Snow Shoe Township, as well as Elk
County excluding Highland, Jones and Millstone Townships. The Bank opened a
full service branch in Bradford, McKean County in 1995 and serves the entire
county. The area is located in northern and central Pennsylvania and is
situated approximately one hundred miles east of the Pittsburgh Metropolitan
area and a similar distance west of the Harrisburg area. The estimated
population of the general trade area is 100,000. The economy is diversified and
includes manufacturing industries, wholesale and retail trade, service
industries, family farms and abundant reserves of coal, clay and timber play a
significant role.
In addition to the Main Office, the Bank has 10 full-service branch offices
in the communities of Bradford, Clearfield, Karthaus, Madera, Osceola Mills,
Philipsburg, and St. Marys, Pennsylvania and one drive-in, with lobby, located
in Clearfield, Pennsylvania. The Bank opened an in-store, full-service
supermarket branch in St. Marys, Elk County in 1994. This branch operates on a
6 day a week basis. The Bank has completed construction of a full service
branch office in Houtzdale, Clearfield County, and has notified the Comptroller
of the Currency ("Comptroller") of its January 10, 1996 opening date.
The Bank is a full-service bank. It engages in a full range of banking
activities and services in individual, business, governmental and institutional
customers. These activities and services principally include checking, savings,
time and transaction accounts; real estate, commercial, industrial and
residential and consumer loans; and a variety of other specialized financial
services. Its Trust division offers a full range of client services.
The Bank's customer base is such that loss of one customer relationship or
a related group of depositors would not have a materially adverse effect on the
business of the Bank.
The Bank's loan portfolio is diversified so that one industry, group of
related industries or changes in household economic conditions does not comprise
a material portion of the loan portfolio.
The Bank's business is not seasonal nor does it have any risks attendant to
foreign sources.
COMPETITION
With 33.3% of total bank deposits in its primary market area, County
National Bank is the largest headquartered bank in its trade area and competes
actively with two community banks in the same area as well as several large
regional banks headquartered outside the area. According to the latest FDIC
summary of deposits, June 30, 1995, the Bank's share of deposits in its total
market area is 17.35%. The Bank has 20.39% of the Clearfield County deposit
base and much smaller percentages of market share in the Elk and McKean county
region. The Bank is generally competitive with all competing financial
institutions in its service area with respect to interest rates paid on time and
savings deposits, service charges on deposit accounts and interest rates charged
on loans.
The banking industry in the Bank's service area continues to be extremely
competitive, both among commercial banks and with financial service providers
such as consumer finance companies, thrifts, investment firms, mutual funds and
credit union. The increased competition has resulted from changes in the legal
and regulatory guidelines as well as from the economic conditions. Mortgage
banking firms, leasing companies, financial affiliates of industrial companies,
brokerage firms, retirement fund management firms, leasing companies and even
government agencies provide additional competition for loans and other financial
services. Some of the financial service providers operating in the Bank's
market area operate on a large-scale regional basis and possess resources
greater than those of the Bank and the Corporation.
SUPERVISION AND REGULATION
The Bank is subject to supervision and examination by applicable federal
and state banking agencies, including the Comptroller. In addition, the Bank is
insured by and subject to some or all of the regulations of the Federal Deposit
Insurance Corporation ("FDIC"). The Bank is also subject to various requirements
and restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types, amounts and terms and
conditions of loans that may be granted, and limitation on the types of
investments that may be made and the types of services that may be offered.
Various consumer laws and regulations also affect the operation of the Bank. In
addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board, including actions
taken with respect to interest rates, as it attempts to control the money supply
and credit availability in order to influence the economy.
EXECUTIVE OFFICERS
The table below lists the executive officers of The Corporation and County
National Bank and sets forth certain information with respect to such persons.
AGE AT PRINCIPAL OCCUPATION
NAME DECEMBER 31, 1995 FOR LAST FIVE YEARS
- ---- ------------------ ---------------------
JAMES P. MOORE 60 PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CNB FINANCIAL CORPORATION
SINCE 9/20/83. CHAIRMAN OF THE BOARD,
COUNTY NATIONAL BANK SINCE 3/19/91,
PREVIOUSLY, PRESIDENT & CHIEF
EXECUTIVE OFFICER, COUNTY NATIONAL
BANK SINCE 4/15/82.
WILLIAM F. FALGER 48 EXECUTIVE VICE PRESIDENT, CNB
FINANCIAL CORPORATION SINCE 3/28/95.
