SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or Section 15(D) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
Commission File Number 2-94863
CANANDAIGUA NATIONAL CORPORATION
(Exact name of Registrant as specified in its charter)
New York 16-1234823
(State of Incorporation) (IRS Employer Identification No.)
72 South Main Street, Canandaigua, NY 14424
(Address of principal executive offices) (Zip Code)
(716) 394-4260
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: 240,000 shares $50
par common
Indicate by check mark whether the Registrant (1) 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) been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(#229.405) is contained in registrant's definitive proxy statement incorporated
herein by reference in Part III of this Form 10-K.
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of January 31, 1996.
Common Stock, $50.00 par value - described on page 26 of 1995 Annual
Report and incorporated herein by reference.
Number of shares outstanding of the Registrant's shares of common stock
as of January 31, 1996. 161,155 shares, common stock, $50.00 par value
<PAGE>
Certain portions of the documents listed below have been incorporated by
reference into the indicated Part of this Form 10-K.
(1) Portions of the Annual Report to Stockholders
for the year ended December 31, 1995 Part I, Item 2
(2) Notice of Annual Meeting of Stockholders Part II, Items 5 & 8
and Proxy Statement dated February 23, 1995 Part III, Items 10-13
(3) Index of Exhibits Part II, Item 5
Page 31
<PAGE>
CANANDAIGUA NATIONAL CORPORATION
FORM 10-K
INDEX
Page Number
PART I.
Item 1. Business 4-17
Item 2. Properties 18
Item 3. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of
Security Holders 18
PART II.
Item 5. Market for the Registrant's Common Stock
and Related Security Holder Matters 19
Item 6. Selected Financial Data 19
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation 20-25
Item 8. Financial Statements and Supplementary Data 25
Item 9. Changes in Disagreements with Accountants on Accounting
and Financial Disclosure 25
PART III.
Item 10. Directors and Executive Officers of
the Registrant 26, 27
Item 11. Executive Compensation 27-29
Item 12. Security Ownership of Certain
Beneficial Owners and Management 29
Item 13. Certain Relationships and Related Transactions 30
PART IV.
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K 31
Signatures 33, 34
<PAGE>
PART I
Item 1. Business
Canandaigua National Corporation
The Canandaigua National Corporation, referred to as The Corporation, was
organized on October 31, 1984, and registered under the Bank Holding Company Act
of 1956, for the purpose of becoming a one-bank holding company. The formation
of the bank holding company was consummated on May 31, 1985, through the
exchange of 80,000 shares of Canandaigua National Corporation $50 par value
common stock for all of the outstanding shares of The Canandaigua National Bank
and Trust Company. The one-bank holding company serves as a means of increasing
the scope of banking and financial services in the market area served by The
Canandaigua National Bank and Trust Company. For the foreseeable future, the
Bank will remain the principal source of the Corporation's operating revenue and
net income.
The Canandaigua National Bank and Trust Company
The Canandaigua National Bank and Trust Company ("Bank") was incorporated
under the laws of The United States of America as a national bank in 1887.
Since that time, Bank has operated as a national banking association doing
business at several locations in Ontario County and at its Branch locations in
the towns of Mendon and Pittsford in Monroe County, New York.
As of December 31, 1995, Bank had total assets of approximately
$315,485,000; total stockholders' equity of approximately $35,519,000; and total
deposits of approximately $277,205,000. Its deposits are insured by the Federal
Deposit Insurance Corporation.
Bank engages in a full service commercial and consumer banking and trust
business. Bank, with its main office at 72 South Main Street, Canandaigua, New
York, provides services to its customers through its network of ten branches
which include drive-in facilities and customer Bank communication terminals.
Bank's full service offices are located in Ontario County and in the town of
Mendon in Monroe County, New York.
Bank's services include accepting time, demand and savings deposits, NOW
accounts, regular savings accounts, money market certificates, investment
certificates, fixed rate certificates of deposit and club accounts. Its
services also include making secured and unsecured commercial and consumer
loans, financing commercial transactions either directly or through regional
industrial development corporations, making construction and mortgage loans
and the renting of safe deposit facilities. Additional services include
making residential mortgage loans, revolving credit loans with overdraft
checking protection, small business loans, and student loans. Bank's
business loans include seasonal, credit, collateral, and term loans. Trust
services provided by Bank include services as executor and trustee under
<PAGE>
Item 1. Business
The Canandaigua National Bank and Trust Company - continued
wills and deeds, as guardian and custodian and as trustee and agent for pension,
profit sharing, individual retirement account and other employee benefit trusts
as well as various investment, pension and estate planning services. Trust
services also include service as transfer agent and registrar of Canandaigua
National Corporation stock and as paying agent for various bond issues and as
escrow agent. In 1995 the Bank formed a subsidiary (CNB Operating Subsidiary
No.1, Inc.). The primary business of this company is to sell life insurance to
individuals. This company is an agency only.
Bank has a relatively stable deposit base and no material amount of deposits
is obtained from a single depositor or group of depositors (including federal,
state and local governments). Bank has not experienced any significant seasonal
fluctuations in the amount of its deposits nor does Bank rely on foreign sources
of funds or income.
Territory Served and Competition
All phases of Bank's business are highly competitive. Bank's market area is
generally Ontario County, with concentration in the Canandaigua, New York area.
Bank competes with local commercial banks as well as other commercial banks with
branches in Bank's market area as well as federal savings and loan associations
and non-bank banks and credit unions. Bank considers its competition to be
Chase Manhattan Bank, N.A., Key Bank, National Bank of Geneva, Community Bank,
N.A., and WCTA Federal Credit Union located in Canandaigua, New York and Sears
Financial Network Center and Fleet Bank, located in Rochester, New York.
Bank, along with other commercial banks, competes with respect to its lending
activities as well as in attracting demand deposits, with savings banks, savings
and loan associations, insurance companies, regulated small loan companies,
non-bank banks and credit unions. Bank also competes with insurance companies,
investment counseling firms, mutual funds and other business firms and
individuals in corporate trust and investment management services.
Bank is generally competitive with all financial institutions in its service
area with respect to interest rates paid on time and savings deposits and
interest rates charged on loans and service charges on deposit accounts.
Bank employed 208 people as of December 31, 1995.
<PAGE>
Supervision and Regulation
Canandaigua National Corporation is incorporated under the laws of the State
of New York and is directly supervised by the Federal Reserve Bank under the
laws governing one-bank holding companies. In addition, the Corporation reports
to the Securities and Exchange Commission under the laws governing corporations
with registered securities.
As a national bank and member of the Federal Reserve System, the Bank is
subject to regulations of the Comptroller of the Currency and the Board of
Governors of the Federal Reserve System. As an insured bank under the Federal
Deposit Insurance Act, Bank is also regulated by the Federal Deposit Insurance
Corporation. Representatives of the Comptroller of the Currency regularly
conduct examinations of Bank's affairs and records, and Bank must furnish
quarterly reports to the Comptroller.
Government Monetary Policies and Economic Controls
The earnings of Bank are affected by the policies of regulatory authorities
including the Comptroller of the Currency, the Board of Governors of the Federal
Reserve System and the Federal Deposit Insurance Corporation. An important
function of the Federal Reserve System is to regulate the money supply and
interest rates. Among the instruments used to implement these objectives are
open market operations in U.S. Government Securities, changes in reserve
requirements against member bank deposits, and changes in the federal discount
rate. These instruments are used in varying combinations to influence overall
growth and distribution of bank loans, investments and deposits, and their use
may also affect interest rates charged on loans or paid for deposits.
The policies and regulations of the Federal Reserve Board have had, and will
probably continue to have, a significant effect on Bank's deposits, loans and
investment growth, as well as the rate of interest earned and paid, and are
expected to affect Bank's operations in the future. The effect of such policies
and regulations, if any, upon the future business and earnings of Bank cannot
accurately be predicted.
Consolidated Financial and Statistical Data
A detailed review of the business activities of the Corporation and Bank is
presented in the following pages.
<PAGE>
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential
<TABLE>
A. Average Balance Sheet (In Thousands)
<CAPTION>
Average Assets 1995 1994 1993
<S> <C> <C> <C>
Cash & Due from Banks $ 13,392 $ 14,178 $ 12,649
Securities:
U.S. Government Securities 32,479 28,438 26,454
Obligations of States and
Political Subdivisions: Tax Exempt 28,349 30,402 32,440
Taxable 1,131 899 1,097
Other 12,706 13,703 13,117
Federal Funds Sold 12,023 14,689 28,709
Loans 209,280 202,622 197,168
Allowance for Loan Losses (2,213) (2,213) (2,415)
Premises & Equipment - net 8,269 8,087 8,181
Other Assets 5,354 4,507 4,146
________ ________ _______
Total $320,770 $315,312 321,546
</TABLE>
<TABLE>
<CAPTION>
Average Liabilities & Stockholders' Equity
<S> <C> <C> <C>
Deposits:
Interest Bearing Demand $ 32,989 $ 37,913 $ 39,593
Non-interest Bearing Demand 46,967 44,566 39,553
Savings 118,300 137,669 148,667
Other Time 84,746 61,151 62,345
_______ _______ _______
Total 283,002 281,299 290,158
Short-term Borrowings and
Securities Sold Under Agreements
to Repurchase 0 8 0
Borrowing from FHLB 1,304 0 0
Other Liabilities 477 970 924
_____ _______ _______
Total Liabilities 284,783 282,277 291,082
Stockholders' Equity 35,987 33,035 30,464
________ ________ ________
Total $320,770 $315,312 $321,546
</TABLE>
<PAGE>
<TABLE>
B. Average Rates and Yields (Dollars In Thousands)
1995 1994
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INT. RATE BALANCE INT. RATE
<CAPTION>
Interest Earning Assets:
<S> <C> <C> <C> <C> <C> <C>
U.S. Gov't. Securities $ 32,479 $ 1,865 5.74% $ 28,438 $ 1,378 4.85%
Obligations of States
& Political
Subdivisions-Tax Exempt 28,349 1,395 4.92% 30,402 1,376 4.53%
Taxable 1,131 64 5.66% 899 55 6.12%
Federal Funds Sold 12,023 697 5.80% 14,689 558 3.80%
Loans (1)(2) 209,280 19,998 9.56% 202,622 17,654 8.71%
Other Securities 12,023 812 6.75% 13,703 868 6.33%
_______ ______ _______ ______
Total Interest
Earning Assets $295,285 $24,831 8.41% $290,753 $21,889 7.53%
_______ ______ ____ _______ ______ ____
Interest Bearing Liabilities:
Demand Deposits 32,989 $ 601 1.82% $ 37,913 $ 724 1.91%
Savings 118,300 3,570 3.02% 137,669 3,568 2.59%
Other Time 84,746 4,614 5.45% 61,151 2,837 4.64%
Short-term Borrowings and
Securities Sold Under
Agreements to
Repurchase 0 0 0% 8 0 0%
Borrowing from FHLB 477 11 2.31% 0 0 0%
_______ ______ ____ _______ _____
Total Interest
Bearing Liabilities $236,512 $8,796 3.72% $236,741 $7,129 3.01%
_______ ______ ____ _______ ______ ____
Net Interest Income $16,035 $14,760
______ ______
Net Yield 4.69% 4.52%
____ ____
Net Interest Income
to Earning Assets 5.43% 5.08%
____ ____
</TABLE>
(1) Non-accrual loans are included in the average loan balance.
(2) Loan interest includes fees on loans of $610,946, $758,214, and $1,225,134
in 1995, 1994, and 1993 respectively.
<PAGE>
<TABLE>
Average Rates and Yields-continued (Dollars in Thousands)
1993
AVERAGE
AVERAGE YIELD/
BALANCE INT. RATE
<CAPTION>
Interest Earning Assets:
<S> <C> <C> <C>
U.S. Gov't. Securities $ 26,454 $ 1,336 5.05%
Obligations of States
& Political
Subdivisions-Tax Exempt 32,440 1,498 4.62%
Taxable 1,097 58 5.29%
Federal Funds Sold 28,709 835 2.89%
Loans (1)(2) 197,168 17,272 8.76%
Other Securities 12,759 825 6.49%
_______ ______
Total Interest
Earning Assets $298,627 $21,824 7.31%
_______ ______ ____
Interest Bearing Liabilities:
Demand Deposits $ 39,593 $ 792 2.00%
Savings 148,667 3,830 2.58%
Other Time 62,345 3,184 5.11%
Short-term Borrowings and
Securities Sold Under
Agreements to
Repurchase 0 0 0%
Borrowing from FHLB 0 0 0%
_______ ______
Total Interest Bearing Liabilities $250,605 $ 7,806 3.12%
_______ ______ ____
Net Interest Income $14,018
______
Net Yield 4.19%
____
Net Interest Income to Earning Assets 4.69%
____
</TABLE>
<PAGE>
<TABLE>
C. Rate/Volume Analysis (Dollars In Thousands)
<CAPTION>
1995 vs 1994 1994 vs 1993
Increase (Decrease) Average Average Average Average Average Average
Due to Change In: Volume Rate Total Volume Rate Total
Interest Income:
<S> <C> <C> <C> <C> <C> <C>
Loans $ 580 $ 1,764 $ 2,344 $ 474 $(92) $382
Federal Funds Sold (101) 240 139 (483) 206 (277)
Investment Securities:
U.S. Gov't Securities 196 291 487 97 (55) 42
Obligations of State
and Political
Subdivision-Exempt (93) 112 19 (93) (29) (122)
-Taxable 14 (5) 9 (11) 8 (3)
Other (106) 50 (56) 58 (15) 43
______ _______ _______ _____ ____ ____
Total Interest
Income 490 2,452 2,942 42 23 65
Interest Expense:
Deposits:
Interest Bearing
Demand (94) (29) (123) (33) (35) (68)
Savings (502) 504 2 (285) 23 (262)
Other Time 1,094 683 1,777 (60) (287) (347)
Borrowing from FHLB 0 11 11 0 0 0
_____ ____ _____ ____ ____ ____
Total Interest
Expense (498) 1,169 1,667 (378) (299) (677)
_____ _____ _____ ___ ___ ___
Net Interest Income $( 8) $1,283 $1,275 $ 420 $ 322 $ 742
</TABLE>
Note: Volume changes are computed by multiplying the volume difference by
the prior year's rate. Rate changes are computed by multiplying the rate
difference by the prior year's balance.
