UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996 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. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 1, 1997.
Common Stock, $4.00 Par Value - $52,977,146
The number of shares outstanding of the issuer's common stock as of March 1,
1997:
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,
1996 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 15, 1997 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 13.
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......................................... 11
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.................................................... 15
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 at 1 South Second Street, Clearfield,
(Clearfield County) Pennsylvania. The Bank's primary marketing area consists of
the Pennsylvania Counties of Clearfield, Elk (excluding the Townships of
Millstone, Highland and Spring Creek), McKean and Cameron. It also includes a
portion of western Centre County including Philipsburg Borough, Rush Township
and the western portions of Snow Shoe and Burnside Townships and a portion of
Jefferson County consisting of the boroughs of Brockway, Falls Creek,
Reynoldsville and Sykesville, and the townships of Washington, Winslow and
Henderson. The approximate population of the general trade area is 100,000.
The economy is diversified and includes manufacturing industries, wholesale and
retail trade, services industries, family farms and the production of natural
resources of coal, oil, gas and timber.
In addition to the Main Office, the Bank has 13 full-service branch offices
and 2 limited service branch offices located in various communities located in
its market area. In December, 1996, the Bank acquired four branch locations,
three full-service and one limited service branches, from PNC Bank N.A.,
Pittsburgh, Pennsylvania. One branch was located in Clearfield in the same
block as the Main Office and has been subsequently closed. Two of the branches
are located in Philipsburg which remain open and supplement the Bank's existing
branches in that community. The third office is located in the DuBois Mall in
DuBois, Clearfield County, which represents the Bank's first branch location in
that community. In addition to acquiring these four branch locations the Bank
also acquired the PNC customer lists for each acquired location with the
objective to convert the customer relationships to the Bank. Also, in January,
1996, the Bank opened a full-service branch office in Houtzdale, Clearfield
County.
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 deposit 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
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 unions. 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, 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. 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.
SUPERVISION AND REGULATION
The Bank is subject to supervision and examination by applicable federal
and state banking agencies, including the Office of the Comptroller of the
Currency. 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, 1996 FOR LAST FIVE YEARS
- ---- ----------------- -------------------
JAMES P. MOORE 61 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 49 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 53 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 59 ASSISTANT SECRETARY,
CNB FINANCIAL CORPORATION, SINCE 3/27/84.
SENIOR VICE PRESIDENT AND TRUST OFFICER,
COUNTY NATIONAL BANK, SINCE 4/15/82.
MARK D. BREAKEY 38 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, 1996, the Bank had a total of 201 employees
of which 158 were full time and 43 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, 1996 December 31, 1995 December 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Average Annual Interest Average Annual Interest Average Annual Interest
Balance Rate Inc./Exp. Balance Rate Inc./Exp. Balance Rate Inc./Exp.
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Interest-bearing deposits with banks $14 0.00% $0 $18 2.42% $0 $1,306 6.97% $91
Federal funds sold and securities
purchased under agreements to resell 1,597 5.45% 87 1,450 5.59% 81 1,130 3.81% 43
Other short-term investments 0 0 0
Investment Securities:
Taxable 55,861 6.17% 3,445 54,681 5.97% 3,264 55,712 5.35% 2,983
Tax-Exempt (1) 24,740 7.92% 1,962 21,495 8.62% 1,853 21,744 8.62% 1,874
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities 82,212 6.68% 5,494 77,644 6.59% 5,198 79,892 6.08% 4,991
Loans
Commercial 47,679 8.14% 3,882 44,621 8.56% 3,818 37,544 7.41% 2,782
Mortgage 116,233 8.52% 9,898 89,215 9.03% 8,057 85,892 8.68% 7,456
Installment 42,009 10.60% 4,451 54,293 9.16% 4,974 53,756 8.51% 4,575
- ------------------------------------------------------------------------------------------------------------------------------------
Total Loans (2) 205,921 8.85% 18,231 188,129 8.96% 16,849 177,192 8.36% 14,813