PREVIOUSLY VICE PRESIDENT, SECRETARY
AND TREASURER. PRESIDENT AND CHIEF
EXECUTIVE OFFICER, COUNTY NATIONAL
BANK SINCE 1/01/93, PREVIOUSLY, GROUP
VICE PRESIDENT, COUNTY NATIONAL BANK
SINCE 4/89;
WILLIAM A. FRANSON 52 SECRETARY, CNB FINANCIAL CORPORATION
SINCE 3/28/95. PREVIOUSLY, ASSISTANT
SECRETARY SINCE 3/27/84. EXECUTIVE
VICE PRESIDENT AND CASHIER, CHIEF
OPERATING OFFICER COUNTY NATIONAL
BANK SINCE 1/01/93, PREVIOUSLY SENIOR
VICE PRESIDENT, COUNTY NATIONAL BANK
SINCE 4/15/82.
CARL J. PETERSON 58 ASSISTANT SECRETARY, CNB FINANCIAL
CORPORATION, SINCE 3/27/84. SENIOR
VICE PRESIDENT AND TRUST OFFICER,
COUNTY NATIONAL BANK, SINCE 4/15/82.
J. MATTHEW MCENROE 40 TREASURER, CNB FINANCIAL CORPORATION
SINCE 3/28/95. SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER, COUNTY
NATIONAL BANK, SINCE 8/22/94 PRIOR
THERETO, VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND TREASURER,
BUCKS COUNTY BANK, SINCE 9/87.
MARK D. BREAKEY 37 SENIOR VICE PRESIDENT, SENIOR LOAN
OFFICER, SINCE 3/28/95. VICE
PRESIDENT, COMMERCIAL BANKING SINCE
4/93, ASSISTANT VICE PRESIDENT
COMMUNITY LENDING, ST. MARYS, SINCE
12/23/91 PRIOR THERETO, LENDING
OFFICER, MELLON BANK
Officers are elected annually at the reorganization meeting of the Board of
Directors. There are not any arrangements or understandings between any and all
of the above officers and any other persons pursuant to which they were selected
as officers. In addition, there are not any family relationships between the
above officers.
EMPLOYEES
The Corporation has no employees who are not employees of the County
National Bank. As of December 31, 1995, the Bank had a total of 167 employees
of which 139 were full time and 28 were part time.
MONETARY POLICIES
The earnings and growth of the banking industry are affected by the credit
policies of monetary authorities, including the Federal Reserve System. An
important function of the Federal Reserve System is to regulate the national
supply of bank credit in order to control recessionary and inflationary
pressures. Among the instruments of monetary policy used by the Federal Reserve
to implement these objectives are open market activities in U.S. Government
Securities, changes in the discount rate on member bank borrowings and changes
in reserve requirements against member bank deposits. These operations are used
in varying combinations to influence overall economic growth and indirectly,
bank loans, investments and deposits. These variables may also affect interest
rates charged on loans or paid for deposits. The monetary policies of the
Federal Reserve authorities have had a significant effect on the operating
results of commercial banks in the past and are expected to continue to have
such an effect in the future.
In view of the changing conditions in the national economy and in the money
markets, as well as the effect of actions by monetary and fiscal authorities
including the Federal Reserve System, no prediction can be made as to possible
future changes in interest rates, deposit levels, loan demand or their effect on
the business and earnings of the Corporation and the Bank.
DISTRIBUTION OF ASSETS, LIABILITIES, & SHAREHOLDER'S EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
The following tables set forth statistical information relating to the
Registrant and its wholly-owned subsidiary. The table should be read in
conjunction with the consolidated financial statements of the Registrant which
are incorporated by reference hereinafter.
AVERAGE CONSOLIDATE BALANCE SHEET
AND NET INTEREST MARGIN
(DOLLARS IN THOUSANDS)
DECEMBER 31, 1995 DECEMBER 31, 1994
- ---------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL INTEREST AVERAGE ANNUAL INTEREST
BALANCE RATE INC./EXP. BALANCE RATE INC./EXP.
