Exhibit 99
Quarterly Shareholder Brochure of CNB Corporation
April 10, 2008
Dear Shareholders:
CNB Corporation's net income for the first quarter of 2008 was $665,000 or $
0.55 basic earnings per share compared to $630,000 or $0.51 basic earnings per
share for the same period last year, an increase of 5.7 %. Assets of the
Corporation at the end of the first quarter were $262.6 million compared with
$260.5 million last year, an increase of 0.8%. Deposits at the end of the first
quarter increased 1.1% to $232.7 million, compared with $230.2 million the same
time last year. Loans as of March 31, 2008 were $176.2 million, compared to
$168.4 million at March 31, 2007, an increase of 4.6%.
Despite the increases over last year, the loan portfolio has been impacted by
Michigan's economic downturn. Loan losses for the first quarter 2008 were
$317,400 which is the highest level we have experienced in several years. The
losses are primarily in the commercial loan portfolio, although some residential
mortgage customers are struggling as well. Such losses are not unique to
Citizens National Bank or to northern Michigan; banks state-wide are
experiencing increases in charge-offs, non-accrual loans and other real estate
owned, while declines in collateral values across the market exacerbates the
situation further. Management is taking an aggressive approach in working
through these problem credits but anticipates there may be further losses in the
next quarter. In response, the provision to the loan loss reserve has been
increased to ensure an adequate reserve for anticipated future losses.
Fortunately, as previously reported to our shareholders, we have no exposure to
the sub-prime mortgage lending market.
At its March 27, 2008 meeting the Board of Directors of CNB Corporation declared
a $0.42 per share dividend payable to shareholders of record on that date. The
dividend paid last year was also $0.42. Although shareholder's equity remained
unchanged at $25.2 million, book value increased to $20.79 at March 31, 2008
compared to $20.33 at March 31, 2007. The increased book value in 2008 is due to
fewer shares outstanding as a result of the 2007 stock repurchase program.
We expect that 2008 will continue to be a challenge for the entire financial
services industry, but believe by identifying and addressing problem credits
early-on and in a forthright manner, we will meet and overcome the challenges
ahead.
I hope to see you at the annual meeting on May 20th.
Sincerely,
Susan A. Eno
President and CEO
Consolidated Balance Sheets
(UNAUDITED)
in thousands of dollars
March 31,
----------------------
2008 2007
--------- ---------
ASSETS
Cash and due from banks $ 5,660 $ 4,981
Interest-bearing deposits with other financial institutions 5,020 10,163
Federal funds sold 19,635 11,362
--------- ---------
Total cash and cash equivalents 30,315 26,506
Securities available for sale 33,680 46,687
Securities held to maturity (market value
of $8,630 in 2008 and $4,575 in 2007) 8,463 4,532
Other securities 1,008 1,008
--------- ---------
Total investment securities 43,151 52,227
Loans 176,198 168,426
Less allowance for loan losses (1,495) (1,551)
--------- ---------
Loans, Net 174,703 166,875
Premises and equipment, net 6,233 6,570
Other assets 8,246 8,270
--------- ---------
Total assets $ 262,648 $ 260,448
========= =========
LIABILITIES
Deposits
Noninterest-bearing demand $ 34,828 $ 37,031
Interest-bearing deposits 197,904 193,151
--------- ---------
Total deposits 232,732 230,182
Other liabilities 4,684 5,061
--------- ---------
Total liabilities 237,416 235,243
SHAREHOLDERS' EQUITY
Common Stock 3,034 3,099
Surplus 19,510 20,482
Retained Earnings and Accumulated other
Comprehensive Income/(Loss) 2,688 1,624
--------- ---------
Total shareholders' equity 25,232 25,205
--------- ---------
Total liabilities and shareholders' equity $ 262,648 $ 260,448
========= =========
Consolidated Statement of Income
(Unaudited)
in thousands of dollars
Three months ended March 31,
2008 2007 2006
------ ------ ------
INTEREST INCOME
Interest and fees on loans $3,122 $3,132 $2,822
Interest on securities:
Taxable 497 427 456
Tax exempt 132 127 127
Other interest income 137 243 102
------ ------ ------
Total interest income 3,888 3,929 3,507
INTEREST EXPENSE ON DEPOSITS 1,345 1,468 995
------ ------ ------
NET INTEREST INCOME 2,543 2,461 2,512
Provision for loan losses 131 69 30
------ ------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,412 2,392 2,482
------ ------ ------
NONINTEREST INCOME
Service charges and fees 279 273 225
Net realized gains from sale of loans 37 31 50
Loan servicing fees, net of amortization 23 18 29
Other income 61 58 40
------ ------ ------
Total noninterest income 400 380 344
------ ------ ------
NONINTEREST EXPENSES
Salaries and benefits 1,149 1,063 1,085
Occupancy 292 311 269
Supplies 41 52 34
Other expenses 461 463 502
------ ------ ------
Total noninterest expenses 1,943 1,889 1,890
------ ------ ------
INCOME BEFORE INCOME TAXES 869 883 936
Income tax expense 204 253 242
------ ------ ------
NET INCOME $ 665 $ 630 $ 694
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BASIC NET INCOME PER SHARE $ 0.55 $ 0.51 $ 0.56
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