Total Earning Assets 288,133 8.23% 23,725 265,773 8.30% 22,047 257,084 7.70% 19,804
Non Interest Bearing Assets
Cash & Due From Banks 8,579 0 7,480 0 7,228 0
Premises & Equipment 8,297 0 6,482 0 4,471 0
Other Assets 2,965 0 2,902 0 2,600 0
Allowance for Possible Loan Losses (2,301) 0 (2,173) 0 (1,927) 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Non-interest earning assets 17,540 -- 0 14,691 -- 0 12,372 -- 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $305,673 $23,725 $280,464 $22,047 $269,456 $19,804
===========================================================================================
Liabilities and Shareholders' Equity
Interest-Bearing Deposits
Demand - Interest-Bearing $76,496 3.13% $2,397 $56,284 1.98% $1,115 $50,779 1.84% $935
Savings 36,266 1.66% 601 38,716 2.72% 1,052 42,719 2.07% 886
Time 117,339 5.47% 6,423 116,239 5.83% 6,778 109,912 4.70% 5,165
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-Bearing Deposits 230,101 4.09% 9,421 211,239 4.23% 8,945 203,410 3.43% 6,986
Short-Term Borrowings 7,186 5.23% 376 5,229 5.32% 278 5,162 4.63% 239
Long-Term Borrowings 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 237,287 4.13% 9,797 216,468 4.26% 9,223 208,572 3.46% 7,225
Demand - Non-Interest-Bearing 27,852 -- 0 25,788 -- 0 26,225 -- 0
Other Liabilities 2,054 -- 0 1,766 -- 0 1,199 -- 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 267,193 3.67% 9,797 244,022 3.78% 9,223 235,996 3.06% 7,225
Shareholder's Equity 38,480 -- 0 36,442 -- 0 33,460 -- 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders'
Equity $305,673 $9,797 $280,464 $9,223 $269,456 $7,225
===========================================================================================
Interest Income/Earning Assets 8.23% 23,725 8.30% $22,047 7.70% $19,804
Interest Expense/Interest Bearing
Liabilities 4.13% 9,797 4.26% 9,223 3.46% 7,225
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Spread 4.10% 13,928 4.03% $12,824 4.24% $12,579
===========================================================================================
Interest Income/Interest Earning Assets 8.23% $23,725 8.30% $22,047 7.70% $19,804
Interest Expense/Interest Earning Assets 3.40% 9,797 3.47% 9,223 2.81% 7,225
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Margin 4.83% $13,928 4.83% $12,824 4.89% $12,579
===========================================================================================
(1) The amounts are reflected on a fully tax equivalent basis using the federal
statutory rate of 34% in 1996, 1995 and 1994, 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.
Net Interest Income For Twelve Months Ended December 31, For Twelve Months Ended December 31,
Rate-Volume Variance 1996 over(under) 1995 1995 over(under) 1994
(Dollars in thousands) Due to Change in Due to Change in
- ------------------------------------------------------------------------------------------------------------------------------
Volume Rate Net Volume Rate Net
- ------------------------------------------------------------------------------------------------------------------------------
Assets
Securities
Interest-Bearing Deposits with Banks $0 $0 $0 ($55) ($36) ($91)
Purchased Under Agreements to Resell 8 (2) 6 14 24 38
Other Short-Term Investments 0 0 0 0 0 0
Investment Securities:
Taxable 71 110 181 (56) 337 281
Tax-Exempt 266 (157) 109 (21) 0 (21)
---------------------------------- ------------------------------------
Total Securities 345 (49) 296 (118) 325 207
Loans
Commercial 198 (134) 64 569 467 1,036
Mortgage 1,471 370 1,841 294 307 601
Installment (277) (246) (523) 46 353 399
---------------------------------- ------------------------------------
Total loans 1,392 (10) 1,382 909 1,127 2,036
---------------------------------- ------------------------------------
Total Earning Assets $1,737 ($59) $1,678 $791 $1,452 $2,243
================================== ====================================
Liabilities and Shareholders' Equity
Interest-Bearing Deposits
Demand - Interest-Bearing $489 $793 $1,282 $101 $71 $180
Savings (63) (388) (451) (83) 275 166
Time 64 (419) (355) 297 1,299 1,613
---------------------------------- ------------------------------------
Total Interest-Bearing Deposits 490 (14) 476 315 1,645 1,959
Short-Term Borrowings 85 13 98 3 35 39
---------------------------------- ------------------------------------
Total Interest-Bearing Liabilities $575 ($1) $574 $318 $1,680 $1,998
================================== ====================================
================================== ====================================
Change in Net Interest Income $1,162 ($58) $1,104 $473 ($228) $245
================================== ====================================
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 $228,576, $192,412 and $348,838 of fees for
the years ending 1996, 1995 and 1994, respectively.
3. Income on restructured loans accounted for under SFAS Nos. 114 & 118 are
included in interest earning assets; there is no income being recognized on a
cash basis.
