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 September 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]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of November 3, 2005 there were 1,236,566 shares of the issuer's common stock
outstanding.
CNB CORPORATION
Index
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (Condensed):
Consolidated Balance Sheets - September 30, 2005 and December 31, 2004............................ 3
Consolidated Statements of Income - Three and Nine Months Ended September 30, 2005 and 2004....... 4
Consolidated Statements of Cash Flows - Nine Months Ended September 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....................................................................... 12
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............................................................... 13
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)
September 30, December 31,
2005 2004
(Unaudited)
ASSETS
Cash and due from banks $ 6,762 $ 5,795
Interest-bearing deposits with other
financial institutions 2,013 2,000
Federal funds sold 4,963 4,900
----------------- ------------------
Total cash and cash equivalents 13,738 12,695
Securities available for sale 76,425 78,280
Securities held to maturity (market value of $4,297
in 2005 and $4,663 in 2004) 4,257 4,621
Other securities 3,758 6,050
Loans, held for sale 185 -
Loans, net of allowance for loan losses of $1,440
in 2005 and $1,350 in 2004 150,715 143,258
Premises and equipment, net 5,018 4,600
Other assets 6,393 4,590
----------------- ------------------
Total assets $ 260,489 $ 254,094
================= ==================
LIABILITIES
Deposits
Noninterest-bearing $ 44,061 $ 37,289
Interest-bearing 187,144 188,122
----------------- ------------------
Total deposits 231,205 225,411
Other liabilities 4,296 4,527
----------------- ------------------
Total liabilities 235,501 229,938
SHAREHOLDERS' EQUITY
Common stock - $2.50 par value; 2,000,000 shares
authorized; and 1,236,566 and 1,237,994 shares
issued and outstanding in 2005 and 2004 3,092 3,095
Additional paid-in capital 20,402 20,475
Retained earnings 2,032 1,010
Accumulated other comprehensive income, net of tax (538) (424)
----------------- ------------------
Total shareholders' equity 24,988 24,156
----------------- ------------------
Total liabilities and shareholders' equity $ 260,489 $ 254,094
================= ==================
See accompanying notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
(Unaudited)
INTEREST INCOME
Loans, including fees $2,653 $2,406 $7,677 $7,236
Securities
Taxable 528 507 1,574 1,416
Tax exempt 136 173 440 528
Interest on federal funds sold 82 52 189 102
------ ------ ------ ------
Total interest income 3,399 3,138 9,880 9,282
INTEREST EXPENSE ON DEPOSITS 836 683 2,215 2,153
------ ------ ------ ------
NET INTEREST INCOME 2,563 2,455 7,665 7,129
Provision for loan losses 30 - 90 -
------ ------ ------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,533 2,455 7,575 7,129
------ ------ ------ ------
NONINTEREST INCOME
Service charges and fees 253 265 710 737
Net realized gains from sales of loans 71 61 183 248
Loan servicing fees, net of amortization 37 26 94 92
Other income 40 40 443 156
------ ------ ------ ------
Total noninterest income 401 392 1,430 1,233
NONINTEREST EXPENSES
Salaries and benefits 861 837 2,475 2,580
Deferred compensation 110 81 576 239
Pension 54 84 210 252
Hospitalization 137 129 400 356
Occupancy 234 203 653 598
Supplies 33 40 125 120
Legal and Professional 117 54 349 211
Other expenses 287 266 805 749
------ ------ ------ ------
Total noninterest expense 1,833 1,694 5,593 5,105
------ ------ ------ ------
INCOME BEFORE INCOME TAXES 1,101 1,153 3,412 3,257
Income tax expense 332 334 906 933
------ ------ ------ ------
NET INCOME $ 769 $ 819 $2,506 $2,324
====== ====== ====== ======
TOTAL COMPREHENSIVE INCOME $ 726 $1,259 $2,392 $1,968
====== ====== ====== ======
Return on average assets (annualized) 1.16% 1.23% 1.29% 1.20%
Return on average equity (annualized) 12.36% 13.16% 13.52% 12.26%
Basic earnings per share $ 0.62 $ 0.66 $ 2.03 $ 1.87
Diluted earnings per share $ 0.62 $ 0.66 $ 2.02 $ 1.86
Dividends declared per share $ 0.40 $ 0.40 $ 1.20 $ 1.20
See accompanying notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands).