The change in interest due to both rate and volume has been allocated to
rate and volume changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
<PAGE>
<TABLE>
I. Investment Portfolio
<CAPTION>
A. Investment Portfolio, including FHLB and FRB stock (Dollars In Thousands)
------December 31--------
1995 1994 1993
<S> <C> <C> <C>
U.S. Government Obligations $31,955 $27,972 $26,574
Mortgage backed Securities 310 283 331
Obligations of States and Political
Subdivisions: Exempt 26,321 29,921 32,879
Taxable 839 904 1,685
Other Securities 12,495 13,514 13,548
_______ _______ _______
Total $71,920 $72,594 $75,017
</TABLE>
<TABLE>
B. Investment Portfolio, including FHLB and FRB stock by Maturity with Weighted
Average Yield (Dollars In Thousands)
<CAPTION>
December 31, 1995
Within One Through Six Through Over
One Year Five Years Ten Years Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury
Obligations $14,676 5.62% $15,252 6.44% 0 0
Mortgage backed
Securities 12 8.44% 55 8.36% 70 8.22% 173 8.01%
US Gov't Agencies 0 1,000 5.37% 1,027 7.15% 0
Obligations of State
and Political
Subdivisions
Taxable: 250 6.25% 540 6.45% 49 6.65% 0
Exempt: 7,637 4.67% 15,230 4.84% 2,645 5.20% 809 6.20%
Other Securities 2,259 6.22% 7,438 6.39% 948 6.95% 1,850 6.35%
_______ _______ ______ ______
Total $24,834 $39,515 $4,739 $2,832
</TABLE>
Note: (a) Securities with no stated maturity are included in the "Over Ten
Years" category.
(b) Yield on "States and Political Subdivisions" (non-taxable
investments) are not reflected on a tax equivalent basis.
<PAGE>
III. Loan Portfolio
The loan portfolio is comprised solely of domestic loans which are widely
diversified with no concentrations in an industry group or with borrowers
engaged in similar activities. The following summary shows the
classifications of loans by category.
<TABLE>
A. Types of Loans
<CAPTION>
December 31,
1995 1994 1993 1992 1991
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural $ 28,326 32,442 30,367 27,672 24,964
Consumer 24,269 26,890 23,297 22,562 23,163
Residential mortgage 86,641 83,018 78,315 86,094 91,966
Commercial mortgage 62,038 60,278 59,036 55,100 56,534
Other 8,770 8,121 7,288 3,523 3,804
________ ________ ________ ________ ________
Total 210,044 210,749 198,303 194,951 200,431
Less: Allowance for
loan losses 2,258 2,202 2,277 2,152 1,888
________ _______ _______ _______ _______
Loans, Net $207,786 208,547 196,026 192,799 198,543
</TABLE>
B. Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table sets forth the maturities and sensitivity to changes in
interest rates of the loan portfolio exclusive of real estate mortgage and
installment loans as of December 31, 1995.
Remaining Maturity
Within One Through Over
One Year Five Years Five Years Total
(Dollars In Thousands)
Commercial, financial
and agricultural $11,202 $10,230 $6,894 $28,326
Loans maturing after one year:
With a predetermined interest
rate $ 7,008
With a floating or adjustable rate $10,116
The maturities set forth above are based upon contracted maturities. Demand
loans, overdrafts and certain time loans, the principal of which will be
renewed in whole or in part, are included in the "Within One Year"
classification. The loan policy encourages a repayment schedule to be set
up whenever possible.
<PAGE>
B. Maturities and Sensitivities of Loans to Changes
In Interest Rates - continued
Bank policy provides that a demand loan should not be renewed more than
once, with renewals at the then prevailing interest rates and with the
assurance the borrower demonstrates the ability to repay on maturity of the
loan.
The Bank provides standby letters of credit commitments which also provide
for availability of funds over a period of generally one year. All such
commitments have fixed expiration dates and may require the payment of a
fee.
The Bank extends lines of credit under which a customer may borrow for
various purposes such as letters of credit. The extension of these
commitments and lines of credit have been in the normal course of business.
In the opinion of Management, at December 31, 1995, there are no material
commitments to extend credit which represent unusual risks.
<TABLE>
C. Risk Elements
(1) Non-accrual, Past Due and Restructured Loans
The risk elements in the loan portfolio are disclosed in the following
schedule.
<CAPTION>
December 31,
Non-Performing Assets 1995 1994 1993 1992 1991
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial &
agricultural $ 1,640 $ 2,350 $1,151 $2,959 $5,939
Real-estate 9,307 8,912 4,866 1,569 1,194
Consumer loans 0 0 0 0 25
______ ______ _____ _____ _____
Total non-performing loans 10,947 11,262 6,017 4,528 7,158
Other real estate owned 2,158 723 721 326 200
_______ _______ ______ ______ ______
Total non-performing assets $13,105 $11,985 $6,738 $4,854 $7,358
Non-performing loans to year
end loans 5.21% 5.35% 3.03% 2.32% 3.57%
Non-performing assets to year end
loans & other real estate owned 6.24% 5.68% 3.40% 2.54% 3.67%
</TABLE>
<PAGE>
<TABLE>
Item III. C. (continued)
<CAPTION>
Past Due 90 Days or More 1995 1994 1993 1992 1991
<S> <C> <C> <C>. <C> <C>
Commercial, financial &
agricultural $ 12 $ 4 $ 381 $ 721 $ 645
Real estate 101 254 889 533 274
Consumer 55 44 69 77 107
____ ____ ______ ______ ______
Total past due 90 days
or more $168 $302 $1,339 $1,331 $1,026
1995 1994 1993 1992 1991
Restructured Loans $0 $0 $393 $393 $393
</TABLE>
The accrual of interest on commercial and real estate loans is
discontinued when the loans become 90 days delinquent or when, in management's
judgment, the collection of principal and interest is uncertain. Recognition
of interest income on non-accrual loans does not resume until management
considers principal and interest collectible. Installment loans are generally
charged off upon becoming 120 days past due.
Additional gross income of $739,000, $496,000, and $279,000 would have
been reported during 1995, 1994, and 1993, respectively, if the loans reported
above as non-accrual and restructured loans had been current in accordance with
the original terms.
(2) Potential Problem Loans
Loans which are not disclosed pursuant to Item III C. (1), but where known
information about credit problems of borrowers causes Management to have
serious doubts as to the ability of such borrowers to comply with present
loan repayment terms which may result in disclosure in Item III C. (1) above
amounted to $325,071 as of December 31, 1995.
<PAGE>
<TABLE>
IV. Summary of Loan Loss Experience
An analysis of the Allowance for Loan Losses and statistics
relating to the relationship of the Allowance and Charge-offs to Loans is
presented in the following summary.
<CAPTION>
Year Ended
December 31,
1995 1994 1993 1992 1991
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C>
Total loans outstanding
at end of year (1) $210,044 $210,749 $198,303 $192,799 $200,431
Average loans outstanding
during year (1) $203,280 $202,622 $197,168 $196,680 $205,979
Allowance for loan losses:
Balance at beginning
of year $ 2,202 $ 2,277 $ 2,152 $ 1,888 $ 1,705
Charge-offs
Commercial, financial
and agricultural 810 712 481 222 591
Installment 191 145 245 289 255
Real Estate Mortgage (2) 151 65 100 259 10
Credit Cards 77 89 69 43 38
_____ _____ ___ ___ ___
Total 1,229 1,011 895 813 894
Recoveries: (2)
Commercial, financial and
agricultural 90 82 218 121 98
Installment 118 143 132 131 121
Real Estate Mortgage 20 0 53 0 31
Credit Cards 26 12 17 25 27
____ ____ ____ ____ ____
Total 254 237 420 277 277
____ ____ ____ ____ ____
Net charge-offs (975) (774) (475) (536) (617)
Provision charged
to expense 1,031 699 600 800 800
______ ______ ______ ______ ______
Balance at end of year $2,258 $2,202 $2,277 $2,152 $1,888
Ratio of net charge-offs
to average loans
outstanding .47% .38% .24% .27% .30%
</TABLE>
(1) Loans are shown net of unearned discount.
(2)Includes Residential and Commercial Mortgages.
<PAGE>
<TABLE>
IV. Summary of loan loss experience - continued
Allocation of allowance for loan losses
<CAPTION>
December 31
(Dollars in Thousands)
1995 1994 1993
% of % of % of
Loans to Loans to Loans to
Total Total Total
Amount Loans Amount Loans Amount Loans
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural (1) $1,809 43% $1,534 44% $1,560 45%
Real Estate Mortgage 81 41% 160 40% 125 40%
Consumer 230 12% 360 13% 421 12%
Other 0 4% 0 3% 0 3%
Unallocated 138 N/A 148 N/A 171 N/A
_____ ___ _____ ___ _____ ___
Total $2,258 100% $2,202 100% $2,277 100%
</TABLE>
<TABLE>
<CAPTION>
December 31
(Dollars in Thousands)
1992 1991
% of % of
Loans to Loans to
Total Total
Amount Loans Amount Loans
<S> <C> <C> <C> <C>
Commercial, financial
and agricultural (1) $1,549 43% $1,336 41%
Real Estate Mortgage 100 44% 340 11%
Consumer 300 11% 0 2%
Other 0 2% 40 46%
Unallocated 203 N/A 172 N/A
_____ ___ _____ ___
Total $2,152 100% $1,888 100%
</TABLE>
The determination of the allowance for loan losses is based on an analysis of
the loan portfolio and reflects an amount which, in management's judgment, is
adequate to provide for loan losses. This analysis is based on management's
periodic evaluation, which considers factors such as past loss experience,
identification of adverse conditions that may affect a borrower's ability to
repay, an assessment of current and expected economic conditions and the
estimated value of any underlying collateral. The allowance for loan losses is
applicable for any loan losses despite the allocation provided above. In
addition, future allocations may change due to circumstances inherent in the
loan portfolio
(1)Includes Commercial Mortgages.
<PAGE>
<TABLE>
V. Deposits
The following summary sets forth the average amounts of the various types of
deposits for December 31, 1995, 1994 and 1993, and the average rate paid on
each.
<CAPTION>
1995 1994 1993
Amount Rate Amount Rate Amount Rate
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing
demand $ 46,676 -- $ 44,566 -- $ 39,553 --
Interest bearing demand 32,989 1.82% 37,913 1.91% 39,593 2.00%
Savings 118,300 3.02% 137,669 2.59% 148,667 2.58%
Other time 84,746 5.45% 61,151 4.64% 62,345 5.11%
________ ________ ________
Total $282,711 3.11% $281,299 2.53% $290,158 2.69%
</TABLE>
<TABLE>
The following table sets forth the time certificate of deposits of $100,000 or
greater, classified by the time remaining until maturity, which were on deposit
as of December 31, 1995.
<CAPTION>
1995
(In Thousands)
<S> <C>
Three months or less $18,428
Over three through six months 536
Over six through twelve months 562
Over twelve months 1,389
_______
Total $20,915
</TABLE>
<TABLE>
VI. Return on Equity and Assets
The following table sets forth certain ratios used in evaluating financial
position and results of operations.
<CAPTION>
December 31,
1995 1994 1993
<S> <C> <C> <C>
Return on average total assets 1.26% 1.18% 1.07%
Return on average equity 10.88% 11.21% 11.25%
Dividend payout ratio 28.78% 26.07% 25.79%
Average equity to total
average assets 11.22% 10.48% 9.47%
</TABLE>
<PAGE>
Item 2. Properties
Canandaigua National Corporation occupies space at the main office of the Bank.
No real property is owned by the Corporation. The Corporation leases real
property in Farmington, Mendon, Manchester, Victor (Eastview Mall), Pittsford,
under long-term renewable leases. The premises are sublet to the Bank for its
Farmington Branch Office.