- ---------------------------------------------------------------------------------------------------------
ASSETS
Interest-bearing deposits
with banks $ 18 2.42% $ 0 $ 1,306 6.97% $ 91
Federal funds sold and
securities purchased under
agreements to resell 1,450 5.59% 81 1,130 3.81% 43
Other short-term 0 0
investments
INVESTMENT SECURITIES:
Taxable 54,681 5.97% 3,264 55,712 5.35% 2,983
Tax-Exempt (1) 21,495 8.62% 1,853 21,744 8.62% 1,874
- ---------------------------------------------------------------------------------------------------------
Total Investment
Securities 76,176 6.72% 5,117 77,456 6.27% 4,857
LOANS
Commercial 44,621 8.56% 3,818 37,544 7.41% 2,782
Mortgage 89,215 9.03% 8,057 85,892 8.68% 7,456
Installment 54,293 9.16% 4,974 53,756 8.51% 4,575
- ---------------------------------------------------------------------------------------------------------
Total Loans (2) 188,129 8.96% 16,849 177,192 8.36% 14,813
Total Earning Assets 265,773 8.30% 22,047 257,084 7.70% 19,804
NON INTEREST BEARING ASSETS
Cash & Due From Banks 7,480 0 7,228 0
Premises & Equipment 6,482 0 4,471 0
Other Assets 2,902 0 2,600 0
Allowance for Possible
Loan Losses (2,173) 0 (1,927) 0
- ---------------------------------------------------------------------------------------------------------
Total Non-interest
earning assets 14,691 -- 0 12,372 -- 0
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS $280,464 $22,047 $269,456 $19,804
==============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING DEPOSITS
Demand -
Interest-Bearing $ 56,284 1.98% $ 1,115 $ 50,779 1.84% $ 935
Savings 38,716 2.72% 1,052 42,719 2.07% 886
Time 116,239 5.83% 6,778 109,912 4.70% 5,165
- ---------------------------------------------------------------------------------------------------------
Total Interest-Bearing
Deposits 211,239 4.23% 8,945 203,410 3.43% 6,986
Short-Term Borrowings 5,229 5.32% 278 5,162 4.63% 239
Long-Term Borrowings 0 0 0 0
- ---------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 216,468 4.26% 9,223 208,572 3.46% 7,225
Demand -
Non-Interest-Bearing 25,788 -- 0 26,225 -- 0
Other Liabilities 1,766 -- 0 1,199 -- 0
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 244,022 3.78% 9,223 235,996 3.06% 7,225
Shareholder's Equity 36,442 -- 0 33,460 -- 0
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $280,464 $ 9,223 $269,456 $ 7,225
==============================================================================
Interest Income/Earning
Assets 8.30% $22,047 7.70% $19,804
Interest Expense/Interest
Bearing Liabilities 4.26% 9,223 3.46% 7,225
- ---------------------------------------------------------------------------------------------------------
NET INTEREST SPREAD 4.04% $12,824 4.24% $12,579
=========================== ===========================
Interest Income/Interest
Earning Assets 8.30% $22,047 7.70% $19,804
Interest Expense/Interest
Earning Assets 3.47% 9,223 2.81% 7,225
- ---------------------------------------------------------------------------------------------------------
NET INTEREST MARGIN 4.83% $12,824 4.89% $12,579
=========================== ===========================
DECEMBER 31, 1993
- ---------------------------------------------------------------------------
AVERAGE ANNUAL INTEREST
BALANCE RATE INC./EXP.
- ---------------------------------------------------------------------------
ASSETS
Interest-bearing deposits
with banks $ 3,131 7.76% $ 243
Federal funds sold and
securities purchased under
agreements to resell 2,944 3.02% 89
Other short-term
investments 743 3.23% 24
INVESTMENT SECURITIES:
Taxable 62,777 5.71% 3,586
Tax-Exempt (1) 25,449 8.82% 2,245
- --------------------------------------------------------------------------
Total Investment
Securities 88,226 6.61% 5,831
LOANS
Commercial 35,087 6.94% 2,436
Mortgage 76,069 8.80% 6,697
Installment 45,890 9.66% 4,435
- --------------------------------------------------------------------------
Total Loans (2) 157,046 8.64% 13,568
Total Earning Assets 252,090 7.84% 19,755
NON INTEREST BEARING ASSETS
Cash & Due From Banks 6,701 0
Premises & Equipment 4,421 0
Other Assets 2,701 0
Allowance for Possible
Loan Losses (1,553) 0
- --------------------------------------------------------------------------
Total Non-interest
earning assets 12,270 -- 0
- --------------------------------------------------------------------------
TOTAL ASSETS $264,360 $19,755
=======================================
LIABILITIES AND SHAREHOLDER'S EQUITY
INTEREST-BEARING DEPOSITS
Demand -
Interest-Bearing $ 49,460 2.31% $1,142
Savings 41,531 2.50% 1,040
Time 115,217 4.67% 5,382
- --------------------------------------------------------------------------
Total Interest-Bearing
Deposits 206,208 3.67% 7,564
Short-Term Borrowings 1,292 2.48% 32
Long-Term Borrowings 0 -- 0
- --------------------------------------------------------------------------
Total interest-bearing
liabilities 207,500 3.66% 7,596
Demand -
Non-Interest-Bearing 23,360 -- 0
Other Liabilities 1,212 -- 0
- --------------------------------------------------------------------------
Total Liabilities 232,072 3.27% 7,596
Shareholder's Equity 32,288 -- 0
- --------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $264,360 $7,596
===============================================
Interest Income/Earning
Assets 7.84% $19,755
Interest Expense/Interest
Bearing Liabilities 3.66% 7,596
- --------------------------------------------------------------------------
NET INTEREST SPREAD 4.18% $12,159
============================
Interest Income/Interest
Earning Assets 7.84% $19,755
Interest Expense/Interest
Earning Assets 3.01% 7,596
- --------------------------------------------------------------------------
NET INTEREST MARGIN 4.82% $12,159
============================
(1) The amounts are reflected on a fully tax equivalent basis using the
federal statutory rate of 34% in 1995, 1994 and 1993, adjusted for
certain tax preferences.
