FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
___________________
For Quarter Ended June 30, 1996 Commission file number: 2-96350
CNB Corporation
(Exact name of registrant as specified in its charter)
South Carolina 57-0792402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 320, Conway, South Carolina 29526
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (803) 248-5721
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares outstanding of the issuer's $10.00 par value common
stock as of June 30, 1996 was 477,272.
<PAGE>
CNB Corporation
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1996, 1
December 31, 1995 and June 30, 1995
Consolidated Statement of Income for the Three Months 2
and Six Months Ended June 30, 1996 and 1995
Consolidated Statement of Changes in Stockholders' 3
Equity for the Six Months Ended June 30, 1996
and 1995
Consolidated Statement of Cash Flows for the Six Months 4
Ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 5-12
Item 2. Management's Discussion and Analysis of Financial 13-22
Condition and Results of Operations
Item 4. Submission of Matters to a Vote of Security Holders 22
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURE 23
<PAGE>
CNB Corporation and Subsidiary
Consolidated Balance Sheets
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1996 1995 1995
ASSETS:
<S> <C> <C> <C>
Cash and due from banks $ 14,252 $ 15,605 $ 12,428
Interest bearing deposits with banks 0 0 0
Investment Securities 74,058 76,402 82,034
(Fair values of $73,306 at
June 30, 1996, $77,231 at
December 31, 1995, and $82,145
at June 30, 1995)
Securities Available for Sale 66,593 62,250 43,019
(Amortized cost of $67,199 at
June 30, 1996, $61,533 at
December 31, 1995, and $42,561
at June 30, 1995)
Federal Funds sold and securities
purchased under agreement
to resell 7,200 7,300 24,625
Loans:
Gross Loans 172,149 153,498 152,531
Less unearned income (1,088) (1,094) (1,143)
Loans, net of unearned income 171,061 152,404 151,388
Less reserve for possible
loan losses (2,321) (2,242) (2,327)
Net loans 168,740 150,162 149,061
Bank premises and equipment 6,876 7,166 6,482
Other assets 6,059 5,809 5,559
Total assets 343,778 324,694 323,208
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing 55,413 44,723 49,697
Interest-bearing 212,012 206,433 190,190
Total deposits 267,425 251,156 239,887
Federal funds purchased and
securities sold under agreement
to repurchase 38,682 36,935 47,707
Other short-term borrowings 2,579 766 1,904
Obligations under mortgages and
capital leases 8 10 16
Other liabilities 1,792 3,609 2,129
Minority interest in subsidiary 24 23 22
Total liabilities 310,510 292,499 291,665
Stockholders' equity:
Common stock, par value $10 per
share: Authorized 500,000;
issued 479,093 shares 4,791 4,791 4,791
Surplus 15,686 15,676 15,663
Undivided Profits 13,314 11,431 10,874
Net Unrealized Holding (363) (430) 274
Gains (Losses) on
Available-For-Sale Securities
Less: Treasury stock (160) (133) (59)
Total stockholders' equity 33,268 32,195 31,543
Total liabilities
and stockholders' equity 343,778 324,694 323,208
</TABLE>
1
<PAGE>
CNB Corporation and Subsidiary
Consolidated Statement of Income
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Interest Income:
<S> <C> <C> <C> <C>
Interest and fees on loans $ 3,888 $ 3,642 $ 7,596 $ 7,112
Interest on investment securities:
Taxable investment securities 1,881 1,590 3,753 3,232
Tax-exempt investment securities 181 220 371 450
Other securities 3 3 3 3
Interest on federal funds sold and securities
purchased under agreement to resell 104 239 228 338
Total interest income 6,057 5,694 11,951 11,135
Interest Expense:
Interest on deposits 2,108 1,969 4,216 3,819
Interest on federal funds purchased and
securities sold under agreement to
repurchase 515 559 1,065 982
Interest on other short-term borrowings 12 14 29 37
Interest on obligation under mortgages and
capital leases 0 0 0 0
Total interest expense 2,635 2,542 5,310 4,838
Net interest income 3,422 3,152 6,641 6,297
Provision for possible loan losses 90 15 140 80
Net interest income after provision for
possible loan losses 3,332 3,137 6,501 6,217
Other income:
Service charges on deposit accounts 468 453 952 900
Gains/(Losses) on securities 0 0 38 26
Other operating income 227 212 395 358
Total other income 695 665 1,385 1,284
Other expenses:
Minority interest in income of subsidiary 0 0 1 1
Salaries and employee benefits 1,503 1,442 2,934 2,764
Occupancy expense 448 371 910 737
Other operating expenses 622 757 1,210 1,404
Total operating expenses 2,573 2,550 5,055 4,906
Income before income taxes 1,454 1,252 2,831 2,595
Income tax provision 498 415 948 829
Net Income 956 837 1,883 1,766
Per share data:
Net income per weighted average shares
outstanding $ 2.01 $ 1.75 $ 3.95 $ 3.69
Cash dividend paid per share $ 0 $ 0 $ 0 $ 0
Book value per actual number of shares
outstanding $ 69.70 $ 65.96 $ 69.70 $ 65.96
Weighted average number of shares outstanding 477,257 478,045 477,257 478,045
Actual number of shares outstanding 477,272 478,197 477,272 478,197
</TABLE>
2
<PAGE>
CNB Corporation and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
(All Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Common Stock:
($10 par value; 500,000 shares authorized)
Balance, January 1 4,791 4,791
Issuance of Common Stock None None
Balance at end of period 4,791 4,791
Surplus:
Balance, January 1 15,676 15,659
Issuance of Common Stock None None
Gain on sale of treasury stock 11 4
Balance at end of period 15,686 15,663
Undivided profits:
Balance, January 1 11,431 9,107
Net Income 1,883 1,766
Cash dividends declared None None
Balance at end of period 13,314 10,874
Net unrealized holding gains/(losses) on
available-for-sale securities:
Balance, January 1 430 (588)
Change in net unrealized gains/(Losses) (794) 862
Balance at end of period (363) 274
Treasury stock:
Balance, January 1 (133) (112)
Purchase of treasury stock (105) (26)
Reissue of treasury stock 78 79
Balance at end of period (160) (59)
Total stockholders' equity 33,268 31,543
</TABLE>
Note: Columns may not add due to rounding.