The Bank's operations are conducted from nine offices located in Ontario
County, New York and two offices located in Monroe County, New York. The main
office of the Bank is a three-story structure located at 72 South Main Street,
Canandaigua, New York. The administrative, operational and electronic data
processing offices of the Bank are located in this facility. The Bank owns
branch offices which are located on the main street in Victor, New York;
Holcomb, New York; and Honeoye, New York. The Bank subleases space for branch
offices in Farmington, New York, at Wade's Supermarket located on Route 96; in
Canandaigua, New York at 709 South Main Street; in Shortsville-Manchester in
the Bliss Shurfine Foodmart; in the Town of Mendon, Monroe County, New York in
the Hitching Post Plaza in the Big-M Food Market; in Victor, New York in the
Eastview Mall and in Pittsford, New York at State Street. There are drive-in
facilities located at all offices except for the Eastview Mall and Pittsford
offices.
The Bank provides 24-hour banking services to Bank customers through automatic
teller facilities located at each office and through remote Automatic Teller
Machines located at the Finger Lakes Community College on Lincoln Hill in the
Town of Hopewell, New York, and at F.F. Thompson Hospital located on North
Parrish Street, Canandaigua, New York.
The carrying value of the properties as of December 31, 1995, which is required
to be included herein pursuant to Item 102 of Regulation S-K, is included under
the caption "Notes to Consolidated Financial Statements" set forth on pages 11
through 25 of the 1995 Annual Report to Stockholders and is incorporated herein
by reference.
Item 3. Legal Proceedings
The Company and its subsidiary are not involved in any pending legal proceeding
other than routine legal proceedings undertaken in the ordinary course of
business. In the opinion of the management, after consultation with counsel,
the aggregate amount involved in such proceedings is not material to the
consolidated financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
NONE
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock
and Related Security Holder Matters
The information required to be included herein, pursuant to Item 201 of
Regulation S-K, is incorporated herein by reference from the pages of the 1995
Annual Report to Stockholders and proxy statement set forth below:
Required Information Annual Report Caption Annual Report Page
Market information "Common Stock Data" 26
Dividends "Common Stock Data" 26
"Stockholders' Equity" 9
Holdings: (At December 31, 1995, the Corporation had approximately 684
shareholders.) Information regarding beneficial ownership of the Corporation's
stock is set forth on pages 1, 2, 3, and 7 of the Corporation's proxy statement
and incorporated herein by reference.
Item 6. Selected Financial Data
<TABLE>
This table represents a summary of selected components of the Corporation's
consolidated financial statements for the five years ended December 31, 1995.
All information concerning the Corporation should be read in conjunction with
the consolidated financial statements and related notes.
<CAPTION>
Selected Financial Data
(Dollars in Thousands except per share data)
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Net Interest Income $ 16,035 14,760 14,018 13,598 13,029
Provision for Loan Losses $ 1,031 699 600 800 800
Non-Interest Income $ 3,393 3,268 3,469 3,157 2,432
Non-Interest Expense $ 12,684 12,022 12,195 11,542 10,775
Applicable Income Taxes $ 1,797 1,604 1,265 1,115 1,002
Net Income $ 3,916 3,703 3,427 3,298 2,884
Per Share Data:
Net Income $ 24.31 23.01 21.32 20.54 17.99
Cash Dividends $ 7.00 6.00 5.50 5.13 4.88
Balance Sheet Data:
Total Assets $317,209 310,541 $314,640 $320,876 $315,432
Total Equity $ 37,397 34,538 31,744 29,162 26,652
Average Assets $320,770 315,312 321,546 315,177 300,409
Average Equity $ 35,987 33,035 30,464 27,939 25,682
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The purpose of this discussion is to focus on information about
Canandaigua National Corporation's financial condition and results of
operations which is not otherwise apparent from the consolidated financial
statements in the annual report. Reference should be made to those statements
and the selected financial data presented elsewhere in this report for an
understanding of the following discussion and analysis.
Liquidity and Interest Rate Sensitivity Management
Liquidity is defined as the ability to generate adequate amounts of cash
to meet the demand for cash from depositors who wish to withdraw funds,
borrowers who require funds to meet their credit needs, and the need for
operating funds and capital expansion.
Interest rate sensitivity management seeks to avoid fluctuating net
interest margins and to enhance consistent growth of net interest income
through periods of changing interest rates. Thus liquidity and interest rate
sensitivity must be jointly managed through asset/liability policy to provide
optimum results for the Corporation.
Asset liquidity is found in cash, federal funds sold, deposits with other
financial institutions, short term security holdings, and loan repayments. On
average for 1995, federal funds sold, cash and due from banks, and interest
bearing deposits with other banks totaled $25.4 million. The securities
portfolio is also an important source of liquidity. As of December 31, 1995,
approximately $24.8 million amortized cost of the portfolio matured in one year
or less. Combining these two major sources of liquidity, the Corporation had
$50 million of readily available assets, which was 15.6% of average assets for
1995. Management believes that liquidity needs are adequately addressed, but
also has short term and long term borrowings available from the Federal Reserve
Bank and the Federal Home Loan Bank.
Interest rate sensitivity varies with different types of interest earning
assets and interest bearing liabilities. In general, short term interest
sensitive assets, such as loans tied to the prime rate, will have greater
sensitivity than fixed rate home mortgages or securities due in over one year.
Similarly, money market and passbook savings accounts have more sensitivity
than certificates of deposit maturing after one year. The Corporation has
chosen to limit both its asset and liability exposure in longer term time
frames so as to avoid large mismatches of assets and liabilities that could
cause large earnings swings.
<PAGE>
<TABLE>
The following chart indicates rate sensitivity at December 31, 1995:
<CAPTION>
INTEREST RATE SENSITIVITY GAPS
As of December 31, 1995
(In Thousands)
MATURITIES
0 - 3 4 - 12 1 - 5 Over 5
MONTHS MONTHS YEARS YEARS
<S> <C> <C> <C> <C>
Loans $101,668 2,747 76,197 29,432
Securities 8,552 16,282 39,515 7,613
Federal Funds sold 6,600
________ ______ _______ ______
Interest-earning
assets $116,820 19,029 115,712 37,045
________ ______ _______ ______
Certificate of Deposits 32,862 24,327 33,077
Savings 63,895
Royal Blue Money Market 15,784
Now & Super Now 31,921
Money Market 25,406
_______ ______ ______ ______
Interest-bearing
liabilities 169,868 24,327 33,077 0
_______ ______ ______ ______
Interest sensitivity
gap $ (53,048) (5,298) 82,635 37,045
Interest-earning
assets 116,820 19,029 115,712 37,045
Interest-bearing
liabilities 169,868 24,327 33,077 0
_______ ______ _______ ______
Interest sensitivity
gap $ (53,048) (5,298) 82,635 37,045
Rate Sensitive Assets
divided by Rate Sensitive
Liabilities 0.69 .78 3.50
</TABLE>
<PAGE>
The chart indicates that the Corporation was repricing $53.0 million more
of interest earning liabilities than interest bearing assets in the 0-3 month
range. This gap is not considered to be a problem, as a good portion of the
savings balances are not considered sensitive to rate change. However, the
Corporation will be challenged in a rising interest rate environment to
maintain its interest margins. For the 4-12 month period, the Corporation is
modestly liability sensitive, as $5.3 million more of interest bearing
liabilities are being repriced than interest earning assets. For the entire
one year range, the Corporation is repricing $58.3 million more interest
bearing liabilities than assets, or 20.21% of earning assets. This liability
sensitivity has increased from $52.4 million and 17.91% of earning assets last
year. The imbalance was due to the movement of deposits from savings to time
deposits with a longer maturity along with recording loans with a longer
maturity. The Corporation is asset sensitive at $82.6 million for the one to
five year range, as interest earning assets increased $11.5 million from last
year's amounts, along with an interest bearing liabilities increase of $8.2
million.
For the entire portfolio range, the Corporation is asset sensitive at
$64.0 million versus asset sensitivity of $57.6 million last year. With
interest rate forecasts continuing to suggest declines, our earnings should be
favorably impacted if we can continue to cut liability rates at the same pace
as earning assets. We will have some difficulty, however, as short term
liability rates are at or near historic lows. Continued declines could lead to
deposit outflows, as investors seek higher returns in other available products.
We may have to limit our liability rate decreases in order to continue to fund
the bank, and that may have a slightly negative impact on historic spreads.
Hopefully increasing lending will offset some of the decline.
Capital Resources
Total Stockholders' equity at December 31, 1995, was $37,397,000,
representing an increase of $2,859,000 (or 8.28%) over 1994. Primary capital,
defined as shareholders equity plus loan loss reserve, was $39,655,000 at
December 31, 1995, or 12.36% of average assets versus $36,717,000 or 11.65% of
average assets at December 31, 1994.
The Federal Reserve Board standards require banks and bank holding
companies to maintain capital based on "risk adjusted" assets so that
categories of assets with potentially higher credit risk will require more
capital backing than assets with lower risk. In addition, banks and bank
holding companies are required to maintain capital to support, on a risk-
adjusted basis, certain off balance sheet activities such as loan commitments
and interest rate swaps. Capital is classified into two tiers. Tier 1 capital
consists of common shareholders' equity, non-cumulative and cumulative
perpetual preferred stock, and minority interests less goodwill and less net
unrealized gain on securities available for sale. Tier 2 capital consists of
allowances for loan and lease losses, hybrid capital instruments, term
subordinated debt, and intermediate-term preferred stock. All banks are
required to meet a minimum ratio of 8% of qualifying total capital to risk
adjusted total assets with at least 4% Tier 1 capital.
<PAGE>
<TABLE>
The table below illustrates the Corporation's regulatory capital ratio
at December 31, 1995 and December 31, 1994:
<CAPTION>
1995 1994
(dollars in thousands)
<S> <C> <C>
Tier 1 Capital $ 37,344 $ 34,515
Tier 2 Capital $ 2,258 $ 2,202
Total Qualifying Capital $39,602 $ 36,717
Risk Adjusted Total Assets $213,442 $213,802
Tier 1 Risk Based Capital Ratio 17.50% 16.14%
Total Risk Based Capital Ratio 18.55% 17.17%
Leverage Ratio 10.48% 10.94%
</TABLE>
As shown in the table, the Corporation's Tier 1 Risk Based Capital has
grown 8.4%, and Total Risk Based Capital has increased 8.0% from year end 1994
levels.
The leverage ratio (Tier 1 Capital divided by total assets less goodwill)
must be at least 3%. The Corporation's leverage ratio was 10.48% as of
December 31, 1995.
The capital ratios of the Corporation are strongly in excess of minimum
regulatory requirements, indicating an ability to meet customer demand and
market competition, while providing sufficient earnings to strengthen the
capital base annually. The Corporation believes that its strong capital base
will allow it to continue a reasonable dividend payment.
Dividends
Payments of dividends by the Bank to the Company is limited or restricted
in certain circumstances. According to federal banking law, the approval of
the Office of the Comptroller of the Currency is required for the declaration
of dividends in any year which dividends exceed the total of net income for
that year plus retained income for the preceding two years. At December 31,
1995, approximately $8,069,000 was available for payment of dividends to the
Company.
Cash dividends for 1995 amounted to $1,127,000, an increase of $161,000 or
16.67% over the $966,000 paid in 1994. Dividends paid were 28.8% and 26.1% of
1995 and 1994 earnings respectively.
Results of Operations
Net interest income is the difference between interest received from
earning assets and interest paid on interest bearing liabilities. It is
affected by both the volume and rates applied to both earnings assets and
liabilities, and therefore, is an effective measurement of how well management
has balanced and reacted to the Corporation's interest rate sensitive assets
and liabilities.
<PAGE>
For the year ended December 31, 1994, the Corporation had $296.4 million
average earning assets, up $3.8 million or 1.3% from the year earlier. Average
interest bearing liabilities were $232.4 million for 1995, down $5.4 million or
2.27% from 1994. The increase in earning assets reflects the beginning of the
area's recovery from a slow, shallow recession. Liability growth has not yet
begun, and historically does trail asset growth in post-recession times. While
being mindful of the Corporation's customers' needs, management was able to
increase net interest income for 1995 to $16.0 million, up from $14.8 million
for 1994, reflecting an increase of 8.11% for 1995. This increase was due to
an increase in total earning assets of almost $5 million while interest bearing
liabilities remained static, combined with the stronger yield described in the
next paragraph.
The yield on interest earning assets was 8.38% in 1995, up from 7.53% in
1994. Cost of funds increased, to 3.72% from 3.01% in 1994. Management
continued to stress the cost and size control of liabilities during 1995, and
therefore the net yield increased to 4.66% from 4.52% in 1994. Net interest
income as a percentage of earning assets (net interest rate margin) rose to
5.41% from 5.08%, as the $1,275,000 increase in net interest income was derived
from successfully managing the changing interest rate environment during the
year, in conjunction with the previously mentioned increase in total earning
assets. Management believes these results are an indication that its interest
rate sensitivity planning is functioning well.
The provision for loan losses in 1995 was $1,031,000, up $332,000 from
1994. The loan loss reserve as of December 31, 1995 was $2.3 million, or 1.08%
of loans outstanding at year end 1995. This ratio is slightly higher than that
of 1994 (1.04%). The cause for the increase of this ratio is due to the
following: Charge-offs rose to $1,229,000 in 1995 from $1,011,000 in 1994,
recoveries of loans charged off increased to $254,000 in 1995 from $237,000 in
1994 along with a decrease in the loan portfolio. Management believes its
ability to properly manage the loan portfolio and current loan loss policies
are effective.