(2) Average outstanding includes the average balance outstanding of all
non-accrual loans. Loans consist of the average of total loans less
average unearned income.
The amount of loan fees included in the interest income on
loans is not material.
6
RATE-VOLUME VARIANCE 1995 over(under) 1994 1994 over(under) 1993
(DOLLARS IN THOUSANDS) Due to Change in Due to Change in
- -----------------------------------------------------------------------------------------------------------------------------------
VOLUME RATE NET VOLUME RATE NET
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-Bearing Deposits
with Banks ($55) ($35) ($90) ($129) ($23) ($152)
Federal Funds Sold and
Securities
Purchased Under
Agreements to Resell 14 24 38 (65) 19 (46)
Other Short-Term 0 0 0 0 0 (24)
Investments
INVESTMENT SECURITIES:
Taxable (56) 337 281 (387) (216) (603)
Tax-Exempt (21) 0 (21) (320) (51) (371)
------------------------------------------------ -------------------------------------------------
Total Investment Securities (77) 337 260 (707) (267) (974)
Securities
LOANS
Commercial 569 467 1,036 176 170 346
Mortgage 294 307 601 854 (95) 759
Installment 46 353 399 707 (567) 140
---------------------------------------------- ---------------------------------------------------
Total loans 909 1,127 2,036 1,737 (492) 1,245
---------------------------------------------- ---------------------------------------------------
TOTAL EARNING ASSETS $ 791 $1,452 $2,243 $ 835 ($762) $ 49
============================================== ===================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING DEPOSITS
Demand - Interest-Bearing $ 106 $ 74 $ 180 $ 30 ($231) (207)
Savings (89) 255 166 30 (179) (154)
Time 311 1,302 1,613 (248) 32 (217)
--------------------------------------------- -------------------------------------------------
Total Interest-Bearing 316 1,590 1,959 (188) (378) (578)
Deposits
Short-Term Borrowings 3 36 39 96 28 207
--------------------------------------------- -------------------------------------------------
Total Interest-Bearing
Liabilities $ 319 $1,626 $1,998 ($92) ($350) ($371)
============================================= =================================================
============================================= =================================================
CHANGE IN NET INTEREST INCOME $ 473 ($174) $ 245 $ 927 ($412) $ 420
============================================= ====================================================
1. The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the
relationship of the absolute dollar amounts of the change in each.
2. Included in interest income is $192,412, $348,838 and $402,390 of fees for the years ending 1995, 1994 and 1993, respectively.
3. Income on restructured loans accounted under SFAS Nos. 114 & 118 are included in interest earning assets; there is no income
being recognized on a cash basis.