Investment Portfolio
(in thousands) December 31, 1996 December 31, 1995 December 31, 1994
-------------------------------- -------------------------------- ---------------------------------
Amortized Unrealized Market Amortized Unrealized Market Amortized Unrealized Market
-------------- -------------- --------------
Cost Gains Losses Value Cost Gains Losses Value Cost Gains Losses Value
-------------------------------- -------------------------------- ---------------------------------
Securities to be held to
maturity:
U.S. Treasury............... $ -- $ -- $ -- $ -- $ -- $ -- $-- $ -- $ -- $ -- $ -- $ --
U.S. Government agencies
and corporations.......... 997 -- 1 996 1,989 18 -- 2,007 -- -- -- --
Obligations of States and
Political Subdivisions.... 7,319 289 -- 7,608 11,251 439 5 11,685 16,845 360 241 16,964
Other Debt Securities....... 9,071 66 24 9,113 11,681 183 16 11,848 17,108 17 201 16,924
Marketable Equities......... -- -- -- -- -- -- -- -- -- -- -- --
-------------------------------- -------------------------------- --------------------------------
$17,387 $355 $25 $17,717 $24,921 $640 $21 $25,540 $33,953 $377 $442 $33,888
================================ ================================ ================================
Securities Available for
Sale:
U.S. Treasury............... $13,496 $36 $24 $13,508 $11,500 $99 $5 $11,594 $15,528 $ -- $280 $15,248
U.S. Government agencies
and corporations........ 26,192 118 203 26,107 24,527 271 106 24,692 18,233 10 688 17,555
Obligations of States and
Political Subdivisions.. 17,562 486 -- 18,048 11,155 289 10 11,434 1,735 4 61 1,678
Other Debt Securities....... 1,047 4 6 1,045 1,528 17 5 1,540 1,958 -- 87 1,871
Marketable Equities......... 2,080 538 17 2,601 1,405 342 -- 1,747 816 210 17 1,009
-------------------------------- -------------------------------- --------------------------------
$60,377 $1,182 $250 $61,309 $50,115 $1,018 $126 $51,007 $38,270 $224 $1,133 $37,361
================================ ================================ ================================
Maturity Distribution of Investment
Securities (in thousands)
December 31, 1996
Collateralized Mortgage
Within After One But After Five But After Obligations and Other
One Year Within Five Years Within Ten Years Ten Years Asset Backed Securities
-------------------------------- -------------------------------- -----------------------
$ Amt Yield $ Amt Yield $ Amt Yield $ Amt Yield $ Amt Yield
--------------------------------- --------------------------------- -----------------------
Securities to be held to maturity:
U.S. Government agencies
and corporations......... $ -- 0.00% $997 6.64% $ -- 0.00% $ -- 0.00% $ -- 0.00%
Obligations of States and
Political Subdivisions... 801 10.92% 3,537 9.57% 2,491 7.67% 490 7.87% -- --
Other Debt Securities........ 3,077 6.74% 5,994 6.65% -- -- -- -- -- --
--------------------------------- --------------------------------- --------------
3,878 7.60% 10,528 7.63% 2,491 7.67% 490 7.87% 0 0.00%
Securities Available for Sale:
U.S. Treasury................ 6,501 6.06% 6,995 5.76% -- -- -- -- -- --
U.S. Government agencies
and corporations......... 3,988 6.21% 20,206 6.58% 1,998 7.04% -- -- -- --
Obligations of States and
Political Subdivisions... -- -- 442 6.25% 12,657 7.80% 4,463 7.91% -- --
Other Debt Securities........ -- -- -- -- -- -- -- -- 1,047 7.05%
--------------------------------- --------------------------------- --------------
10,489 6.12% 27,643 6.36% 14,655 7.70% 4,463 7.91% 1,047 7.05%
================================= ================================= ==============
TOTAL $14,367 6.52% $38,171 6.71% $17,146 7.56% $4,953 7.90% $1,047 7.05%
================================= ================================= ==============
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%.