Nine months ended September 30,
2005 2004
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,506 $ 2,324
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization 379 860
Provision for loan losses 90 -
Loans originated for sale (8,781) (13,261)
Proceeds from sales of loans originated for sale 8,688 13,432
Gain on sales of loans (183) (248)
Increase in other assets (1,653) (238)
Increase in other liabilities 727 343
-------- --------
Total adjustments (733) 888
-------- --------
Net cash provided by operating activities 1,773 3,212
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities available for sale 15,884 24,244
Purchase of securities available for sale (14,458) (32,568)
Proceeds from maturities of securities held to maturity 1,814 1,771
Purchase of securities held to maturity (1,450) (1,785)
Proceeds from maturities of other securities 2,350 370
Purchase of other securities (58) (329)
Net change in portfolio loans (7,547) (265)
Premises and equipment expenditures (767) (875)
-------- --------
Net cash used in investing activities (4,232) (9,437)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 5,794 6,668
Dividends paid (2,216) (2,180)
Net proceeds from exercise of stock options 21 47
Purchases of common stock (97) (503)
-------- --------
Net cash provided by financing activities 3,502 4,032
-------- --------
Net change in cash and cash equivalents 1,043 (2,193)
Cash and cash equivalents at beginning of year 12,695 17,065
-------- --------
Cash and cash equivalents at end of period $ 13,738 $ 14,872
======== ========
Cash paid during the period for:
Interest $ 2,177 $ 2,160
Income taxes $ 1,017 $ 920
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 after 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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
------------ -------------- ------------- ---------------
Net income as reported $ 769 $ 819 $ 2,506 $ 2,324
Deduct: Stock based compensation
expense determined under
fair value method - (11) - (33)
------------ ------------- ------------- --------------
Proforma net income $ 769 $ 808 $ 2,506 $ 2,291
============ ============= ============= ==============
Basic earnings per share as reported $ 0.62 $ 0.66 $ 2.03 $ 1.87
Proforma basic earnings per share 0.62 0.65 2.03 1.84
Diluted earnings per share as reported 0.62 0.66 2.02 1.86
Proforma diluted earnings per share 0.62 0.65 2.02 1.84
There were no stock options granted during the three or nine months ended
September 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 (510) 42.71
Options forfeited (525) 48.57
----- ------
Balance at September 30, 2005 9,952 26,804 $ 46.98
===== ======
At September 30, 2005 options outstanding had a weighted average remaining life
of approximately 4.7 years. There were 26,804 options exercisable at September
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 nine month
periods ending September 30, 2005 the weighted average shares outstanding in
calculating basic earnings per share were 1,237,305 and 1,236,562 while the
weighted average number of shares for diluted earnings per share were 1,240,083
and 1,239,223. As of September 30, 2005 there were 8,340 shares not considered
in the earnings per share calculation because they were antidilutive. For the
three and nine month periods ending September 30, 2004 the weighted average
shares outstanding in calculating basic earnings per share were 1,238,362 and
1,242,799 while the weighted average number of shares for diluted earnings per
share were 1,240,866 and 1,246,969.
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 nine month periods
ending September 30, 2005.
FINANCIAL CONDITION
The Company's balances of cash and cash equivalents increased $1 million or
8.2%. During the nine month period ending September 30, 2005, $1.8 million in
cash was provided by operating activities. Investing activities utilized $4.2
million during the nine months ended September 30, 2005, primarily due to
origination of loans and financing activities provided $3.5 million.
SECURITIES
The securities portfolio decreased $4.5 million since December 31, 2004. The
available for sale portfolio increased to 90.5% 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
SEPTEMBER 30, 2005
U.S. Government agency $54,281 $ 0 $ (603)
Mortgage-backed 8,931 0 (64)
State and municipal 13,213 126 (23)
------- ------- -------
$76,425 $ 126 $ (690)
======= ======= =======
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
SEPTEMBER 30, 2005
State and municipal $4,257 $ 56 $ (16) $4,297
====== ====== ====== ======
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
September 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 $31,082 $ 253 $ 254
Due from one to five years 43,344 2,233 2,259
Due from five to ten years 1,150 593 606
Due after ten years 849 1,178 1,178
------- ------- -------
$76,425 $ 4,257 $ 4,297
======= ======= =======
LOANS
Net loans at September 30, 2005 increased $7.5 million from December 31, 2004.
The table below shows total loans outstanding by type, in thousands of dollars,
at September 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 September 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 13.9% of total loans.
September 30, 2005 December 31, 2004
Balance % of total Balance % of total
------------ ---------- ---------- ----------
Portfolio loans:
Residential real estate $ 81,423 53.51% $ 83,364 57.64%
Consumer 9,478 6.23% 8,699 6.02%
Commercial real estate 51,497 33.84% 43,336 29.97%
Commercial 9,765 6.42% 9,220 6.38%
----------- ------ ---------- ------
152,163 100.00% 144,619 100.00%
====== ======
Deferred loan origination fees, net (8) (11)
Allowance for loan losses (1,440) (1,350)
----------- ----------
Loans, net $ 150,715 $ 143,258
=========== ==========
ALLOWANCE AND PROVISION FOR LOAN LOSSES
An analysis of the allowance for loan losses, in thousands of dollars, for the
nine months ended September 30, follows:
2005 2004
-------- --------
Beginning balance $ 1,350 $ 1,575
Provision for loan losses 90 -
Charge-offs (12) (221)
Recoveries 12 8
------- -------
Ending balance $ 1,440 $ 1,362
======= =======
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 nine months of 2005.