The Corporation's investment portfolio book value fell to $70.5 million at
December 31, 1995 from $71.1 million at December 31, 1994, reflecting a
decrease of .84%. Net loans fell to $207.8 million at December 31, 1995 from
$208.5 million at December 31, 1995, giving a decrease of .34%.
Other income for 1995 increased to $3.4 million from $3.3 million,
reflecting an increase of $125,000 or 3.8%. Service charges on deposit
accounts was up $42,000 to $1,604,000. Net gain on sale of mortgage loans
declined to $40,000 from $113,000 due to the slowing of the real estate market
and prior years refinancing when rates were lower. Other operating income for
1995 rose to $678,000 from $657,000 reflecting an increase of $21,000.
<PAGE>
Operating expenses totaled $12.7 million, up 5.5% from $12.0 million in
1994. Opening a new branch was the main cause of the increase along with a
refund of FDIC insurance.
The rate of return on average assets and the rate of return on average
equity are a good measure of the Corporation's results. For the year 1995,
return on average assets rose to 1.26% from 1.18%. Return on average equity
was 10.88% in 1995 compared to 11.21% in 1994. Management believes these
results indicate the Corporation remains quite healthy. The slight decline in
return on equity is due to the rapid growth of the Corporation's capital and is
an indication of the Corporation's financial strength.
Accounting Standards
In October 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation
which encourages, but does not require, companies to use a fair value based
method of determining compensation cost for grants of stock options under
stock-based employee compensation plans. Under Accounting Principals Board
Opinion No. 25 (Opinion 25), currently utilized by the Company, compensation
cost is the excess, if any, of the quoted market price of the stock at the date
of grant over the amount employees must pay to acquire it. Companies electing
to continue accounting under these plans under the provisions of Opinion 25
will be required to present pro forma disclosures of net income and net income
per share, as if a fair value based method had been applied. The Company is
required to implement SFAS 123 on January 1, 1996. Currently the Company does
not have any plans that would fall under this standard.
In May 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standards (SFAS) No. 122, Accounting for Mortgage Servicing Rights.
SFAS 122 requires the Company to recognize as separate assets rights to service
mortgage loans for others, however those servicing rights are acquired and also
requires the Company to assess its capitalized mortgage servicing rights for
impairment based on the fair value of those rights. SFAS 122 must be adopted
on January 1, 1996 on a prospective basis. Management does not believe the
adoption of SFAS 122 will have a material impact on the Company's financial
condition or results of operations due to the level of historical and
anticipated sales of loans to the secondary market with servicing retained.
Item 8. Financial Statements and Supplementary Data
(Supplementary data has been omitted because it is not applicable)
Financial statements, together with a report thereon of KPMG Peat Marwick LLP
dated January 26, 1996 appearing on Page 6 of the 1995 Annual Report to
Stockholders are incorporated herein by reference. A reference index to the
consolidated financial statements and accompanying notes presented in the
Annual Report to Stockholders is shown in Item 14 of this filing.
Item 9. Change in and Disagreements with Accountants on Accounting on
Financial Disclosure
NONE
<PAGE>
PART III
Item 10. Directors and Executive Officers
(a) Directors
The information with respect to the directors of the Corporation, which is
required to be included herein pursuant to Item 401 of Regulation S-K, is
included under the caption "Election of Directors" on pages 3 and 4 of the
Proxy Statement, dated February 23, 1996, and is incorporated herein from the
Proxy Statement by reference. There are no arrangements or understandings
between any director and any other person pursuant to which the director was
selected.
(b) Executive Officers
The name, age and position of the executive officer of the Corporation as
of December 31, 1995, is set forth on page 6 of the Proxy Statement dated
February 23, 1996 under the caption "Principal Officers" and is incorporated
herein by reference. Officers are generally elected annually by the Board of
Directors at the meeting of directors immediately following the annual meeting
of stockholders. The disclosure of family relationships between the executive
officer and directors of the Corporation is set forth on page 4 of the Proxy
Statement dated February 23, 1996 and is incorporated herein by reference.
There are no arrangements or understandings between the executive officer and
any other person pursuant to which the executive officer was selected.
No Director or executive officer of the Corporation has received any
remuneration from the Bank or the Corporation in his capacity as a director or
executive officer of the Corporation.
The executive officer of the Corporation has been an officer of the Bank
for five years or more.
Directors and the executive officer as a group beneficially owned 15,264
shares or 9.47% of the shares outstanding. Shares owned directly total 13,964
and shares held by directors, executive officer, or their spouses in a
fiduciary capacity or by their spouses individually total 1,300.
(c) Significant Employees
Not applicable
(d) Family Relationship
Disclosed in Item 10 (a) - Directors
(e) Business Experience
Disclosed in Item 10 (a) and 10 (b)
(f) None
(g) None
<PAGE>
Item 11. Executive Compensation
(a) Cash Compensation
The information required to be included herein regarding executive compensation
pursuant to Item 402 of Regulation S-K is included under the caption "Executive
Compensation" in registrants definitive proxy statement on page 6 and is
incorporated herein by reference.
During the year ended December 31, 1995, officers of the Corporation did not
receive any compensation from the Corporation for services rendered in such
capacity. All of the above compensation was paid by the Bank for services
rendered in the course of their employment with the bank.
(b) Compensation Pursuant to Plans
The Bank has a non-contributory, profit sharing plan covering substantially all
full-time employees who have completed one year of service, subject to a
minimum number of hours of service with the Bank. Contributions to the profit
sharing plan by the Bank are allocated among eligible participants in the
proportion that each participant's "points" for the calendar year bear to the
total "points" awarded for the calendar year. Participants are awarded one
point for each full calendar year of employment and one point for each $100 of
compensation paid such participant during that year. Voluntary contributions
may be made and invested in a separate "Voluntary Account" in which the
participant is always fully vested. Participants become fully-vested with non-
contributory allocations upon: reaching the age of 65, disability, death, or
7 years of service as defined by the plan. If employment is otherwise
terminated, partial vesting will be accorded depending upon the participant's
years of service. Retirement and death benefits may be distributed in a cash
lump sum or a series of equal installments, payable at least annually, over a
period selected by the Profit Sharing Plan Committee. The amounts contributed
to the profit sharing plan by the Bank in 1993, 1994, and 1995 were $630,000,
$640,000, and $639,000 respectively.
The Corporation has an Employee Stock Ownership Plan (ESOP) for employees of
its wholly-owned subsidiary, and executive officers are members of the plan.
Contributions to the ESOP are allocated among eligible participants in the
proportion that each participant's gross compensation bears to total
compensation of all participants. Contributions to the plan for 1993, 1994,
and 1995 were $47,000, $33,900, and $46,000 respectively.
<PAGE>
The Corporation has an incentive stock plan for senior management of the
Corporation. Annual contributions are made based on performance factors
established by the board of directors. The Corporation has accrued a liability
of $595,000 as of December 31, 1995 representing its obligation under the plan.
Expenses of the plan amounted to $155,000, $115,000, and $105,000 for the
years ended December 31, 1995, 1994 and 1993 and were paid by the Bank.
The following table sets forth the amount of profit sharing benefits set aside
or accrued by the Bank, directly or indirectly, under the Profit Sharing Plan
for the year ended December 31, 1995 for all executive officers of the Bank.
Amount Set Aside
or Accrued for Cumulative
Name of the Year Ended Accrued
Individual December 31, 1995 Benefit
- ------------------------------------------------------------------------
George W. Hamlin, IV $22,334 $678,204
The following table sets forth the amount of ESOP benefits set aside or accrued
by the Bank, directly or indirectly, under the ESOP for the year ended December
31, 1995 for all executive officers of the Bank.
Amount Set Aside
or Accrued for Cumulative
Name of the Year Ended Accrued
Individual December 31, 1995 Benefit
- --------------------------------------------------------------------------
George W. Hamlin, IV $ 1,606 $ 16,921
(c) Other Compensation - Option/SAR Grants Table
The information required to be included herein regarding executive compensation
pursuant to Item 402 of Regulation S-K is included under the caption "Executive
Compensation" in registrants definitive proxy statement on page 7 and is
incorporated herein by reference.
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value
Table
The information required to be included herein regarding executive compensation
pursuant to Item 402 of Regulation S-K is included under the caption "Executive
Compensation" in registrants definitive proxy statement on page 6 and is
incorporated herein by reference.
(e) Long-Term Incentive Plan Awards Table
NONE
(f) Defined Benefit or Actuarial Plan Disclosure
NONE
<PAGE
(g) Compensation of Directors
For the years 1995, 1994, and 1993 no compensation was paid to members of the
Board of Directors of Canandaigua National Corporation. For the years of 1995,
1994, and 1993 members of the Board of Directors of The Canandaigua National
Bank and Trust Company were compensated at the rate of $300 per meeting.
(h) Employment Contracts and Termination of Employment and Change-In-
Control Arrangements
NONE
(i) Report on Repricing of Options/SARS
NONE
(j) Compensation Committee Interlocks
NONE
(k) Board Compensation Committee Report on Executive Compensation
The information required to be set forth for this item is set forth in
Registrant's definitive proxy statement at page 7 and incorporated herein by
reference.
(l) Performance Graph
The information required to be set forth for this item is set forth in
Registrant's definitive proxy statement at page 8 and incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a), (b) The information required by Item 403 (a) and (b) of Regulation S-K is
included with the information given on pages 1 through 3 of the Proxy
Statement and is incorporated herein by reference.
(c) Changes in Control
NONE
<PAGE>
Item 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
NONE
(b) Certain Business Relationships
NONE
(c) Indebtedness of Management
Certain directors and executive officers of the Corporation and the Bank and
their associates were customers of and had transactions with the Bank in the
ordinary course of the Bank's business during 1995. All outstanding loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others, and in the opinion of the Bank, did
not involve more than a normal risk of collectibility or present other
unfavorable features.
(d) Transactions with Promoters
Not applicable
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Canandaigua National
Corporation and subsidiary have been incorporated by reference in Item 8 on
Page 26: Pages*
Independent Auditors' Report 6
Consolidated Balance Sheets As of December 31, 1995 and 1994 7
Consolidated Statements of Income For Each of the Years in the 3-Year
Period ended December 31, 1995 8
Consolidated Statements of Changes In Stockholders' Equity for Each
of the Years in the 3-Year Period ended December 31, 1995 9
Consolidated Statements of Cash Flows For Each of the Years in the
3-Year Period ended December 31, 1995 ...........................10
Notes to Consolidated Financial Statements......................... 10-25
* 1995 Annual Report to Stockholders
(a) 2. Financial Statement Schedules
Schedules are omitted since the required information is either not applicable,
not deemed material, or is shown elsewhere in the financial statements or notes
thereto.
(a) 3. Exhibits Table
(11) The information required by Item 601(a)(3)(11) of Regulation S-K is set
forth on page 7 and 13 of the 1995 Annual Report to the Stockholders and is
incorporated herein by reference.
(13) A copy of the 1995 Annual Report to Stockholders is attached hereto as
Exhibit A.
(19) A copy of the definitive proxy statement mailed to Stockholders is
attached hereto as Exhibit B.
(22)The Canandaigua National Bank and Trust Company is the only wholly owned
subsidiary of Registrant. The Bank is incorporated under the laws of The
United States of America. Registrant owns one-third of the common stock of
Greater Funding of New York, Inc. a New York State licensed mortgage company.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CANANDAIGUA NATIONAL CORPORATION
By:
George W. Hamlin, IV
President
Date: 3/24/95
<PAGE>
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 in the capacities and on the dates indicated.
Signature Title Date
George W. Hamlin, IV President/Director April 1, 1996
George W. Hamlin, IV
Robert G. Sheridan Secretary/Director April 1, 1996
Robert G. Sheridan
Gregory S. MacKay Treasurer April 1, 1996
Gregory S. MacKay
Director
Patricia Boland
Frank H. Hamlin Director April 1, 1996
Frank H. Hamlin
Stephen D. Hamlin Director April 1, 1996
Stephen D. Hamlin
Paul r. Kellogg Director April 1, 1996
Paul R. Kellogg
Director
Eldred M. Sale
Director
Caroline C. Shipley
Alan J. Stone Director April 1, 1996
Alan J. Stone
Director
David Hamlin, Jr.
Director
Willis F. Weeden, MD
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
Canandaigua National Corporation:
We have audited the accompanying consolidated balance sheets of Canandaigua
National Corporation and subsidiary as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the years in the three-year period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Canandaigua
National Corporation and subsidiary at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, on January 1,
1995, the Company changed its method of accounting for impairment of loans to
adopt the provisions of Statement of Financial Accounting Standards (SFAS) No.
114, Accounting for Creditors for Impairment of a Loan, as amended by SFAS No.
118, Accounting by Creditors for Impairment of Loan - Income Recognition and
Disclosures.
