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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
Commission file # 0-28388
CNB CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-2662386
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 North Main Street, Cheboygan MI 49721
(Address of principal executive offices, including Zip Code)
(231) 627-7111
(Registrant's telephone number, including area code)
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 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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes [ ] No [X]
As of August 10, 2005 there were 1,236,566 shares of the issuer's common stock
outstanding.
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CNB CORPORATION
Index
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (Condensed):
Consolidated Balance Sheets - June 30, 2005 and December 31, 2004 ............................... 3
Consolidated Statements of Income -
Three and Six Months Ended June 30, 2005 and 2004 ............................................ 4
Consolidated Statements of Cash Flows - Six Months Ended June 30, 2005 and 2004 ................. 5
Notes to Consolidated Financial Statements .................................................. 6 - 7
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations ...... 8 - 11
Item 3 - Quantitative and Qualitative Disclosures About Market Risk ..................................... 11
Item 4 - Controls and Procedures ........................................................................ 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings .............................................................................. 12
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds .................................... 12
Item 3 - Defaults Upon Senior Securities ................................................................ 12
Item 4 - Submission of Matters to a Vote of Security Holders ............................................ 13
Item 5 - Other Information .............................................................................. 13
Item 6 - Exhibits and Reports on Form 8-K ............................................................... 13
Signatures ......................................................................................... 14 - 17
Exhibit Index ........................................................................................... 18
2
PART I - FINANCIAL INFORMATION
ITEM 1-FINANCIAL STATEMENTS (CONDENSED)
CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data)
June 30, December 31,
2005 2004
(Unaudited)
ASSETS
Cash and due from banks $ 10,075 $ 5,795
Interest-bearing deposits with other
financial institutions - 2,000
Federal funds sold 1,659 4,900
-------------- --------------
Total cash and cash equivalents 11,734 12,695
Securities available for sale 78,897 78,280
Securities held to maturity (market value of $5,428
in 2005 and $4,663 in 2004) 5,383 4,621
Other securities 4,108 6,050
Loans, held for sale 541 -
Loans, net of allowance for loan losses of $1,409
in 2005 and $1,350 in 2004 148,217 143,258
Premises and equipment, net 4,674 4,600
Other assets 5,072 4,590
-------------- --------------
Total assets $ 258,626 $ 254,094
============== ==============
LIABILITIES
Deposits
Noninterest-bearing $ 41,172 $ 37,289
Interest-bearing 188,251 188,122
-------------- --------------
Total deposits 229,423 225,411
Other liabilities 4,422 4,527
-------------- --------------
Total liabilities 233,845 229,938
SHAREHOLDERS' EQUITY
Common stock - $2.50 par value; 2,000,000 shares
authorized; and 1,237,027 and 1,237,994 shares
issued and outstanding in 2005 and 2004 3,093 3,095
Additional paid-in capital 20,424 20,475
Retained earnings 1,759 1,010
Accumulated other comprehensive income, net of tax (495) (424)
-------------- --------------
Total shareholders' equity 24,781 24,156
-------------- --------------
Total liabilities and shareholders' equity $ 258,626 $ 254,094
============== ==============
See accompanying notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
(Unaudited)
INTEREST INCOME
Loans, including fees $ 2,575 $ 2,415 $ 5,024 $ 4,830
Securities
Taxable 538 468 1,046 909
Tax exempt 152 168 304 355
Interest on federal funds sold 55 22 107 50
------- -------- -------- --------
Total interest income 3,320 3,073 6,481 6,144
INTEREST EXPENSE ON DEPOSITS 726 714 1,379 1,470
------- -------- -------- --------
NET INTEREST INCOME 2,594 2,359 5,102 4,674
Provision for loan losses 30 - 60 -
------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,564 2,359 5,042 4,674
------- -------- -------- --------
NONINTEREST INCOME
Service charges and fees 237 245 457 472
Net realized gains from sales of loans 60 125 112 187
Loan servicing fees, net of amortization 35 33 57 66
Other income 348 55 403 116
------- -------- -------- --------
Total noninterest income 680 458 1,029 841
NONINTEREST EXPENSES
Salaries and benefits 821 933 1,614 1,743
Deferred compensation 391 79 466 158
Pension 78 84 156 168
Hospitalization 134 110 263 227
Occupancy 207 193 419 395
Supplies 49 34 92 80
Legal and Professional 138 89 232 157
Other expenses 259 268 518 483
------- -------- -------- --------
Total noninterest expense 2,077 1,790 3,760 3,411
------- -------- -------- --------
INCOME BEFORE INCOME TAXES 1,167 1,027 2,311 2,104
Income tax expense 235 295 574 599
------- -------- -------- --------
NET INCOME $ 932 $ 732 $ 1,737 $ 1,505
======= ======== ======== ========
TOTAL COMPREHENSIVE INCOME $ 1,147 $ (220) $ 1,666 $ 709
======= ======== ======== ========
Return on average assets (annualized) 1.45% 1.14% 1.35% 1.18%
Return on average equity (annualized) 15.11% 11.51% 14.12% 11.81%
Basic earnings per share $ 0.75 $ 0.59 $ 1.40 $ 1.21
Diluted earnings per share $ 0.75 $ 0.59 $ 1.40 $ 1.20
Dividends declared per share $ 0.40 $ 0.40 $ 0.80 $ 0.80
See accompanying notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands).