7
INVESTMENT PORTFOLIO
(IN THOUSANDS) DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------------------------- ---------------------------------------------
UNREALIZED UNREALIZED
AMORTIZED --------------------- MARKET AMORTIZED ----------------------- MARKET
COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE
--------------------------------------------- ---------------------------------------------
SECURITIES TO BE HELD TO MATURITY:
U.S. Treasury.............. $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
U.S. Government agencies
and corporations....... 1,989 18 -- 2,007 -- -- -- --
Obligations of States and
Political Subdivisions. 11,251 439 5 11,685 16,845 360 241 16,964
Other Debt Securities...... 11,681 183 16 11,848 17,108 17 201 16,924
Marketable Equities........ -- -- -- -- -- -- -- --
--------------------------------------------- ---------------------------------------------
$24,921 $ 640 $ 21 $25,540 $33,953 $ 377 $ 442 $33,888
============================================= =============================================
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury.............. $11,500 $ 99 $ 5 $11,594 $15,528 $ -- $ 280 $15,248
U.S. Government agencies
and corporations....... 24,527 271 106 24,692 18,233 10 688 17,555
Obligations of States and
Political Subdivisions. 11,155 289 10 11,434 1,735 4 61 1,678
Other Debt Securities...... 1,528 17 5 1,540 1,958 -- 87 1,871
Marketable Equities........ 1,405 342 -- 1,747 816 210 17 1,009
--------------------------------------------- ---------------------------------------------
$50,115 $1,018 $ 126 $51,007 $38,270 $ 224 $1,133 $37,361
============================================= =============================================
MATURITY DISTRIBUTION OF INVESTMENT
SECURITIES (IN THOUSANDS)
DECEMBER 31, 1995
WITHIN AFTER ONE BUT AFTER FIVE BUT AFTER
ONE YEAR WITHIN FIVE YEARS WITHIN TEN YEARS TEN YEARS
-------------------------------------------- ---------------------------------------------
$ Amt Yield $ Amt Yield $ Amt Yield $ Amt Yield
--------- --------- --------- --------- --------- --------- --------- ---------
SECURITIES TO BE HELD TO MATURITY:
U.S. Government agencies
and corporations....... $ -- % $ -- % $ 1,989 6.90% $ -- %
Obligations of States and
Political Subdivisions. 2,695 9.47% 3,789 9.64% 4,767 8.83% -- --
Other Debt Securities...... 3,629 6.64% 8,051 6.82% -- -- -- --
--------------------------------------------- ---------------------------------------------
6,324 7.85% 11,840 7.72% 6,756 8.26% 0 0.00%
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury.............. 4,999 6.32% 6,501 6.11% -- -- -- --
U.S. Government agencies
and corporations....... 2,251 5.12% 21,256 6.47% 1,021 7.85% -- --
Obligations of States and
Political Subdivisions. 250 8.86% 1,464 6.25% 7,041 8.22% 2,400 7.53%
Other Debt Securities...... -- -- -- -- -- -- -- --
--------------------------------------------- ---------------------------------------------
7,500 6.04% 29,221 6.38% 8,062 8.17% 2,400 7.53%
============================================= =============================================
TOTAL $13,824 6.87% $41,061 6.77% $14,818 8.21% $2,400 7.53%
============================================= =============================================
The weighted average yields are based on book value and effective yields weighted for the scheduled maturity with tax-exempt
securities adjusted to a taxable-equivalent basis using a tax rate of 34%.
DECEMBER 31, 1993
------------------------------------------------
UNREALIZED
AMORTIZED -------------------- MARKET
COST GAINS LOSSES VALUE
------------------------------------------------
SECURITIES TO BE HELD TO MATURITY
U.S. Treasury.............. $15,591 $ 114 $ 22 $15,683
U.S. Government agencies
and corporations....... 15,994 49 105 15,938
Obligations of States and
Political Subdivisions. 23,589 963 1 24,551
Other Debt Securities...... 23,397 506 18 23,885
Marketable Equities........ 356 91 9 438
------------------------------------------------
$78,927 $1,723 $155 $80,495
================================================
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury.............. $ -- $ -- $ -- $ --
U.S. Government agencies
and corporations....... -- -- -- --
Obligations of States and
Political Subdivisions. -- -- -- --
Other Debt Securities...... -- -- -- --
Marketable Equities........ -- -- -- --
------------------------------------------------
$ -- $ -- $ -- $ --
================================================
MATURITY DISTRIBUTION OF INVESTMENT