KPMG Peat Marwick LLP
January 26, 1996
Rochester, New York
<PAGE>
<TABLE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1995 and 1994
(dollars in thousands, except per share amounts)
<CAPTION>
Assets 1995 1994
<S> <C> <C>
Cash and due from banks $ 16,811 14,175
Interest bearing deposits with other financial institutions 47 52
Federal funds sold 6,600 3,400
Securities:
Available for sale, at fair value 444 409
Held to maturity (fair value of $70,728 in 1995
and $69,016 in 1994) 70,070 70,767
Loans - net of allowance of $2,258 in 1995
and $2,202 in 1994 207,786 208,547
Premises and equipment - net 8,559 8,107
Accrued interest receivable 2,046 2,170
FHLB stock and Federal Reserve Bank stock 1,406 1,418
Other assets 3,440 1,496
_______ _______
Total Assets $ 317,209 310,541
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 49,779 45,782
Interest bearing 227,272 229,055
_______ _______
Total deposits 277,051 274,837
Borrowing from FHLB 1,013 0
Accrued interest payable and other liabilities 1,748 1,166
________ ______
Total Liabilities 279,812 276,003
_______ _______
Commitments and contingencies (Note 9 and 10)
Stockholders' equity:
Common stock, $50 par value; 240,000 shares authorized,
161,155 shares issued and outstanding in 1995 and
160,980 in 1994 8,058 8,049
Additional paid-in capital 8,203 8,172
Undivided profits 21,083 18,294
Net unrealized gain on securities available for sale,
net of taxes 53 23
_______ ______
Total Stockholders' Equity 37,397 34,538
______ _______
Total Liabilities and Stockholders' Equity $ 317,209 310,541
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993
(dollars in thousands, except per share amounts)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Interest income:
Loans $ 19,998 17,654 17,272
Securities 4,136 3,677 3,717
Federal funds sold and other 697 558 835
______ ______ ______
Total interest income 24,831 21,889 21,824
Interest expense:
Deposits 8,796 7,129 7,806
______ ______ ______
Net interest income 16,035 14,760 14,018
Provision for loan losses 1,031 699 600
______ ______ ______
Net interest income after provision for loan losses 15,004 14,061 13,418
______ ______ ______
Other income:
Service charges on deposit accounts 1,604 1,562 1,794
Trust income 1,071 936 903
Net gain on sale of mortgage loans 40 113 417
Other operating income 678 657 355
______ ______ ______
Total other income 3,393 3,268 3,469
Operating expenses:
Salaries and employee benefits 7,063 6,489 6,563
Occupancy expense 1,961 1,862 1,883
FDIC insurance 319 630 652
Marketing and public relations 283 202 169
Office supplies, printing and postage 635 540 549
Other operating expenses 2,423 2,299 2,379
______ ______ ______
Total operating expenses 12,684 12,022 12,195
______ ______ ______
Income before income taxes 5,713 5,307 4,692
Income taxes 1,797 1,604 1,265
______ ______ ______
Net income $ 3,916 3,703 3,427
Net income per common share $ 24.31 23.01 21.32
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE> CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1995, 1994 and 1993
(dollars in thousands, except per share amounts)
<CAPTION>
Net
Unrealized
Gain on
Additional Securities
Common Paid in Undivided Available-
Stock Capital Profits for-Sale Total
_____ __________ _________ __________ _______
<S> <C> <C> <C> <C><C>
Balance at December 31, 1992 4,016 4,091 21,055 0 29,162
Sale of 180 shares of common stock 5 34 0 0 39
Increase par value to $50.00
from $25.00 4,021 0 (4,021) 0 0
Cash dividend - $5.50 per share 0 0 (884) 0 (884)
Board resolution to transfer
Undivided Profits to Additional
Paid in Capital 0 4,020 (4,020) 0 0
Net income 0 0 3,427 0 3,427
_____ _________ ________ _________ _______
Balance at December 31, 1993 8,042 8,145 15,557 0 31,744
Sale of 150 shares of common stock 7 27 0 0 34
Cash dividend - $6.00 per share 0 0 (966) 0 (966)
Net unrealized gain on Securities
available-for-sale, net of taxes
of $16,000 0 0 0 23 23
Net income 0 0 3,703 0 3,703
_____ _________ ________ _________ _______
Balance at December 31, 1994 8,049 8,172 18,294 23 34,538
Sale of 175 shares of common stock 9 31 0 0 40
Cash dividend - $7.00 per share 0 0 (1,127) 0 (1,127)
Change in unrealized gain on
Securities available-for-sale,
net of taxes of $20,000 0 0 0 30 30
Net income 0 0 3,916 0 3,916
_____ _________ ________ _________ _______
Balance at December 31, 1995 $ 8,058 8,203 21,083 53 37,397
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(dollars in thousands)
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,916 3,703 3,427
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 947 1,102 1,240
Provision for loan losses 1,031 699 600
Deferred income taxes (54) 24 (157)
Originations of loans held for sale (3,615) (10,183) (39,353)
Proceeds from sales of loans held for sale 4,370 10,900 38,367
(Increase) decrease in interest receivable 124 (295) (127)
(Increase) in other assets (492) (1,002) (492)
Increase (decrease) in accrued interest payable
and other liabilities 592 29 (36)
______ ______ ______
Net cash provided by operating activities 6,819 4,977 3,469
______ ______ ______
Cash flows from investing activities:
Proceeds from call of FHLB stock 12 87 0
Securities held to maturity:
Proceeds from call of securities 618 755 0
Proceeds from maturities of securities 38,060 33,181 39,531
Purchase of securities (37,820) (31,595) (43,138)
Loans made to customers net of principal
payments received on loans (2,638) (13,937) (2,841)
Fixed asset purchases - net (1,555) (1,145) (977)
Proceeds from sale of other real estate 786 935 106
______ ______ ______
Net cash provided (used) by investing activities(2,537) (11,719) (7,319)
______ ______ ______
Cash flows from financing activities:
Net increase (decrease) in demand, savings
and short-term deposits (18,944) (11,663) (7,191)
Proceeds from sale of common stock 40 34 39
Proceeds from issuance of certificates of deposit
net of payments on maturing certificates 20,567 4,742 (1,591)
Dividends paid (1,127) (966) (884)
Proceeds from borrowing 1,023 0 0
Principal repayments on borrowing (10) 0 0
______ ______ ______
Net cash provided (used) by financing activities1,549 (7,853) (9,627)
______ ______ ______
Net (decrease) in cash and cash equivalents 5,831 (14,595) (13,477)
Cash and cash equivalents - beginning of year 17,627 32,222 45,699
______ ______ ______
Cash and cash equivalents - end of year $ 23,458 17,627 32,222
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 8,659 7,179 7,992
Income taxes $ 1,705 1,629 1,221
Supplemental disclosure of non-cash investing activities:
Additions to other real estate acquired
through foreclosure $ 2,204 937 501
<FN>
See accompanying notes to consolidated financial statements.
<TABLE/>
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
Note1 Summary of Significant Accounting Policies
Business
Canandaigua National Corporation (the Company) provides a full range of
banking and trust services to individual and corporate customers. The Company
is subject to competition from other financial institutions. The Company is
subject to the regulations of certain federal agencies and undergoes periodic
examinations by those regulatory authorities.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, The Canandaigua National Bank and Trust Company
the
Bank). All significant intercompany accounts and transactions have been
eliminated in consolidation. The financial statements have been prepared in
conformity with generally accepted accounting principles and conform with
predominant practices within the banking industry.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Amounts in prior years' consolidated financial statements are reclassified
whenever necessary to conform with the current year's presentation. The
following is a description of the Company's more significant accounting
policies.
Securities
The Company classifies its debt securities as either available for sale or
held to maturity as the Company does not hold any securities considered to be
trading. Held to maturity securities are those that the Company has the
ability and intent to hold until maturity. All other securities not included
as held to maturity are classified as available for sale.
Available for sale securities are recorded at fair value. Held to maturity
securities are recorded at amortized cost, adjusted for the amortization or
accretion of premiums or discounts. Unrealized holding gains and losses, net
of the related tax effect, on available for sale securities are excluded from
earnings and are reported as a separate component of stockholders' equity until
realized.
A decline in fair value of any available for sale or held to maturity
security below cost that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the security.
Premiums and discounts are amortized or accreted over the life of the related
held to maturity security as an adjustment to yield using the effective
interest method. Dividend and interest income are recognized when earned.
Realized gains and losses are included in earnings and are derived using the
specific identification method for determining the cost of securities sold.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies (continued)
Loans
Loans are stated at the principal amount outstanding. Interest on loans is
credited to income based on the level-yield method.
The accrual of interest on commercial and real estate loans is discontinued
and previously accrued interest is reversed when the loans become 90 days
delinquent or when, in management's judgment, the collection of principal and
interest is uncertain. Recognition of interest income on nonaccrual loans does
not resume until management considers principal and interest collectible.
Installment loans are generally charged off upon becoming 120 days past due.
Loans held for sale are carried at the lower of cost or market value on an
aggregate basis. Market value is estimated based on outstanding investor
commitments, or in the absence of such commitments, based on current yield
requirements or quoted market prices.
Allowance for Loan Losses
The determination of the allowance for loan losses is based on an analysis of
the loan portfolios and reflects an amount which, in management's judgment, is
adequate to provide for loan losses. This analysis is based on management's
periodic evaluation, which considers factors such as past loss experience,
identification of adverse conditions that may affect a borrower's ability to
repay, an assessment of current and expected economic conditions and the
estimated value of any underlying collateral.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowances may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowances for
loan losses. Such agencies may require the Company to recognize additions to
allowance based on their judgments about information available to them at the
time of their examination.
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, as
amended by SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures on January 1, 1995. Management, considering
current information and events regarding the borrowers' ability to repay their
obligations, considers a loan to be impaired when it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the loan agreement. When a loan is considered to be impaired, the
amount of the impairment is measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate, or as a
practical expedient, at the loan's observable market price or the fair value of
collateral if the loan is collateral dependent. Impairment losses are included
in the allowance for loan losses through a charge to the provision for loan
losses. Cash receipts on impaired loans are applied to reduce the principal
balance outstanding and accrued but unpaid interest. Adoption of these
statements did not have a material impact on the Company's 1995 financial
condition or results of operations.
<PAGE
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies (continued)
Premises and Equipment
Land is carried at cost. Buildings, equipment and leasehold improvements are
carried at cost, less accumulated depreciation and amortization. Depreciation
is computed using straight-line and accelerated methods over the estimated
useful lives of the assets. Amortization of leasehold improvements is provided
over the lesser of the term of the lease or the estimated useful lives of the
assets.
Income Taxes
The Company and its subsidiary file a consolidated tax return. Deferred
income tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
Trust Department Income
Assets held in fiduciary or agency capacity for customers are not included in
the accompanying consolidated balance sheets, since such assets are not assets
of the Company. Fee income is recognized on the accrual method.
Other Real Estate
Real estate acquired through foreclosure or deed in lieu of foreclosure is
recorded at the lower of the unpaid loan balance on the property at the date of
transfer, or fair value. Adjustments made to the value at transfer are charged
to the allowance for loan losses. After transfer, the property is carried at
the lower of cost or estimated fair value less estimated costs to sell.
Adjustments to the carrying values of such properties that result from
subsequent declines in value are charged to operations in the period in which
the declines occur. Operating costs associated with the properties are charged
to expense as incurred. Gains on the sale of other real estate are included in
results of operations when title has passed and the sale has met the minimum
down payment and other requirements prescribed by generally accepted accounting
principles.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1 Summary of Significant Accounting Policies (continued)
Profit Sharing Plan
The Company has a profit sharing plan covering all employees upon completion
of 1,000 hours of service with respect to salaried employees, and 870 hours of
service for employees paid on an hourly basis. Contributions to the plan are
determined by a mathematical formula which takes into account average net
income of the Bank for the current and prior year, and the level of the Bank's
stockholders' equity. It is the Company's policy to fund current costs as they
accrue. Profit sharing plan expense amounted to $639,000, $641,000 and
$630,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
Employee Stock Ownership Plan
The Company has an employee stock ownership plan (ESOP) for employees of the
Company. Annual contributions are made at the discretion of the board of
directors. ESOP expense amounted to $46,000, $33,900, and $47,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.
Incentive Stock Plan
The Company has an incentive stock plan for senior management of the Company.
Annual expense is based on performance factors established by the board of
directors. The Company has accrued a liability of $595,000 as of December 31,
1995 representing its obligation under the plan. Expenses of the plan amounted
to $155,000, $115,000, and $105,000 for the years ended December 31, 1995, 1994
and 1993, respectively.
Cash Equivalents
For the purpose of reporting cash flows, cash and cash equivalents include
cash on hand, interest bearing deposits with other financial institutions and
federal funds sold.
Financial Instruments With Off-Balance-Sheet Risk
The Company does not engage in the use of derivative financial instruments.
The Company's only financial instruments with off-balance-sheet risk are
commercial letters of credit and committed lines of credit. These off-balance-
sheet items are shown in the Company's balance sheet upon funding.
Per Share Data
Net income per common share is based upon the weighted average number of
common shares outstanding during the year. There were no common stock
equivalents outstanding during the years presented which would result in
dilution of net income per share. During 1993 the Company declared a two-for-
one stock split. All share and per share amounts have been restated to
retroactively reflect the stock split. The weighted average number of common
shares outstanding for each of the years in the three-year period ended
December 31, 1995 are as follows: 1995 - 161,068; 1994 - 160,902 and 1993 -
160,754. Primary and fully diluted net income per share are the same for 1995,
1994 and 1993.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2 Federal Funds Sold
Income from federal funds sold for the years ended December 31, 1995, 1994
and 1993 was $692,000, $554,000 and $831,000, respectively.