Six months ended June 30,
2005 2004
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,737 $ 1,505
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization 295 600
Provision for loan losses 60 -
Loans originated for sale (5,862) (9,854)
Proceeds from sales of loans originated for sale 5,380 9,952
Gain on sales of loans (112) (187)
Increase in other assets (392) (200)
Increase (decrease) in other liabilities 849 217
---------- ----------
Total adjustments 218 528
---------- ----------
Net cash provided by operating activities 1,955 2,033
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities available for sale 9,425 16,198
Purchase of securities available for sale (10,440) (21,809)
Proceeds from maturities of securities held to maturity 688 1,064
Purchase of securities held to maturity (1,450) (1,785)
Proceeds from maturities of other securities 2,000 140
Purchase of other securities (58) (319)
Net change in portfolio loans (5,019) 1,678
Premises and equipment expenditures (305) (696)
---------- ----------
Net cash used in investing activities (5,159) (5,529)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 4,012 6,185
Dividends paid (1,716) (1,683)
Net proceeds from exercise of stock options 11 46
Purchases of common stock (64) (413)
---------- ----------
Net cash provided by financing activities 2,243 4,135
---------- ----------
Net change in cash and cash equivalents (961) 639
Cash and cash equivalents at beginning of year 12,695 17,065
---------- ----------
Cash and cash equivalents at end of period $ 11,734 $ 17,704
========== ==========
Cash paid during the period for:
Interest $ 1,351 $ 1,468
Income taxes $ 655 $ 721
See accompanying notes to consolidated financial statements.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1-Basis of Presentation
The consolidated financial statements include the accounts of CNB Corporation
("Company") and its wholly owned subsidiary, Citizens National Bank of Cheboygan
("Bank") and the Bank's wholly owned subsidiary CNB Mortgage Corporation. All
significant intercompany accounts and transactions are eliminated in the
consolidation process. The statements have been prepared by management without
an audit by independent certified public accountants. However, these statements
reflect all adjustments (consisting of normal recurring accruals) and
disclosures which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented and should be read
in conjunction with the notes to the consolidated financial statements included
in the CNB Corporation's Form 10-K for the year ended December 31, 2004.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission.
Because the results of operations are so closely related to and responsive to
changes in economic conditions, the results for any interim period are not
necessarily indicative of the results that can be expected for the entire year.
Stock Compensation: The following proforma information presents net income and
basic and diluted earnings per share had the fair value method been used to
measure compensation for stock options granted. The exercise price of options
granted is equivalent to the market price of the underlying stock at the stock
grant date; therefore no compensation expense has been recorded for stock
options granted. FAS123R will be effective in 2006 and requires companies to
record compensation for stock options provided to employees in return for
employee service. The cost is measured at the fair value of the options when
granted, and this cost is expensed over the employee's service period, which is
normally the vesting period of the options. This will apply to awards granted or
modified adoption. Compensation cost will also be recorded for prior option
grants that vest after the date of adoption. The effect on results of operations
will depend on the level of future option grants and the calculation of the fair
value of the options granted at such future date, as well as the vesting periods
provided, and so cannot currently be predicted.