SECURITIES (IN THOUSANDS)
DECEMBER 31, 1995 Collateralized Mortgage
Obligations and Other
Asset Backed Securities
------------------------------------------------
$ Amt Yield
----------- --------
SECURITIES TO BE HELD TO MATURITY
U.S. Government agencies
and corporations....... $ -- %
Obligations of States and
Political Subdivisions. -- --
Other Debt Securities...... -- --
------------------------------------------------
0 0.00%
SECURITIES AVAILABLE FOR SALE:
U.S. Treasury.............. -- --
U.S. Government agencies
and corporations....... -- --
Obligations of States and
Political Subdivisions. -- --
Other Debt Securities...... 1,528 7.00%
------------------------------------------------
1,528 7.00%
================================================
TOTAL $ 1,528 7.00%
================================================
LOAN PORTFOLIO
A. TYPE OF LOAN
(IN THOUSANDS): 1995 1994 1993 1992 1991
------------ ------------- ----------- ------------ ------------
Commercial, Financial and Agricultural $ 49,643 $40,643 $40,953 $40,203 $45,162
Real Estate Mortgages 108,749 99,946 99,014 77,441 66,269
Installment Loans to Individuals 43,794 44,196 40,488 33,996 36,716
-------- ------- ------- ------- -------
GROSS LOANS 203,703 184,785 170,455 151,647 165,127
Less: Unearned Income 3,608 2,900 2,499 1,823 1,255
-------- ------- ------- ------- -------
TOTAL LOANS NET OF UNEARNED $200,038 $181,789 $107,956 $150,014 $144,871
B. LOAN MATURITIES AND INTEREST SENSITIVITY
DECEMBER 31, 1995
ONE YEAR ONE THROUGH OVER TOTAL GROSS
Commercial Financial and Agricultural OR LESS FIVE YEARS FIVE YEARS LOANS
------------------------------------- ------------ ------------- ----------- ------------
Loans With Predetermined Rate $ 4,097 $11,654 $7,676 $23,227
Loans With Floating Rate 26,351 05 -- 26,416
------------ ------------- ----------- ------------
$30,441 $11,719 $7,476 $49,643
============ ============= =========== ============
C. RISK ELEMENTS
1995 1994 1993 1992 1991
------------ ------------- ----------- ------------ ------------
Loans on non-accrual basis $414 $957 $1,134 $559 $525
Accruing loans which are contractually
past due 90 days or more as to interest
or principal payments 2,503 307 518 700 1,290
Trouble Debt Restructuring 705 -- -- -- --
------------ ------------- ----------- ------------ ------------
$5,322 $1,264 $1,652 $1,338 $1,815
============ ============= =========== ============ ============
1. Internal income recorded on the non-accrual loans for the year ended December 31, 1996 was $3,775. Interest income which would
have been recorded on these loans had they been on accrual income was $60,258.
2. Loans are placed in non-accrual status when the interest or principal is 90 days past due, unless the loan is in collection,
will increase and it is believed that there will be no loss of interest or principal.
3. As December 31, 1995 there was $3,905,656 in loans which are considered problem loans. In the opinion of management, these loans
are adequately insured and losses re believed to be minimal.
8
SUMMARY OF LOAN LOSS EXPERIENCE
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
(IN THOUSANDS) YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ----------
Balance at beginning of Period $ 2,033 $ 1,750 $ 1,502 $ 1,369 $ 1,269
Charge-offs:
Domestic:
Commercial, Financial and Agricultural 59 95 198 307 130
Real Estate Mortgages 28 33 -- 12 28
Installment Loans to Individuals 282 254 135 164 202
------- ------- ------- ------- -------
369 382 333 483 360
Recoveries:
Domestic:
Commercial, Financial and Agricultural -- 19 26 67 --
Real Estate Mortgages -- -- -- 14 --
Installment Loans to Individuals 101 121 30 35 47
------- ------- ------- ------- -------
101 140 56 116 47
Net Charge-offs: (268) (242) (277) (367) (313)
Provision for Loan Losses 380 525 525 500 413
========== ========== ========== ========== ==========
Balance at End-of Period $ 2,145 $ 2,033 $ 1,750 $ 1,502 $ 1,369
========== ========== ========== ========== ==========
Ratio of net charge-offs during the period
to average loans outstanding 0.14 0.18 0.25 0.22 0.25
The Provision for loan losses reflects the amount deemed appropriate by management to establish an adequate reserve to meet the
present and foreseeable risk characteristics of the present loan portfolio. Management's judgement is based on the evaluation of
individual loans, the overall risk characteristics of various portfolio segments, past experience with losses, the impact of
economic conditions on borrowers, and other relevant factors.