Note 3 Securities
The aggregate amortized cost and fair value of Securities Available-for-Sale
and Securities Held-to-Maturity at December 31, 1995 and 1994 follows (in
thousands):
1995 1994
Amortized Fair Amortized Fair
Cost Value Cost Value
Securities Available-for-Sale:
Common stock $ 355 444 370 409
Securities Held-to-Maturity:
U.S. Treasury obligations $ 29,928 30,256 25,940 25,493
U.S. Government agencies 2,027 1,999 2,032 1,870
Mortgage-backed securities 310 334 283 283
Obligations of state and
municipal subdivisions 27,160 27,330 30,825 30,227
Other securities 10,645 10,809 11,687 11,143
______ ______ ______ ______
Total $ 70,070 70,728 70,767 69,016
Gross unrealized gains and gross unrealized losses on Securities Available-
for-Sale and Securities Held-to-Maturity at December 31, 1995 and 1994 follow
(in thousands):
1995 1994
Unrealized Unrealized
Gains Losses Gains Losses
Securities Available-for-Sale:
Common stock $ 89 0 39 0
Securities Held-to-Maturity:
U.S. Treasury obligations $ 336 (8) 12 (459)
U.S. Government agencies 1 (29) 0 (162)
Mortgage - backed securities 24 0 11 (11)
Obligations of state and
municipal subdivisions 277 (107) 74 (672)
Other securities 164 0 0 (544)
___ ___ ___ _____
Total $ 802 (144) 97 (1,848)
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3 Securities (continued)
The amortized cost and fair value of securities Held-to-Maturity by years to
maturity as of December 31, 1995 follow (in thousands):
Amortized Cost: Obligations
U.S. U.S. Mortgage- of state and
Treasury Government backed municipal Other
Years obligations agencies securities subdivisions securities
<S> <C> <C> <C> <C> <C>
Under 1 $ 14,676 0 12 7,887 2,259
1 to 5 15,252 1,000 55 15,770 7,438
5 to 10 0 1,027 70 2,694 948
10 and over 0 0 173 809 0
______ _____ ___ ______ _____
Total $ 29,928 2,027 310 27,160 10,645
Fair Value : Obligations
U.S. U.S. Mortgage- of state and
Treasury Government backed municipal Other
Years obligations agencies securities subdivisions securities
Under 1 $ 14,720 0 15 7,875 2,270
1 to 5 15,536 990 63 15,885 7,556
5 to 10 0 1,009 77 2,735 983
10 and over 0 0 179 835 0
______ _____ ___ ______ _____
Total $ 30,256 1,999 334 27,330 10,809
Maturities of mortgage-backed securities are classified in accordance with
the contractual repayment schedules.
Securities Held-to-Maturity with carrying values of $54,953,000 were
pledged as collateral against municipal deposits at December 31, 1995.
Interest on securities segregated between taxable interest and tax-exempt
interest for the years ended December 31, 1995, 1994 and 1993 follows (in
thousands):
1995 1994 1993
Taxable $ 2,741 2,301 2,219
Tax-exempt 1,395 1,376 1,498
_____ _____ _____
Total $ 4,136 3,677 3,717
The Bank's required investment in stock of the Federal Home Loan Bank
amounted to $926,000 and $938,000 at December 31, 1995 and 1994,
respectively, which equals the Company's cost basis. This investment allows
the Bank to maintain a $15,645,000 overnight line of credit with the Federal
Home Loan Bank. Advances are payable on demand and bear interest at the
quoted rate at the time of the advance.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 4 Loans
The major classifications of loans at December 31, 1995 and 1994 follow (in
thousands):
1995 1994
Commercial, financial and agricultural $ 28,326 32,442
Mortgages:
Residential 86,641 83,018
Commercial 62,038 60,278
Consumer 24,269 26,890
Other 7,815 6,411
Loans held for sale 955 1,710
_______ _______
Total 210,044 210,749
Less - allowance for loan losses 2,258 2,202
_______ _______
Loans - net $ 207,786 208,547
Interest and fees on loans for the years ended December 31, 1995, 1994 and
1993 follow (in thousands):
1995 1994 1993
Commercial $ 3,358 3,179 2,868
Mortgage 13,964 12,227 11,882
Consumer and other 2,676 2,248 2,522
______ ______ ______
Total $ 19,998 17,654 17,272
A summary of the changes in the allowance for loan losses follow (in
thousands):
Years Ended December 31,
1995 1994 1993
Balance at beginning of year $ 2,202 2,277 2,152
Provision charged to operations 1,031 699 600
Loans charged off (1,229) (1,011) (895)
Recoveries of loans charged off 254 237 420
_____ _____ _____
Balance at end of year $ 2,258 2,202 2,277
The principal balance of loans not accruing interest totaled $10,947,000 and
$11,262,000 at December 31, 1995 and 1994, respectively. The effect of
nonaccrual loans on interest income for the years ended December 31, 1995,
1994,
and 1993 was $739,000, $496,000, and $279,000 respectively. Other real estate
owned amounted to $2,141,000 and $723,000 at December 31, 1995 and 1994,
respectively and is included in other assets in the consolidated balance
sheets.
At December 31, 1995, the recorded investment in loans that are considered to
be impaired totaled $10,947,000. Included in this amount was $619,000 of
impaired loans for which the related allowance for loan losses is $293,000, and
$10,328,000 of impaired loans with no related allowance for loan losses. The
average recorded investment in impaired loans during 1995 was $11,105,000. The
effect on interest income for impaired loans was $739,000 in 1995. Income
earned on impaired loans during 1995 was approximately $275,000.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 4 Loans (continued)
Loans serviced for others, amounting to $69,611,000 and $71,875,000 at December
31, 1995 and 1994, respectively, are not included in the consolidated financial
statements.
The Company's market area is generally Western Ontario County, the Township of
Mendon, and Pittsford. Virtually all loans are made in its market area.
Accordingly, the ultimate collectibility of a substantial portion of the
Company's loan portfolio is susceptible to changes in the conditions in this
area.
The Company's concentrations of credit risk are as disclosed in the above
schedule of loan classifications. The concentrations of credit risk in
commercial letters of credit and lines of credit outstanding parallel the loan
classifications reflected above. Other than general economic risks, management
is not aware of any material concentrations of credit risk to any industry or
individual borrower.
Note 5 Premises and Equipment
A summary of premises and equipment follows (in thousands):
December 31, 1995 December 31, 1994
Land and land improvements $ 759 746
Buildings and leasehold improvements 9,983 9,417
Furniture, fixtures, equipment and vehicles 10,051 9,050
______ ______
20,793 19,213
Less accumulated depreciation and amortization 12,234 11,106
______ ______
Premises and equipment - net $ 8,559 8,107
Note 6 Deposits
Deposits at December 31, 1995 and 1994 by type were (in thousands):
1995 1994
Demand deposits $ 47,445 43,611
Savings and time deposits 191,912 194,030
Other deposits:
U.S. Government 324 348
State and political subdivisions 36,602 36,108
Official checks 768 740
_______ _______
Total $ 277,051 274,837
Certificates of deposit of $100,000 or more amounted to $20,915,000 at
December 31, 1995 and $14,881,000 at December 31, 1994. Interest expense on
certificates of deposit of $100,000 or more was as follows: $1,181,000 in
1995; $270,000 in 1994; and $209,000 in 1993.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 7 Borrowing From FHLB
In 1995 the Bank borrowed $1,023,000 from the FHLB at an effective rate of 2.5%
to fund low income housing projects. Principal payments of approximately
$25,000 are due annually with the balance due at maturity in 2010.
Note 8 Income Taxes
Total income taxes for the years ended December 31, 1995, 1994 and 1993 were
allocated as follows (dollars in thousands):
1995 1994 1993
Income before income taxes $ 1,797 1,604 1,265
Change in Stockholders' equity for unrealized
gain on securities available for sale 20 16 0
_____ _____ _____
Total $ 1,817 1,620 1,265
The components of income tax expense are as follows (in thousands):
Years ended December 31,
Current: 1995 1994 1993
Federal $ 1,450 1,260 1,127
State 401 320 295
_____ _____ _____
1,851 1,580 1,422
Deferred (54) 24 (157)
_____ _____ _____
Total $ 1,797 1,604 1,265
Income tax expense was $1,797,000, $1,604,000 and $1,265,000 for the years
ended December 31, 1995, 1994 and 1993, respectively, and differed from the
amounts computed by applying the applicable U.S. Federal corporate tax rates
to pretax income from continuing operations as follows:
Years ended December 31,
1995 1994 1993
Tax expense at statutory rate of 34% $ 1,957 1,804 1,595
Tax-exempt interest (474) (468) (509)
Nondeductible interest expense 53 47 56
State taxes, net of federal benefit 265 211 195
Other (4) 10 (72)
_____ _____ _____
Total $ 1,797 1,604 1,265
Effective tax rate 31.5% 30.2% 27.0%
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 8 Income Taxes (continued)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1995
and
1994 are presented below:
Deferred tax assets: 1995 1994
Allowance for loan losses $ 580 563
Incentive stock plan 244 180
Excess servicing 108 124
Other 17 0
___ ___
Total gross deferred tax assets 949 867
Deferred tax liabilities:
Depreciation 475 445
Net unrealized gains on Available-for-Sale securities 36 16
Accretion on bonds 9 11
___ ___
Total gross deferred tax liabilities 520 472
___ ___
Net deferred tax asset $ 429 395
Realization of deferred tax assets is dependent upon the generation of future
taxable income or the existence of sufficient taxable income within the
carryback period. A valuation allowance is provided when it is more likely
than not that some portion of the deferred tax assets will not be realized. In
assessing the need for a valuation allowance, management considers the
scheduled reversal of deferred tax liabilities, the level of historical taxable
income and projected future taxable income over the periods which the temporary
differences comprising the deferred tax assets are deductible. Based on its
assessment, management determined that no valuation allowance is necessary.
Note 9 Stockholders' Equity
Payment of dividends by the Bank to the Company is limited or restricted in
certain circumstances. According to federal banking law, the approval of the
Office of the Comptroller of the Currency is required for the declaration of
dividends in any year which dividends exceed the total of net income for that
year plus retained income for the preceding two years. At December 31, 1995,
approximately $8,069,000 was available for payment of dividends to the Company.
Note 10 Leases
The Company leases certain buildings and office space under operating lease
arrangements. Rent expense under these arrangements amounted to $192,000 in
1995, $118,000 in 1994 and $114,000 in 1993. Real estate taxes, insurance,
maintenance, and other operating expenses associated with the buildings and
office space are generally paid by the Company.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 10 Leases (Continued)
A summary of noncancellable long-term operating lease commitments as of
December 31, 1995 follows (in thousands):
Years ending December 31, Amount
1996 $ 177
1997 163
1998 163
1999 154
2000 139
After 2000 158
___
Total $ 954
Note 11 Commitments and Contingencies
In the normal course of business there are various outstanding commitments to
extend credit which are not reflected in the accompanying consolidated
financial statements. Because many commitments and almost all letters of
credit expire without being funded in whole or in part, the contract amounts
are not estimates of future cash flows. Loan commitments have off-balance
sheet credit risk because only origination fees are recognized in the balance
sheet until commitments are fulfilled or expire. The credit risk amounts are
equal to the contractual amounts, assuming that the amounts are fully advanced
and collateral or other security is of no value. The Company's policy
generally requires customers to provide collateral, usually in the form of
customers' operating assets or property, prior to the disbursement of approved
loans. The contract amounts of these commitments at December 31, 1995 are:
Commercial letters of credit $2,727,000 and unused commitments $22,179,000.
The contract amounts of these commitments at December 31, 1994 are: Commercial
letters of credit $2,487,000 and unused commitments $31,971,000. The majority
of these commitments have terms up to one year at fixed interest rates current
at the date of origination.
The Bank is required to maintain average reserve balances with the Federal
Reserve Bank. The average amount of such reserve balances for the year ended
December 31, 1995 was approximately $3,356,000.
The Bank is subject to capital adequacy requirements of the Federal Deposit
Insurance Corporation. Under the "prompt corrective action" provision of the
Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), federal
regulators are required to take prompt corrective action to solve the problems
of critically undercapitalized institutions. The FDICIA established capital
levels for which insured institutions will be categorized as (in declining
order) well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized or critically undercapitalized. Under the
FDICIA, a well capitalized institution must generally have a risk-based capital
ratio of at least 10 percent, a Tier 1 risk-based ratio of at least 6 percent
and a Tier 1 leverage ratio of at least 5 percent. The bank is a well
capitalized institution under the definition.
In the normal course of business, the Company has various contingent
liabilities outstanding that are not included in the consolidated financial
statements. Management does not anticipate any material losses as a result of
these contingent liabilities.
<PAGE
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 12 Loans to Directors and Officers
Certain executive officers, directors and their business interests are
customers of the Bank. Transactions with these parties are based on
substantially the same terms as similar transactions with others and do not
carry more than normal credit risk. At December 31, 1995 and 1994, loans to
these related parties amounted to $939,000 and $708,000, respectively.