LOAN PORTFOLIO
A. TYPE OF LOAN
(in thousands): 1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Commercial, Financial and Agricultural $45,037 $49,643 $40,643 $40,953 $40,203
Residential Mortgage 100,402 78,111 68,907 58,927 49,184
Commercial Mortgage 31,451 30,658 31,039 30,087 28,264
Installment 43,448 45,294 44,196 40,488 33,996
Lease Receivables 6,069 0 0 0 0
-------- -------- -------- -------- --------
GROSS LOANS 226,407 203,706 184,785 170,455 151,647
Less: Unearned Income 3,304 3,668 2,996 2,499 1,623
-------- -------- -------- -------- --------
TOTAL LOANS NET OF UNEARNED $223,103 $200,038 $181,789 $167,956 $150,024
B. LOAN MATURITIES AND INTEREST SENSITIVITY
December 31, 1996
----------------------------------------------------
One Year One Through Over Total Gross
Commercial, Financial and Agricultural or Less Five Years Five Years Loans
-------- ----------- ---------- -----------
Loans With Predetermined Rate $5,387 $13,983 $4,887 $24,257
Loans With Floating Rate 20,380 371 29 20,780
----------------------------------------------------
$25,767 $14,354 $4,916 $45,037
====================================================
C. RISK ELEMENTS
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Loans on non-accrual basis $230 $114 $957 $1,134 $539
Accruing loans which are contractually past due 90
days or more as to interest or principal payment 2,166 2,503 307 518 799
Troubled Debt Restructurings 654 705 -- -- --
-------------------------------------------------------------
$3,050 $3,322 $1,264 $1,652 $1,338
=============================================================
1. Interest income recorded on the non-accrual loans for the year ended
December 31, 1996 was $8,581. Interest income which would have been
recorded on these loans had they been on accrual status was $23,763.
2. Loans are placed in non-accrual status when the interest or principal is 90
days past due, unless the loan is in collection, well secured and it is
believed that there will be no loss of interest or principal.
3. At December 31, 1996 there was $3,320,734 in loans which are considered
problem loans. In the opinion of management, these loans are adequately
secured and losses are believed to be minimal.
Summary of Loan Loss Experience
Analysis of the Allowance for Loan Losses
(in Thousands) Years Ended December 31,
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Balance at beginning of Period $2,145 $2,033 $1,750 $1,502 $1,369
Charge-offs:
Domestic:
Commercial, Financial and Agricultural 5 59 0 198 307
Commercial Mortgages 0 28 95 0 0
Residential Mortgages 0 0 33 0 12
Consumer Loans and Credit Cards 355 282 254 135 164
-------- -------- -------- -------- --------
360 369 382 333 483
Recoveries:
Domestic:
Commercial, Financial and Agricultural 5 0 19 26 67
Commercial Mortgages 1 0 0 0 0
Residential Mortgages 0 0 0 0 14
Consumer Loans and Credit Cards 82 101 121 30 35
-------- -------- -------- -------- --------
88 101 140 56 116
Net Charge-offs: (272) (268) (242) (277) (367)
Provision for Loan Losses 600 380 525 525 500
======== ======== ======== ======== ========
Balance at End-of Period $2,473 $2,145 $2,033 $1,750 $1,502
======== ======== ======== ======== ========
Percentage of net charge-offs during the period
to average loans outstanding 0.13 0.14 0.18 0.25 0.22
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 econmic
conditions on borrowers, and other relevant factors.
ALLOCATION OF THE ALLOWANCE FOR POSSIBLE LOAN LOSSES
(in thousands)
1996 1995 1994
-------------------------------------------------------------------------------
Domestic: % of Loans in % of Loans in % of Loans in
each Category each Category each Category
$ Amt. to Total $ Amt. to Total $ Amt. to Total
-------------------------------------------------------------------------------
Real Estate Mortgages $425 58.24% $387 53.40% $60 54.09%
Installment Loans to Individuals 600 21.87% 422 22.24% 210 23.92%
Commercial, Financial and 583 19.89% 446 24.36% 895 21.99%
Agricultural
Unallocated 865 N/A 890 N/A 868 N/A
==============================================================================
TOTALS $2,473 100.00% $2,145 100.00% $2,033 100.00%
==============================================================================
(in thousands)
1993 1992
-----------------------------------------------------
Domestic: % of Loans in % of Loans in
each Category each Category
$ Amt. to Total $ Amt. to Total
-----------------------------------------------------
Real Estate Mortgages $47 52.22% $111 51.07%
Installment Loans to Individuals 167 23.75% 227 22.42%
Commercial, Financial and 834 24.03% 471 26.51%
Agricultural
Unallocated 702 N/A 693 N/A
====================================================
TOTALS $1,750 100.00% $1,502 100.00%
====================================================
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".