ALLOCATION OF THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
(in thousands)
1995 1994 1993 1992 1991
-----------------------------------------------------------------------------------------------
Domestic: % of % of % of % of % of
Loans in Loans in Loans in Loans in Loans in
each each each each each
Category Category Category Category Category
$ Amt. to Total $ Amt. to Total $ Amt. to Total $ Amt. to Total $ Amt. to Total
-----------------------------------------------------------------------------------------------
Real Estate Mortgages $ 387 53.40% $ 60 54.09% $ 47 52.22% $ 111 51.07% $ 82 45.35%
Installment Loans to Individual 422 22.24% 210 23.92% 167 23.75% 227 22.42% 229 25.13%
Commercial, Financial and
Agricultural 446 24.36% 895 21.99% 834 24.03% 471 26.51% 562 29.52%
Unallocated 890 N/A 868 N/A 702 N/A 693 N/A 496 N/A
===============================================================================================
TOTALS $2,145 100.00% $2,033 100.00% $1,750 100.00% $1,502 100.00% $1,369 100.00%
===============================================================================================
1. In determining the allocation of the allowance for possible credit losses, County National Bank considers economic trends,
historical patterns and specific credit reviews.
2. With regard to the credit reviews, a "watchlist" is evaluated on a monthly basis to determine potential commercial losses.
Consumer loans and mortgage loans are allocated using historical loss experience. The total of these reserves is deemed
"allocated", while the remaining balance is "unallocated".
9
DEPOSITS
(in thousands)
December 31, 1995 1994 1993
Amount Amount Amount
----------- ---------- --------
Demand - Non Interest Bearing $ 25,705 $ 26,225 $ 23,360
Demand - Interest Bearing 78,821 50,779 49,460
Savings Deposits 35,589 42,719 41,531
Time Deposits 115,672 109,912 115,217
=========== ========== ========
TOTAL DEPOSITS $255,787 $229,635 $229,568
=========== ========== ========
The maturity of certificates of deposits and other time
deposits in denomination of $100,000 or more
as of December 31, 1995 (in thousands):
Maturing in:
Three months or less................................. $ 1,910
Greater than three months but less than six months... 2,934
Greater than six months but less than twelve months.. 3,802
Greater than tweleve months.......................... 4,030
=========
TOTAL $12,676
=========
RETURN ON EQUITY AND ASSETS
Information required by this section is presented on pages 18 and 19
of the Annual Report to Shareholders for the year ended December 31, 1995, and
is incorporated herein by reference.
ITEM 2. PROPERTIES
The headquarters of the Corporation and the County National Bank is located at
the corner of Market and Second Streets, Clearfield, Pennsylvania. In addition
to the banking offices at its principal office, County National Bank owns the
following properties in which it operates branch offices; 1231 S. Second Street,
Clearfield, Pennsylvania; Karthaus, Pennsylvania; Main Street, Madera,
Pennsylvania; 609 Lingle Street, Oscecla Mills, Pennsylvania; 113-117
Presqueisle Street, Philipsburg, Pennsylvania; 133 Washington Street, St. Marys,
Pennsylvania and a drive-in banking facility at 219 E. Cherry Street,
Clearfield, Pennsylvania, and 216 Spring Street, Houtzdale, Pennsylvania. The
Bank leases branch facilities located at 25 Irwin Drive, Philipsburg,
Pennsylvania, a supermarket branch at Bi-Lo Plaza, Million Dollar Highway, St.
Marys, and 224 West Washington Street, Bradford, Pennsylvania. Drive-in banking
facilities are maintained at all branch locations with the exception of the Main
Office at Market and Second Streets, Clearfield, Pennsylvania and the branch at
Karthsus, Pennsylvania. Automatic teller machines are in operation at branch
offices located at 219 E. Cherry Street and 1231 S. Second Street in Clearfield,
Pennsylvania; 113-117 Presqueisle Street, and 25 Irwin Drive, Philipsburg,
Pennsylvania and 133 Washington Street, St. Marys, Pennsylvania, within the
Bi-Lo Supermarket Lobby, Million Dollar Highway, St. Marys, Pennsylvania and 224
W. Washington Street, Bradford, McKean County, Pennsylvania.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings towhich the Corporation or the
Bank is a party, or of which any of their property is the subject, except
ordinary routine proceedings which are incidental to the oridnary conduct of
business. In the opinion of Management, pending legal proceedings will not have
a material adverse effect onthe consolidated financial position of the
Corporation.