Note 13 Condensed Financial Information - Parent Company Only
The following are the condensed balance sheets, statements of income, and
statements of cash flows for Canandaigua National Corporation (parent company
only).
Balance Sheets (dollars in thousands)
December 31,
1995 1994
Assets:
Cash $ 154 142
Investment in subsidiary bank 35,519 32,594
Premises and equipment - net 0 1,425
Securities Available-for-Sale 345 360
Loans 11 17
Other assets 1,368 0
______ ______
Total assets $ 37,397 34,538
Stockholders' equity:
Common stock $ 8,058 8,049
Additional paid-in capital 8,203 8,172
Undivided profits 21,083 18,294
Net unrealized gain on securities available for sale,
net of taxes 53 23
______ ______
Total stockholders' equity $ 37,397 34,538
Statements of Income (dollars in thousands)
Years ended December 31,
1995 1994 1993
Income - Dividends from The Canandaigua
National Bank and Trust Company $ 1,124 1,009 905
Other income 2 0 0
Other expense (114) (120) (120)
_____ _____ _____
Income before undistributed income of subsidiary 1,012 889 785
Equity in undistributed income of subsidiary 2,904 2,814 2,642
_____ _____ _____
Net income $ 3,916 3,703 3,427
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13 Condensed Financial Information - Parent Company Only (cont.)
Statements of Cash Flows (dollars in thousands)
Years ended December 31,
1995 1994 1993
Cash flows from operating activities:
Net income $ 3,916 3,703 3,427
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 25 99 98
Equity in undistributed earnings of subsidiary bank (2,904) (2,814) (2,642)
Other 35 0 0
_____ _____ _____
Net cash from operating activities 1,072 988 883
Cash flows from investing activities:
Purchase of securities (28) 0 (20)
Loans disbursed net of principal payments received 6 6 (23)
Decrease in other real estate 49 0 0
Capital expenditures 0 (3) (5)
_____ _____ _____
Net cash provided (used) in investing activities 27 3 (48)
Cash flows from financing activities:
Proceeds from issuance of common stock 40 34 39
Dividends paid (1,127) (966) (884)
_____ _____ _____
Net cash used by financing activities (1,087) (932) (845)
Net increase (decrease) in cash 12 59 (10)
Cash at beginning of year 142 83 93
_____ _____ _____
Cash at end of year $ 154 142 83
In 1995 the Company transferred fixed assets with a carrying value of
$1,400,000 to the Bank in exchange for other real estate with a carrying value
of $1,400,000.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 14 Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:
Cash and Cash Equivalents
For these short-term instruments that generally mature 90 days or less, the
carrying value approximates fair value.
Securities
Fair values for securities are based on quoted market prices or dealer quotes,
where available. Where quoted market prices are not available, fair values are
based on quoted market prices of comparable instruments.
Loans Receivable
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as loans adjustable by
prime, commercial, mortgages, installment, and other consumer. Each loan
category is further segmented into categories based on collateral, for purpose
of the calculations.
The fair value of performing loans is calculated by discounting scheduled cash
flows through the estimated maturity using estimated market discount rates that
reflect the credit and interest rate risk inherent in the loan category. The
estimate of maturity is based on the average maturity for each loan
classification.
Delinquent loans (not in foreclosure) are valued using the method noted above.
While credit risk is a component of the discount rate used to value loans,
delinquent loans are presumed to possess additional risk. Therefore, the
calculated fair value of loans delinquent more than 30 days but less than 91
days delinquent, are reduced by an allocated amount of the allowance for loan
losses. The fair value of loans currently in foreclosure is estimated to
approximate carrying value, as such loans are generally carried at fair value.
FHLB Stock and Federal Reserve Bank Stock
The carrying value of these instruments, which is redeemable at par,
approximates fair value.
Accrued Interest Receivable and Payable
For these short-term instruments, the carrying value approximates fair value.
Deposits
The fair value of demand deposits, savings accounts, and certain money market
accounts is the amount payable on demand at the reporting date. The fair value
of fixed maturity certificates of deposit is estimated using a discounted cash
flow approach that applies current market rates (prevailing CD rates) to a
schedule of aggregated expected monthly maturities on time deposits.
<PAGE>
CANANDAIGUA NATIONAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 14 Fair Values of Financial Instruments (continued)
Borrowing from FHLB:
The fair value of borrowing is calculated by discounting scheduled cash flows
through the estimated maturity using market rates presently available for new
borrowings.
The estimated fair values of the Company's financial instruments are as
follows:
December 31, 1995 December 31, 1994
Carrying Fair Carrying Fair
Amount Value(1) Amount Value(1)
Financial Assets:
Cash and due from banks $ 16,858 16,858 14,227 14,227
Federal funds sold 6,600 6,600 3,400 3,400
Securities:
Available-for-Sale 444 444 409 409
Held-to-Maturity 70,070 70,728 70,767 69,016
Loans:
Loans adjustable by prime 100,603 101,076 111,928 110,412
Commercial loans 22,438 21,862 13,890 13,644
Mortgages 62,997 68,830 58,793 58,896
Installment loans 20,170 20,432 22,393 22,529
Other consumer 2,881 2,897 2,035 2,050
Loans held for sale 955 955 1,710 1,710
Allowance for loan losses (2,258) 0 (2,202) 0
FHLB and Federal Reserve Bank stock 1,406 1,406 1,418 1,418
Accrued interest receivable 2,046 2,046 2,170 2,170
Financial Liabilities:
Deposits:
Demand accounts, Savings and
Money Market accounts 186,775 186,775 207,140 207,140
Certificates of deposit 90,276 90,666 67,697 68,961
Borrowing from FHLB 1,013 670 0 0
Accrued interest payable 701 701 701 701
Off balance sheet commitments:
Commercial letters of credit 0 27 0 25
Unused lines of credit $ 0 0 0 0
(1)Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value of commitments to extend credit approximates the fee charged to make
the commitments.
<PAGE>
COMMON STOCK DATA
The Company's stock is not actively traded nor is it traded in the over-the-
counter market. In addition, it is not listed with a national securities
exchange. Due to the limited number of transactions, the weighted average sale
price may not be indicative of the actual market value of the Company's stock.
The following table sets forth a summary of the weighted average sale price,
book value, and semi annual dividends paid per share since the first quarter of
1990.
Average Dividend
Sale Price Book Value Paid
1995
4th quarter no sales $ 232.06
3rd quarter $ 307.09 $ 226.65 $3.50
2nd quarter $ 293.15 $ 223.46
1st quarter $ 288.71 $ 216.94 $3.50
1994
4th quarter $ 259.87 $ 214.55
3rd quarter $ 256.64 $ 208.23 $3.00
2nd quarter $ 240.34 $ 205.25
1st quarter no sales $ 199.09 $3.00
1993
4th quarter no sales $ 197.47
3rd quarter no sales $ 194.08 $2.75
2nd quarter $ 206.47 $ 189.68
1st quarter $ 203.42 $ 183.72 $2.75
1992
4th quarter $ 195.90 $ 181.65
3rd quarter $ 192.51 $ 178.65 $2.63
2nd quarter no sales $ 174.68
1st quarter $ 190.00 $ 169.46 $2.50
1991
4th quarter $ 181.99 $ 166.24
3rd quarter $ 168.71 $ 162.95 $2.50
2nd quarter $ 199.18 $ 159.73
1st quarter $ 161.34 $ 155.31 $2.38
1990
4th quarter $ 175.49 $ 152.99
3rd quarter $ 211.70 $ 148.54 $2.38
2nd quarter $ 231.48 $ 145.36
1st quarter $ 245.02 $ 141.99 $2.25
As stated above, the stock of the Company is not listed with a national
securities exchange; therefore, no formal bid and asked for quotations are
available.
All per share amounts have been adjusted to reflect a two-for-one stock split
in 1993.
</TABLE>
CANANDAIGUA NATIONAL CORPORATION
72 SOUTH MAIN STREET
CANANDAIGUA, NEW YORK 14424
This Proxy Statement is being mailed to holders of common stock, in
connection with solicitation of proxies by the Board of Directors of
Canandaigua National Corporation for use at the Annual Meeting of Stockholders
to be held March 13, 1996, and any adjournment thereof. Each proxy that is
properly executed and returned will be voted at the meeting and, if a choice is
specified therein, will be voted in accordance with the specification made. If
no choice is specified, it will be voted in favor of the proposals set forth in
the notice enclosed herewith. Any proxy may be revoked by the person giving it
at any time prior to its exercise.
Only stockholders of record as of the close of business on January 31, 1996,
are entitled to notice of, and to vote at, the Annual Meeting. On that date,
there were outstanding and entitled to vote 161,155 shares of common stock, par
value $50 per share. Each share of common stock is entitled to one vote. A
quorum will consist of the holders of not less than a majority of the shares
entitled to vote, present either in person or by proxy.
This Proxy Statement and the accompanying proxy are being mailed by first-
class mail on February 23, 1996.
All expenses incurred in connection with the solicitation of proxies will be
borne by the Corporation. It is estimated that the cost of this solicitation
of security holders will be approximately $4,000.
SHAREHOLDERS OF MANAGEMENT AND OTHERS
Principal Beneficial Owners of Common Stock
A) The following table sets forth, as of January 31, 1996, the name and
address of each person who owns of record or who is known by the Board of
Directors to be the beneficial owner ("beneficial ownership" as used in this
Proxy Statement is defined in Rule 13d-3 under the Securities Exchange Act of
1934) of more that 5% of the Corporation's outstanding common stock, the number
of shares beneficially owned, and the percentage of the Corporation's
outstanding common stock so owned and the percentage of class of the
Corporation's common stock beneficially owned by all Directors and Principal
Officers of the Corporation as a group:
Shares of Common Percent of
Name and Address Stock Owned Class
Arthur S. Hamlin 8,700(1) 5.40%
Canandaigua, NY
All Directors and Principal 15,264(2) 9.47%
Officers of Corporation
as a Group (12 persons)
(1) Includes 1,200 shares in the Estate of Mary D. Hamlin, of which he is the
executor
(2) Includes 40 shares owned individually by Robert G. Sheridan, 18 shares
owned
by Robert G. Sheridan as custodian for his three children under New York
Uniform Gifts to Minors Act, and 10 shares owned by his IRA held by subsidiary
bank. Includes 42 shares owned individually by Gregory S. MacKay, 42 shares
owned individually by his spouse, 52 shares owned by his IRA held by subsidiary
bank and 16 shares owned by his two children.
<PAGE>
As of January 31, 1996, the Trust Department of The Canandaigua National Bank
and Trust Company held in various fiduciary capacities 25,847 shares or 16.04 %
of the outstanding shares. The Trust Department of the bank has the power to
vote 9,281 of these shares.
B) Beneficial Ownership by Directors and Principal Officers: The following
table sets forth as of January 31, 1996, the amount and percentage of the
common stock of the Corporation beneficially owned by each Director and each
Principal Officer.
Shares of Common Percent of
Name and Address Stock Owned Class
Patricia A. Boland 50 .03%
Canandaigua, NY
David Hamlin, Jr. 150(1) .09%
Bloomfield, NY
Frank H. Hamlin 5,690 3.53%
Naples, NY
George W. Hamlin, IV 1,750(2) 1.09%
Canandaigua, NY
Stephen D. Hamlin 1,455(3) .90%
Paul R. Kellogg 352(4) .22%
Canandaigua, NY
Eldred M. Sale 1,610(5) 1.00%
Victor, NY
Caroline C. Shipley 108 .07%
Canandaigua, NY
Alan J. Stone 3,379(6) 2.10%
Honeoye, NY
Willis F. Weeden, MD 500 .31%
Canandaigua, NY
Gregory S. MacKay 152(7) .09%
Canandaigua, NY
Robert G. Sheridan 68(8) .04%
Canandaigua, NY
(1)Includes 70 shares in his Self Directed IRA held by subsidiary bank.
<page
(2) Includes 80 shares owned individually by his spouse, 68 shares owned by his
spouse as custodian for his minor children under New York Uniform Gifts to
Minors Act and 136 shares owned by his two children.
(3) Includes 360 shares owned individually by his spouse.
(4) Includes 100 shares owned individually by his spouse.
(5) Includes 410 shares owned individually by his spouse.
(6) Includes 439 shares owned by his IRA held by subsidiary bank, 20 shares
owned individually by his spouse and 50 shares owned by her IRA held by
subsidiary bank.
(7) Includes 42 shares owned individually by his spouse, 52 shares owned by his
IRA held by subsidiary bank and 16 shares owned by his two children.
(8) Includes 18 shares owned as custodian for his three children under New York
Uniform Gifts to Minors Act and 10 shares owned by his IRA held by
subsidiary bank.
ELECTION OF OFFICERS
The number of Directors to be elected at the 1996 Annual Meeting is four.
Directors are elected annually by the stockholders to hold office for three
years and until their successors are elected and qualified. Willis F. Weeden,
MD has made the decision not to seek re-election to the Board of Directors.
Management has nominated as Directors, and recommends the election of the four
persons listed below. Nominees Frank H. Hamlin, Stephen D. Hamlin and Paul R.
Kellogg are members of the present Board and were elected by the stockholders
of the Corporation at the Annual Meeting held in 1984. Nominee Daniel P.