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Net income as reported $ 932 $ 732 $ 1,737 $ 1,505
Deduct: Stock based compensation
expense determined under fair value
method - (11) - (22)
----------- ----------- ---------- ----------
Proforma net income $ 932 $ 721 $ 1,737 $ 1,483
=========== =========== ========== ==========
Basic earnings per share as reported $ 0.75 $ 0.59 $ 1.40 $ 1.21
Proforma basic earnings per share 0.75 0.58 1.40 1.19
Diluted earnings per share as reported 0.75 0.59 1.40 1.20
Proforma diluted earnings per share 0.75 0.58 1.40 1.19
There were no stock options granted during the three or six months ended June
30, 2005 and 2004.
6
In future years, as additional options are granted, the effect on net income and
earnings per share may increase. Stock options are used to reward certain
officers and provide them with an additional equity interest. Options are issued
for 10 year periods and have varying vesting schedules. Information about
options available for grant and options granted follows:
Weighted
Average
Available Options Exercise
For Grant Outstanding Price
Balance at January 1, 2005 9,952 27,839 $ 46.92
Options exercised - (300) 38.60
Options forfeited (525) 48.57
--------- -----------
Balance at June 30, 2005 9,952 27,014 $ 46.98
========= ===========
At June 30, 2005 options outstanding had a weighted average remaining life of
approximately 5.0 years. There were 27,014 options exercisable at June 30, 2005
with a weighted-average exercise price of $ 46.98.
There have been no significant changes in the Company's critical accounting
policies since December 31, 2004.
Note 2-Earnings Per Share
Basic earnings per share are calculated solely on weighted-average common shares
outstanding. Diluted earnings per share will reflect the potential dilution of
stock options and other common stock equivalents. For the three and six month
periods ending June 30, 2005 the weighted average shares outstanding in
calculating basic earnings per share were 1,237,518 and 1,237,683 while the
weighted average number of shares for diluted earnings per share were 1,239,342
and 1,240,520. As of June 30, 2005 there were 8,340 shares not considered in the
earnings per share calculation because they were antidilutive. For the three and
six month periods ending June 30, 2004 the weighted average shares outstanding
in calculating basic earnings per share were 1,245,677 and 1,245,041 while the
weighted average number of shares for diluted earnings per share were 1,248,925
and 1,249,848.
7
ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion provides information about the consolidated financial condition
and results of operations of CNB Corporation ("Company") and its wholly owned
subsidiary, Citizens National Bank of Cheboygan ("Bank") and the Bank's wholly
owned subsidiary CNB Mortgage Corporation for the three and six month periods
ending June 30, 2005.
FINANCIAL CONDITION
The Company's balances of cash and cash equivalents decreased $961,000 or 7.6%.
During the six month period ending June 30, 2005, nearly $2 million in cash was
provided by operating activities. Investing activities utilized $5.2 million
during the six months ended June 30, 2005, primarily due to origination of loans
and financing activities provided $2.2 million.
SECURITIES
The securities portfolio increased $563,000 since December 31, 2004. The
available for sale portfolio increased to 89.3% of the investment portfolio up
from 88.0% at year-end.
The fair values and related unrealized gains and losses for securities available
for sale were as follows, in thousands of dollars:
Gross Gross
Fair Unrealized Unrealized
Value Gains Losses
Available for Sale
JUNE 30, 2005
U.S. Government agency $57,377 $ 7 $ (618)
Mortgage-backed 6,486 3 (15)
State and municipal 15,034 147 (22)
------- ------- -------
$78,897 $ 157 $ (655)
======= ======= =======
DECEMBER 31, 2004
U.S. Government agency $56,786 $ 20 $ (431)
Mortgage-backed 3,149 8 -
State and municipal 18,345 255 (17)
------- ------- -------
$78,280 $ 283 $ (448)
======= ======= =======
The carrying amount, unrecognized gains and losses, and fair value of securities
held to maturity were as follows, in thousand of dollars:
Gross Gross
Carrying Unrecognized Unrecognized Fair
Amount Gains Losses Value
------ ----- ------ -----
Held to Maturity
JUNE 30, 2005
State and municipal $ 5,383 $ 63 $ (18) $ 5,428
========== ======= ======== ==========
DECEMBER 31, 2004
State and municipal $ 4,621 $ 55 $ (13) $ 4,663
========== ======= ======== ==========
8
The carrying amount and fair value of securities by contractual maturity at
June 30, 2005 are shown below, in thousands of dollars.