10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders through the
solicitation of proxies, or otherwise, for the three months ended December 31,
1995.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDERS
MATTERS
Information relating to the Corporation's common stock is on pages 17 and
28 of the Annual Shareholder's Report for the year ended December 31, 1995 and
is herein incorporated by reference. There were 1,421 registered shareholders
of record as of March 1, 1996.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this section is presented on pages 18 and 19 of the
Annual Shareholder's Report for the year ended December 31, 1995 and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information required by this section is presented on pages 20 - 24 of the
Annual Shareholder's Report for the year ended December 31, 1995 and is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements which appear in the Annual
Shareholder's Report for the year ended December 31, 1995 are incorporated
herein by reference to such annual report:
Pages in
Annual Report
-------------
Consolidated Statements of Condition 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Consolidated Statements of Changes in Stockholder's Equity 7
Notes to Consolidated Financial Statements 8 - 15
Report of Independent Auditors 16
Quarterly financial data relating to the results of operations for the year
ended December 31, 1995 and 1994, appears in the Annual Shareholder's Report for
the year ended December 31, 1995 under the caption "Quarterly Summary of
Earnings" at Page 17 and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to Executive Officers is included in Part I and
information describing the Corporation's directors is included by reference on
pages 3 and 4 of the Proxy Statement for the Annual Meeting to be held on April
16, 1996.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this section is presented on pages 4 - 7 of the
Proxy Statement for the Annual Meeting of Shareholders to be held April 16, 1996
and is incorporated herein by reference.
11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this section is presented on pages 3 - 4 of the
Proxy Statement for the Annual Meeting of Shareholders to be held April 16, 1996
and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this section is presented on page 8 of the Proxy
Statement for the Annual Meeting of Shareholders to be held April 16, 1996 and
is incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A.) 1. FINANCIAL STATEMENTS FILED
The Financial Statements listed below are incorporated herein by reference
from the Annual Shareholder's Report for the year ended December 31, 1995.
Pages in
Annual Report
-------------
CNB Financial Corporation and Subsidiary:
Consolidated Balance Sheet 4
Consolidated Statement of Income 5
Consolidated Statements of Cash Flows 6
Consolidated Statements of Changes in Shareholder's Equity 7
Notes to Consolidated Financial Statements 8 to 15
Report of Independent Auditors 16
Quarterly Summary of Earnings and Per Share Data 17
2. FINANCIAL STATEMENT SCHEDULES:
All schedules are omitted since they are not applicable.
(B.) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of the year
ended December 31, 1995.
12
Pursuant to the requirements of the Sections 13 or 15 (d) of the
Securities Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CNB FINANCIAL CORPORATION
(Registrant)
Date: March 26, 1996 By: /s/ JAMES P. MOORE
----------------------------- ------------------------------------------
JAMES P. MOORE
President & Chief Executive Officer
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 indicated on March 26, 1996.
/s/ JAMES P. MOORE President and Chief Executive Officer,
- ------------------------------------------ Director
JAMES P. MOORE
/s/ WILLIAM F. FALGER Executive Vice President
- ------------------------------------------
WILLIAM F. FALGER
/s/ CARL J. PETERSON Assistant Secretary, Director
- ------------------------------------------
CARL J. PETERSON
/s/ J. MATTHEW MCENROE Treasurer, Principal Financial Officer
- ------------------------------------------ Principal Accounting Officer
J. MATTHEW MCENROE
/s/ ROBERT E. BROWN Director /s/ JEFFREY S. POWELL
- ------------------------------------------ ------------------------------------------
ROBERT E. BROWN JEFFREY S. POWELL
Director /s/ EDWARD B. REIGHARD
- ------------------------------------------ ------------------------------------------
RICHARD D. GATHAGAN EDWARD B. REIGHARD
/s/ JAMES J. LEITZENGER Director
- ------------------------------------------ ------------------------------------------
JAMES J. LEITZENGER PETER F. SMITH
/s/ DENNIS L. MERREY Director /s/ L.E. SOULT, JR.
- ------------------------------------------ ------------------------------------------
DENNIS L. MERREY L.E. SOULT, JR.
/s/ WILLIAM R. OWENS DIRECTOR /s/ ROBERT G. SPENCER
- ------------------------------------------ ------------------------------------------
WILLIAM R. OWENS ROBERT G. SPENCER
/s/ ROBERT C. PENOVER Director /s/ JOSEPH L. WAROQUIER, SR.
- ------------------------------------------ ------------------------------------------
ROBERT C. PENOVER JOSEPH L. WAROQUIER, SR.
13
EXHIBITS:
The exhibits listed below are filed herewith or are incorporated herein by
reference to other filings:
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------ ----------- -------------
3(a) Articles of Incorporation, 17
as amended
3(b) By-Laws 23
13 Annual Report to Shareholders for 1995
21 Subsidiaries of the Registrant 14
99 Proxy Statement for the Annual Meeting of
Shareholders to be held April 16, 1996
14