Fuller is not a member of the present board and has been nominated to fill the
vacancy created by the retirement of Willis F. Weeden, MD. Each nominee has
consented to be named in this Proxy Statement and to serve if elected. If at
the time of the Annual Meeting any of them becomes unavailable for election,
the proxies may exercise discretionary authority to vote for substitutes
proposed by the Board of Directors. Management has no reason to believe that
any substitute nominees will be required.
INFORMATION ON DIRECTORS AND NOMINEES
Year First Elected
or Appointed to: Principal Occupation
Name Age Corporation Bank For Past Five Years
Incumbent Class 2 Directors - Term Expiring 1996
Frank H. Hamlin 90 1984 1948 Chairman of the Board of
Directors of The
Canandaigua National
Bank
and Trust Company until
February 1986; retired
February 1986 - present
Stephen D. Hamlin 59 1984 1973 Chief Executive Officer
Sonnenberg Gardens
February 1996 - present
<PAGE>
Year First Elected
or Appointed to: Principal Occupation
Name Age Corporation Bank For Past Five Years
Incumbent Class 2 Directors - Term Expiring 1996
Paul R. Kellogg 68 1984 1962 Owner - Kellogg's Pan-
Tree Inn
Nominee Class 2 Director
Daniel P. Fuller 45 * ** President and General
Manager Bristol Mountain
Ski Resort - December
1984 - Present
* not currently a Director of Corporation
** not currently a Director of subsidiary Bank
Class 1 Directors - Term Expiring 1997
David Hamlin, Jr. 52 1993 1993 Farmer
Retired Colonel, New
York State Air National
Guard
George W. Hamlin, IV 54 1984 1979 President, CEO and Trust
Officer - The
Canandaigua
National Bank and Trust
Company April 1979 -
present. Director of
the
Buffalo, NY Federal
Reserve Bank 1992 -
present
Caroline C. Shipley 56 1984 1984 Business Manager -
WCGR/WLKA Radio Station
1985 to August 1991;
Educator - Area II
New York State School
Boards Association
Director and Vice
President January 1991 -
December 1995; President
January 1996 - present
<PAGE>
Year First Elected
or Appointed to: Principal Occupation
Name Age Corporation Bank For Past Five Years
Class 3 Directors - Term Expiring 1998
Patricia A. Boland 60 1986 1986 Executive Director -
Granger Homestead 10/89
- -
present
Eldred M. Sale 71 1984 1966 Sr. Vice President - The
Canandaigua National
Bank
and Trust Company 1980 -
January 1987; presently
retired
Robert G. Sheridan 47 1984 1992 Senior Vice President
and
Cashier - The
Canandaigua
National Bank and Trust
Company - 1989 - present
Alan J. Stone 55 1986 1986 CEO Stone Construction
Equipment, Inc. until
1986 Managing Partner -
Stone Properties July
1986 - present.
Chairman
of the Board -
Canandaigua National
Corporation - February
1994 - present
The family relationships between the above-named Directors are as follows:
George Hamlin is the son of Frank Hamlin. Stephen Hamlin is the nephew of
Frank Hamlin and first cousin of George Hamlin. David Hamlin, Jr. , is a first
cousin once removed of Frank Hamlin and a second cousin of George and Stephen
Hamlin.
COMMITTEES OF THE BOARD OF DIRECTORS
The Directors of Canandaigua National Corporation and the Directors of The
Canandaigua National Bank and Trust Company are the same persons.
The Corporation does not have standing Audit, Nominating, or Compensation
Committees. These functions are performed by the following committees of The
Canandaigua National Bank and Trust Company:
The Examining Committee consists of five (5) Directors who are not employees
of the subsidiary bank and who are appointed annually by the Board of
Directors. Members of the Committee are:
Caroline C. Shipley Frank H. Hamlin
Stephen D. Hamlin Patricia A. Boland
Paul R. Kellogg
<PAGE>
The Examining Committee met six (6) times during 1995 to supervise the
internal audit activities of the Bank. The function of the Committee is to
make or cause to be made suitable examinations every year and to insure that
the Bank's activities are being conducted in accordance with the law and the
banking rules and regulations established by the Comptroller of the Currency,
other regulatory and supervisory authorities, and in conformance with
established policy. In addition, the Examining Committee recommends to the
Board of Directors the services of a reputable independent certified public
accounting firm, and the Board of Directors then appoints the independent
certified public accounting firm at the annual organizational meeting of
Directors. The Committee receives and reviews the reports of the independent
certified public accounting firm and presents them to the Board of Directors
with comments and recommendations. At least once during each twelve-month
period, this Committee makes audits of the Trust Department or causes audits to
be made and ascertains whether an adequate review of all the assets in each
trust has been made.
The Officers' Compensation Committee consists of three (3) Directors who are
not employees of the subsidiary bank and who are appointed by the Board of
Directors each year. Members of the Committee are as follows:
Stephen D. Hamlin Alan J. Stone
Caroline C. Shipley
The Officers' Compensation Committee met three (3) times during 1995 to
perform annual reviews of officers' performance. Based on the Committee's
reviews, recommendations on officers' titles and salaries for the upcoming year
are made to the Board of Directors for approval.
The Corporation has no Nominating Committee or other committee performing a
similar function, but the Board of Directors does consider persons suggested as
candidates for election as Corporate Directors. In this connection, the Board
will consider recommendations submitted by stockholders. Any stockholder
wishing to make such a recommendations should submit it to the Secretary of the
Corporation. Notice of intention to make any nominations or other proposals,
other than by the Board of Directors, must be made in writing and must be
received by the Secretary of the Corporation no less than twenty (20) days
prior to any meeting of stockholders called for the election of Directors.
Such notification should contain the following information to the extent known
to the notifying stockholder: (a) the name and address of each proposed
nominee; (b) the principal occupation of each proposed nominee; (c) the total
number of shares of capital stock of the Corporation that will be voted for
each proposed nominee; (d) the number of shares of common stock of the
Corporation owned by the notifying stockholder.
The Board of Directors of the Corporation held twelve (12) regular meetings
during 1995. No incumbent Director of the Bank or of the Corporation attended
fewer than 75% of the aggregate of all the meetings of the Board of Directors
and the Committees of which they were members.
BOARD OF DIRECTORS COMPENSATION
For the years 1995 and 1994, no compensation was paid to members of the Board
of Directors of Canandaigua National Corporation. For the years 1995 and 1994,
members of the Board of Directors of The Canandaigua National Bank and Trust
Company were compensated at the rate of $300 per meeting attended.
<PAGE>
PRINCIPAL OFFICERS
The following table sets forth selected information about the Principal
Officers of the Corporation, each of whom is elected by the Board of Directors
and each of whom holds office at the discretion of the Board of Directors:
Number
Office and of Shares
Position with Beneficially
Name Corporation Held Since Owned Age
George W. Hamlin, IV* President 1984 1,750(1) 54
Robert G. Sheridan* Secretary 1984 68(2) 47
Gregory S. MacKay* Treasurer 1988 152(3) 46
(1) Includes 80 shares owned individually by his spouse, 68 shares owned by his
spouse as custodian for his minor child under New York Uniform Gifts to Minors
Act and 136 shares owned by his two children
(2) Includes 18 shares owned as custodian for his three children under New York
Uniform Gifts to Minors Act and 10 shares owned by his IRA held by subsidiary
bank.
(3) Includes 42 shares owned individually by his spouse, 52 shares owned by his
IRA held by subsidiary bank and 16 shares owned by his two children.
* All of the Principal Officers of the Corporation are officers of the
subsidiary bank and have served as officers of the subsidiary bank for the
past five (5) years.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation Long -Term Compensation
Awards Other Compensation
Name and Defined
Principal Other Annual SAR's Contribution
Position Year Salary Bonus Compensation PSA's Plan ESOP
George W. 1993 $189,326 $11,360 $5,313 See $25,820 $1,916
Hamlin, IV 1994 $202,576 $12,388 $5,774 Table $22,984 $1,718
President 1995 $214,198 $13,099 $6,145 Below $21,532 $1,606
STOCK APPRECIATION RIGHTS (SAR)
PHANTOM STOCK AWARDS (PSA)
The table set forth below lists the value of the Stock Appreciation Rights
and Phantom Stock Awards as of the date of award using the highest of three
different estimates of value: (1) the book value of the Corporation, (2) the
appraised value of the stock using a third-party appraisal of the Corporation's
stock prepared for the Corporation's Employee Stock Ownership Plan, and (3) the
price at which the Corporation's stock was bought and sold in private
transactions for which the Corporation has information during the calendar
quarter in which the award was made. The Corporation does not have pricing
information regarding all private purchases and sales of the Corporation's
stock, and the shares of the Corporation are not listed on any national
exchange nor traded over the counter. The Stock Appreciation Rights and
Phantom Stock
<PAGE>
Awards are perpetual. Stock Appreciation Rights are exercisable after five
years from the date of award. Phantom Stock Awards are exercisable by a
recipient upon reaching the age of 55 or upon attaining 15 years of continuous
full-time employment with the company. Amounts set forth in the table are
adjusted for a two-for-one stock split approved by the stockholders in 1993
Estimated Estimated
Number % of Total Base Price Value as of Value as of
Granted SAR/PSA SARs Only Date of Award 12/31/95
Name Year SAR/PSA Granted $/Share SAR/PSA SAR/PSA
George W. 1993 86.87 25% 166.24 3,883.70 12,234.23
Hamlin, IV 86.87 18,329.57 26,673.84
1994 88.87 25% 181.65 3,942.71 11,151.62
88.87 20,091.40 27,300.30
1995 101.20 25% 197.47 6,314.88 11,096.54
101.20 26,298.84 31,077.51
No Stock Appreciation Rights or Phantom Stock Awards were exercised during
1995.
Compensation for the executive officer for whom disclosure is required by
Item 402 of Regulation S-K is determined by the Officers' Compensation
Committee consisting of Stephen D. Hamlin, Caroline C. Shipley and Alan J.
Stone. The Committee's consideration consists of, but is not limited to,
analysis of the following factors: financial performance of the company,
including Return on Equity, Return on Assets, growth of the company, and
management of assets and liabilities. All of these factors are considered in
the context of the market for the company's products and services, and the
complexity and difficulty of managing business risks in the prevailing economic
conditions and regulatory environment.
In addition, the Officers' Compensation Committee conducts a comparison study
of the company's executive compensation with that of comparable positions in
similar companies within the company's peer group. The Committee also
considers intangible factors such as the scope of responsibility of the
executive, leadership within the company, the community and within the
industry, and whether the company, under the executive's leadership, has been
able to serve worthwhile public purposes while enhancing shareholder value.
PERFORMANCE GRAPH
The following performance graph is required to be set forth in the Proxy
Statement by Item 402 (1) of Regulation S-K. The theory incorporated into this
requirement is that all corporations have organized orderly markets in which to
exchange their securities. The graph is provided so that stockholders and
prospective stockholders can compare market results with peer companies or with
indexes of companies in similar businesses or having similar capitalization,
e.g. those companies which are listed on the NASDAQ or NYSE.
<PAGE>
THE CORPORATION'S COMMON STOCK IS NOT LISTED WITH A NATIONAL SECURITIES
EXCHANGE, NOR IS IT TRADED IN THE OVER-THE-COUNTER MARKET. THE CORPORATION'S
COMMON STOCK IS NOT ACTIVELY TRADED; LESS THAN 1% OF THE CORPORATION'S
OUTSTANDING SHARES HAVE BEEN BOUGHT AND SOLD IN ANY YEAR REPRESENTED IN THE
GRAPH. DUE TO THE EXTREMELY LIMITED NUMBER OF TRANSACTIONS, THE AVERAGE SALE
PRICE OF THE CORPORATION'S COMMON STOCK USED IN THE GRAPH MAY NOT BE INDICATIVE
OF THE ACTUAL MARKET VALUE OF THE CORPORATION'S COMMON STOCK. THE GRAPH SET
FORTH BELOW DEPICTS THE AVERAGE SALE PRICE OF THE CORPORATION'S COMMON STOCK
BASED ONLY UPON TRANSACTIONS FOR WHICH THE CORPORATION HAS PRICE INFORMATION.
THERE ARE PURCHASES AND SALES OF THE CORPORATION'S COMMON STOCK FOR WHICH THE
CORPORATION HAS NO PRICE INFORMATION; THEREFORE, THE ACTUAL AVERAGE SALE PRICE
OF ALL SHARES BOUGHT AND SOLD IN ANY QUARTER MAY BE DIFFERENT THAN SET FORTH IN
THE GRAPH.
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick as independent
certified public accountants of Canandaigua National Corporation until the
Annual Meeting held in 1996. Representatives are expected to be present at the
meeting and to be available to respond to appropriate questions. They will be
given the opportunity to make a statement if they so desire.
FINANCIAL INFORMATION
Incorporated by reference and made a part hereof is the Annual Report of
Canandaigua National Corporation for the year ending December 31, 1995.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
1996 Annual Meeting of Stockholders. However, if other matters should come
before the meeting, it is the intention of each person named in the Proxy to
vote it in accordance with his or her judgment on such matters.
By Order of the Board of Directors
George W. Hamlin, IV
Secretary - Board of Directors
February 23, 1996
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