Available for sale Held to Maturity
Fair Carrying Fair
Value Amount Value
----- ------ -----
Due in one year or less $ 27,411 $ 834 $ 836
Due from one to five years 49,500 2,727 2,757
Due from five to ten years 1,151 623 636
Due after ten years 835 1,199 1,199
--------- ------- -------
$ 78,897 $ 5,383 $ 5,428
========= ======= =======
LOANS
Net loans at June 30, 2005 increased $5 million from December 31, 2004. The
table below shows total loans outstanding by type, in thousands of dollars, at
June 30, 2005 and December 31, 2004 and their percentages of the total loan
portfolio. All loans are domestic. A quarterly review of loan concentrations at
June 30, 2005 indicates the pattern of loans in the portfolio has not changed
significantly. There is no individual industry with more than a 10%
concentration. However, all tourism related businesses, when combined, total
14.1% of total loans.
June 30, 2005 December 31, 2004
Balance % of total Balance % of total
------- ---------- ------- ----------
Portfolio loans:
Residential real estate $ 80,871 54.05% $ 83,364 57.64%
Consumer 8,914 5.96% 8,699 6.02%
Commercial real estate 49,235 32.90% 43,336 29.97%
Commercial 10,615 7.09% 9,220 6.38%
--------- ----- --------- -----
149,635 100.00% 144,619 100.00%
====== ======
Deferred loan origination fees, net (9) (11)
Allowance for loan losses (1,409) (1,350)
--------- ---------
Loans, net $ 148,217 $ 143,258
========= =========
ALLOWANCE AND PROVISION FOR LOAN LOSSES
An analysis of the allowance for loan losses, in thousands of dollars, for the
six months ended June 30, follows:
2005 2004
---- ----
Beginning balance $ 1,350 $ 1,575
Provision for loan losses 60 -
Charge-offs (11) (108)
Recoveries 10 6
--------- ---------
Ending balance $ 1,409 $ 1,473
========= =========
The Company had one impaired loan during 2004 with an average balance of
approximately $100,000. The balance of this loan was zero at December 31, 2004.
The Company had no impaired loans during the first six months of 2005.
Since December 31, 2004, net loans have increased $5 million and the loan
portfolio has undergone a shift in its composition over the past six months.
Since December 31, 2004 commercial mortgages have increased $5.9
9
million while consumer mortgages have decreased $2.5 million. This is primarily
due to a slow down in residential refinancing and a stronger emphasis on
commercial lending. There has been no change in the bank's lending policies. The
lending staff continues to be well-trained and experienced. The trend and volume
of past due loans continues to be well-controlled and in line with peer
averages. In response to the change in portfolio composition and loan growth
management recorded a provision of $60,000 in the first six months of 2005
compared to $0 for 2004.
CREDIT QUALITY
The Company maintains a high level of asset quality as a result of actively
managing delinquencies, nonperforming assets and potential loan problems. The
Company performs an ongoing review of all large credits to watch for any
deterioration in quality. Nonperforming loans are comprised of: (1) loans
accounted for on a nonaccrual basis; (2) loans contractually past due 90 days or
more as to interest or principal payments (but not included in nonaccrual loans
in (1) above); and (3) other loans whose terms have been renegotiated to provide
a reduction or deferral of interest or principal because of a deterioration in
the financial position of the borrower (exclusive of loans in (1) or (2) above).
The aggregate amount of nonperforming loans is shown in the table below.
June 30, December 31,
2005 2004
(dollars in thousands)
Nonaccrual $ - $ -
Loans past due 90 days or more 247 674
Troubled debt restructurings - -
----------- ---------
Total nonperforming loans $ 247 $ 674
=========== =========
Percent of total loans 0.17% 0.47%
DEPOSITS
Deposits at June 30, 2005 increased $4.0 million since December 31, 2004.