DEPOSITS
(in thousands)
December 31, 1996 1995 1994
Amount Amount Amount
---------- ---------- ----------
Demand - Non Interest Bearing $30,812 $25,705 $26,225
Demand - Interest Bearing 82,184 78,821 50,779
Savings Deposits 36,183 35,589 42,719
Time Deposits 120,877 115,672 109,912
========= ========= =========
TOTAL DEPOSITS $270,056 $255,787 $229,635
========= ========= =========
The maturity of certificates of deposits and other time deposits in denomination
of $100,000 or more as of December 31, 1996 (in thousands):
Maturing in:
Three months or less................................ $1,654
Greater than three months and through six months.... 1,862
Greater than six months and through twelve months... 2,673
Greater than tweleve months......................... 6,720
=========
TOTAL $12,909
=========
RETURN ON EQUITY AND ASSETS
Information required by this section is presented on pages 19 and 20 of the
Annual Report to Shareholders for the year ended December 31, 1996, and is
incorporated herein by reference.
ITEM 2. PROPERTIES
The headquarters of the Corporation and the Bank is located at 1 South
Second Street, Clearfield, Pennsylvania. The Bank operates 14 full-service and
2 limited service offices. Of these 16 offices, 11 are owned and 5 are leased
from independent owners. There are no incumberances on the offices owned and
the rental expense on the leased property is immaterial in relation to operating
expenses.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which 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 ordinary conduct of
business. In the opinion of management and counsel, pending legal proceedings
will not have a material adverse effect on the consolidated financial position
of the Corporation.
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,
1996.
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, 1996 and
is herein incorporated by reference. There were 1,433 registered shareholders
of record as of March 1, 1997.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this section is presented on pages 19 and 20 of the
Annual Shareholder's Report for the year ended December 31, 1996 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 21-27 of the
Annual Shareholder's Report for the year ended December 31, 1996 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, 1996 are incorporated
herein by reference to such annual report:
Pages in
Annual Report
-------------
Consolidated Statements of Condition 5
Consolidated Statements of Income 6
Consolidated Statements of Cash Flows 7
Consolidated Statements of Changes in Shareholders' Equity 8
Notes to Consolidated Financial Statements 9 - 16
Report of Independent Auditors 17
Quarterly financial data relating to the results of operations for the year
ended December 31, 1996 and 1995, appears in the Annual Shareholder's Report for
the year ended December 31, 1996 under the caption "Quarterly Summary of
Earnings" at Page 18 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
15, 1997.
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 15, 1997
and is incorporated herein by reference.
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 15, 1997
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 15, 1997 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, 1996.
Pages in
Annual Report
-------------
CNB Financial Corporation and Subsidiary:
Consolidated Statements of Condition 5
Consolidated Statements of Income 6
Consolidated Statements of Cash Flows 7
Consolidated Statements of Changes in Shareholders' Equity 8
Notes to Consolidated Financial Statements 9 to 16
Report of Independent Auditors 17
Quarterly Summary of Earnings and Per Share Data 18
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, 1996.
EXHIBITS:
The exhibits listed below are filed herewith or are incorporated herein by
reference to other filings:
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- --------- -------------------------------------- -------------
13 Annual Report to Shareholders for 1996
21 Subsidiaries of the Registrant 14
Pursuant to the requirements of Section 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 25, 1997 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 25, 1997.
/s/ James P. Moore President and Chief Executive Officer,
- -------------------------- Director
JAMES P. MOORE
/s/ William F. Falger Executive Vice President, Principal
- -------------------------- Financial Officer,
WILLIAM F. FALGER Principal Accounting Officer
/s/ William A. Franson Secretary
- --------------------------
WILLIAM A. FRANSON
/s/ Carl J. Peterson Assistant Secretary, Director
- --------------------------
CARL J. PETERSON
/s/ Robert E. Brown Director /s/ Jeffrey S. Powell
- -------------------------- --------------------------
ROBERT E. BROWN JEFFREY S. POWELL
/s/ Richard D. Gathagan Director /s/ Edward B. Reighard
- -------------------------- --------------------------
RICHARD D. GATHAGAN EDWARD B. REIGHARD
/s/ James J. Leitzinger Director /s/ Peter F. Smith
- -------------------------- --------------------------
JAMES J. LEITZINGER 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. Penoyer Director /s/ Joseph L. Waroquier, Sr.
- -------------------------- --------------------------
ROBERT C. PENOYER JOSEPH L. WAROQUIER, SR.