9
Since December 31, 2004, net loans have increased $7.5 million and the loan
portfolio has undergone a shift in its composition over the past nine months.
Since December 31, 2004 commercial mortgages have increased $8.2 million while
consumer mortgages have decreased $1.9 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 $90,000 in the first nine 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.
September 30, December 31,
2005 2004
(dollars in thousands)
Nonaccrual $ - $ -
Loans past due 90 days or more 69 674
Troubled debt restructurings - -
------- -------
Total nonperforming loans $ 69 $ 674
======= =======
Percent of total loans 0.05% 0.47%
DEPOSITS
Deposits at September 30, 2005 increased $5.8 million since December 31, 2004.
Interest-bearing deposits decreased $978,000 or less than 1% for the nine months
ended September 30, 2005, while noninterest -bearing deposits increased $6.8
million or 18.2%. This growth can be attributed to seasonal activity.
LIQUIDITY AND FUNDS MANAGEMENT
As of September 30, 2005, the Company had $5.0 million in federal funds sold,
$76.4 million in securities available for sale and $253,000 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 35.3% of total deposits as of September 30, 2005.
Total equity of the Company at September 30, 2005 was $25.0 million compared to
$24.2 million at December 31, 2004.
RESULTS OF OPERATIONS
CNB Corporation's 2005 net income for the first nine months was $2.5 million, an
increase of $182,000 compared to 2004 results. This growth and change in
composition 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 were $2.03 and diluted earnings per share were $2.02 for 2005
10
compared to basic earnings per share of $1.87 and diluted earnings per share of
$1.86 for 2004. The return on assets was 1.29% for the first nine months of the
year versus 1.20% for the same period in 2004. The return on equity was 13.52%
compared to 12.26% for the same period last year.
Net income for the three months ending September 30, 2005 was $769,000 compared
to $819,000 for 2004. This was a decrease of $50,000 or 6.1%. Basic and diluted
earnings per share were $0.62 compared to $0.66 for 2004. The return on average
assets was 1.16% compared to 1.23% for 2004. The return on average equity was
12.36% compared to 13.16% for 2004. These decreases were primarily due to the
higher interest rates being paid on deposits in the third quarter 2005 as
compared to the same period in 2004.
For the first nine months of 2005, net interest income was $7.7 million
representing an increase of 7.5% from the same period in 2004. This increase can
be attributed to an increase in interest income compared to the first nine
months of 2004. The fully taxable equivalent net interest margin increased to
4.31% for the nine month period ending September 30, 2005 compared to 4.03% for
the same period ending September 30, 2004. This change can be attributable to an
increase in overall interest rates from 2005 to 2004.
Net interest income for the three months ending September 30, 2005 was $2.6
million compared to $2.5 million for the same period in 2004 representing an
increase of 4.4%. This increase is for the same reason as noted above.
In response to the change in the loan portfolio composition and loan growth
management recorded a provision expense of $90,000 in the first nine months in
2005 compared to $0 for the same period in 2004. The provision expense for the
three months ending September 30, 2005 was $30,000 and no provision expense was
recorded during the third quarter of 2004.
Noninterest income for the nine months ending September 30, 2005 was $1.4
million, an increase of $197,000 or 16.0% 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.
For the three months ended September 30, 2005 noninterest income increase to
$401,000 as compared to $392,000 for the same period in 2004. This increase can
be attributed to increased gains on the sale of loans and increase servicing fee
income, but was offset by decreased service charge fee income.
Noninterest expense for the first nine months of 2005 was $5.6 million compared
to $5.1 million for the same period in 2004. This increase can largely be
attributed to the increase in deferred compensation expense as noted above.
Legal and professional fees increase $138,000 for the nine months ending
September 30, 2005. Some of this increase can be attributed to increased fees
from outside auditors due to additional audit requirements under Sarbanes-Oxley.
Increases in professional fees also include service costs for the addition of
internet banking and other miscellaneous professional service fees.
For the three months ended September 30, 2005, noninterest expense increased
$139,000 to $1.8 million as compared to $1.7 million for the same period in
2004. The majority of this increase can be attributed to an increase in legal
and professional fees for the same reasons as noted above.
The provision for federal income tax was 26.6% of pretax income for the nine
months ended September 30, 2005 as compared to 28.6% for the same period in
2004. The difference between the tax rates 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.
11
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.
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.
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
July, 2005 671 $50.00 $5
August, 2005 None $5
September, 2005 None $5
Total $5
12
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
September 30, 2005, the Company has $5 remaining to purchase stock under the
program, but due to the average price per share the Company considers the
program to have come to an end as of July 31, 2005.
ITEM 3-DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5-OTHER INFORMATION
None
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
None
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)
Date: November 10, 2005 /s/ James C. Conboy, Jr.
------------------------------------------
James C. Conboy, Jr.
President and Chief Executive Officer
Date: November 10, 2005 /s/ Susan A. Eno
------------------------------------------
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