Interest-bearing deposits increased $129,000 or less than 1% for the six months
ended June 30, 2005, while noninterest -bearing deposits increased $3.9 million
or 10.4%. This growth can be attributed to seasonal activity.
LIQUIDITY AND FUNDS MANAGEMENT
As of June 30, 2005, the Company had $1.7 million in federal funds sold, $78.9
million in securities available for sale and $834,000 in held to maturity
securities maturing within one year. These sources of liquidity are supplemented
by new deposits and loan payments received by customers. These short-term assets
represent 35.5% of total deposits as of June 30, 2005.
Total equity of the Company at June 30, 2005 was $24.8 million compared to $24.2
million at December 31, 2004.
RESULTS OF OPERATIONS
CNB Corporation's 2005 net income for the first six months was $1.7 million an
increase of $232,000 compared to 2004 results. This increase can be attributed
to an increase in net interest income resulting from the higher rate environment
compared to 2004. Earnings also include $300,000 due to life insurance proceeds
received due to death of a director. The proceeds were offset by additional
expense of $315,000 to recognize the amount payable to the director upon death
under the deferred compensation plan. Basic earnings per share and diluted
earnings per share were $1.40 per share for 2005 compared to basic earnings per
share of $1.21
10
and diluted earnings per share of $1.20 for 2004. The return on assets was 1.35%
for the first six months of the year versus 1.18% for the same period in 2004.
The return on equity was 14.12% compared to 11.81% for the same period last
year.
Net income for the three months ending June 30, 2005 was $932,000 compared to
$732,000 for 2004. This was an increase of $200,000 or 27.3%. Basic and diluted
earnings per share were $0.75 compared to $0.59 for 2004. The return on average
assets was 1.45% compared to 1.14% for 2004. The return on average equity was
15.11% compared to 11.51% for 2004. These increases were primarily due to the
same reasons noted above for the six month period.
For the first six months of 2005, net interest income was $5.1 million
representing an increase of 9.2% from the same period in 2004. This increase can
be attributed to an increase in interest income compared to the first six months
of 2004. The fully taxable equivalent net interest margin increased to 4.32% for
the six month period ending June 30, 2005 compared to 4.02% for the same period
ending June 30, 2004. This change can be attributable to an increase in overall
interest rates from 2005 to 2004.
In response to the change in the loan portfolio composition and loan growth
management recorded a provision expense of $60,000 in the first six months in
2005 compared to $0 for the same period in 2004.
Noninterest income for the six months ending June 30, 2005 was $1 million, an
increase of $188,000 or 22.4% from the same period last year. The majority of
this increase can be attributed to income from the life insurance proceeds as
mentioned above. The increase in noninterest income due to the life insurance
proceeds was offset, in part by a decline in gains on sales of loans due to the
lesser amount of loans that were sold to the secondary market year-to-date 2005
as compared to the same period in 2004.
Noninterest expense for the first six months of 2005 was $3.7 million compared
to $3.4 million for the same period in 2004. This increase can largely be
attributed to the increase in deferred compensation expense as noted above.
The provision for federal income tax was 24.8% of pretax income for the six
months ended June 30, 2005 as compared to 28.5% for the same period in 2004. The
difference between the tax rate for the two periods is due to the unanticipated
non-taxable income from insurance proceeds during 2005. The difference between
the effective tax rate and the federal corporate tax rate of 34% is generally
due to tax-exempt interest earned on investments and loans and other tax-related
items.
ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary source of market risk for the financial instruments held by the
Company is interest rate risk. That is, the risk that a change in market rates
will adversely affect the market value of the instruments. Generally, the longer
the maturity, the higher the interest rate risk exposure. While maturity
information does not necessarily present all aspects of exposure, it may provide
an indication of where risks are prevalent.
All financial institutions assume interest rate risk as an integral part of
normal operations. Managing and measuring interest rate risk is a dynamic,
multi-faceted process that ranges from reducing the exposure of the Company's
net interest margin to swings in interest rates, to assuring sufficient capital
and liquidity to support future balance sheet growth. The Company manages
interest rate risk through the Asset Liability Committee. The Asset Liability
Committee is comprised of bank officers from various disciplines. The Committee
reviews policies and establishes rates which lead to prudent investment of
resources, the effective management of risks associated with changing interest
rates, the maintenance of adequate liquidity, and the earning of an adequate
return of shareholders' equity.
Management believes that there has been no significant changes to the interest
rate sensitivity since the presentation in the December 31, 2004 Management
Discussion and Analysis appearing in the December 31, 2004 10K.
11
ITEM 4-CONTROLS AND PROCEDURES
The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"). These
rules refer to the controls and other procedures of a company that are designed
to ensure that information required to be disclosed by a company in the reports
that it files under the Exchange Act is recorded, processed summarized and
reported within required time periods. Our Chief Executive Officer and
Treasurer, who serves as the Company's CFO have evaluated the effectiveness of
our disclosure controls and procedures as of the end of the period covered by
this report (the "Evaluation Date"), and have concluded that, as of the
Evaluation Date, our disclosure controls and procedures are effective in
providing them with material information relating to the Corporation which is
required to be included in our periodic reports filed under the Exchange Act.
The Bank hired Ms. Shanna Hanley as Vice President and Senior Controller in
April. Ms. Hanley will be directly involved in the financial reporting
aspect of the Bank and the Corporation. Ms. Hanley was appointed as
treasurer of the Corporation at the May 17, 2005 annual meeting.
PART II-OTHER INFORMATION
ITEM 1-LEGAL PROCEEDINGS
None
ITEM 2- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES
PERIOD
Total Approximate
number dollar value
of shares of shares
Total Average purchased that may
number of price as part of publicly be purchased
shares paid per announced under the plans
purchased share plans or programs or programs
April, 2005 None
May, 2005 396 $50.00
June, 2005 671 $50.00
Total $33,555
The Company adopted a Stock Redemption Program on November 14, 2002 with the
provision that it would remain in effect for six months or until $1 million had
been expended on the purchase of common stock, whichever shall occur first. The
Company extended the program in May 2003 until November 2003. The Company
reinstated the program on December 24, 2003 and it will remain in effect until
the $1 million originally allocated for common stock purchases is met. As of
June 30, 2005, the Company has $33,555 remaining to purchase stock.
12
ITEM 3-DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of CNB Corporation was held on May 17,
2005. Elected as Directors for one year term were Steven J. Baker; James C.
Conboy, Jr.; Kathleen M. Darrow; Thomas J. Ellenberger; Vincent J.
Hillesheim; John L. Ormsbee; Francis J. VanAntwerp, Jr.; and John P. Ward.
Votes cast for: 903,486
Votes cast against: 5,092
Votes withheld: 203
Votes cast for were for all eight directors listed above with the exception of
the votes cast against as noted. Votes cast against were 6 for Robert E.
Churchill, 5,086 for John L. Ormsbee. Votes withheld were for all eight
directors listed above.
ITEM 5-OTHER INFORMATION
Due to the passing of Chairman Robert E. Churchill on May 9, 2005, Mr. John
P. Ward was elected by the Board of Directors at the May 17, 2005 annual
meeting to serve as Chairman of the Board for the ensuing year. Mr. Ward
retired from the Bank during 1998 and was the Secretary of the Corporation
prior to this election. Due to Mr. Ward's appointment to Chairman, the
position of Secretary of the Corporation was appointed to Ms. Susan A. Eno at
the same meeting. Ms. Eno is an Executive Vice President of the Corporation;
Executive Vice President and Cashier of the Bank. Ms. Eno has been an
officer of the Corporation since 1996 and an employee of the Bank since
1971. She has been in her current position for more than 8 years.
ITEM 6-EXHIBITS AND REPORTS OF FORM 8-K
a.) Exhibits
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.1 Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002
b.) Reports on Form 8-K
A Current Report on Form 8-K was filed on July 11, 2005, with an accompanying
letter to shareholders, disclosing the Corporation's financial performance for
the first six months of 2005.
13
Pursuant to the requirements 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.
CNB Corporation
------------------------------
(Registrant)
/s/ James C. Conboy, Jr.
Date: August 12, 2005 ------------------------------
James C. Conboy, Jr.
President and Chief Executive
Officer
/s/ Susan A. Eno
Date: August 12, 2005 ------------------------------------
Susan A. Eno
Executive Vice President
14
EXHIBIT INDEX
Number Exhibit
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15