3
<PAGE>
CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the six-month period ended June 30,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,883 $ 1,766
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 414 320
Provision for loan losses 140 80
Provision for deferred income taxes (336) 573
Loss (gain) on sale of investment
securities 38 26
(Increase) decrease in accrued interest
receivable (430) (404)
(Increase) decrease in other assets 180 (89)
(Decrease) increase in other liabilities (958) (112)
Increase in minority interest in
subsidiary 1 2
Net cash provided by operating
activities 932 2,162
INVESTING ACTIVITIES
Proceeds from sale of investment securities
available for sale 2,000 3,117
Proceeds from maturities of investment
securities held to maturity 14,935 845
Proceeds from maturities of investment
securities available for sale 1,465 2,000
Purchase of investment securities held to
maturity (9,449) 0
Purchase of investment securities
available for sale (10,950) (2,849)
Decrease (increase) in interest-bearing
deposits in banks 0 0
(Increase) decrease in federal funds sold 100 (21,500)
(Increase) decrease in loans (18,657) (7,025)
Premises and equipment expenditures (124) (1,492)
Net cash provided by (used for)
investing activities (20,680) (26,904)
FINANCING ACTIVITIES
Dividends paid (1,432) (955)
Increase (Decrease) in deposits 16,269 5,694
(Decrease) increase in securities sold
under repurchase agreement 1,747 18,471
(Decrease) increase in other
short-term borrowings 1,813 (590)
Increase (decrease)in obligation under
mortgages and capital leases (2) (2)
Net cash provided by (used for)
financing activities 18,395 22,618
Net increase (decrease) in cash
and due from banks (1,353) (2,124)
CASH AND DUE FROM BANKS, BEGINNING OF YEAR 15,605 14,552
CASH AND DUE FROM BANKS, JUNE 30, 1996 AND 1995 $14,252 $12,428
CASH PAID (RECEIVED) FOR:
Interest $ 5,331 $ 4,672
Income taxes $ 990 $ 753
</TABLE> 4
<PAGE>
CNB CORPORATION AND SUBSIDIARY (The "Corporation")
CNB CORPORATION (The "Parent")
THE CONWAY NATIONAL BANK (The "Bank")
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All Dollar Amounts in Thousands)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net income per share - Net income per share is computed on the basis of the
weighted average number of common shares outstanding, 477,257 for the six-
month period ended June 30, 1996 and 478,045 for the six-month period ended
June 30, 1995.
NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain average reserve balances either at the
Bank or on deposit with the Federal Reserve Bank. The average amount of
these reserve balances for the six-month period ended June 30, 1996 and
for the years ended December 31, 1995 and 1994 were approximately $4,678,
$4,306, and $3,988, respectively.
5
<PAGE>
NOTE 3 - INVESTMENT SECURITIES
Investment securities with a par value of approximately $61,070 at June 30,
1996 and $66,115 at December 31, 1995 were pledged to secure public deposits
and for other purposes required by law.
The following summaries reflect the book value, unrealized gains and losses,
approximate market value, and tax-equivalent yields of investment securities
at June 30, 1996 and at December 31, 1995.
<TABLE>
<CAPTION>
June 30, 1996
Book Unrealized Holding Fair
Value Gains Losses Value Yield(1)
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
United States Treasury
Within one year $12,524 $ 38 $ 11 $12,551 5.93%
One to five years 25,288 130 202 25,216 6.19
37,812 168 213 37,767 6.10
Federal agencies
Within one year 0 0 0 0 -
One to five years 28,086 1 541 27,546 6.00
After ten years 859 0 29 830 6.15
28,945 1 570 28,376 6.00
State, county and
municipal
Within one year 0 0 0 0 -
One to five years 326 8 0 334 7.85
326 8 0 334 7.85
Other Securities(Equity) 116 0 0 116 -
Total available for sale $67,199 $ 177 $ 783 $66,593 6.05%
HELD TO MATURITY
United States Treasury
Within one year 17,122 24 59 17,087 5.63%
One to five years 28,687 58 447 28,298 5.59
45,809 82 506 45,385 5.60
Federal agencies
Within one year 3,003 20 0 3,023 8.14%
One to five years 8,815 0 222 8,593 6.07
Six to ten years 3,080 0 140 2,940 6.16
14,898 20 362 14,556 6.52
State, county and
municipal
Within one year 1,386 15 0 1,401 9.78%
One to five years 6,382 193 28 6,547 8.64
Six to ten years 5,583 40 206 5,417 7.14
13,351 248 234 13,365 8.13
Total held to maturity $74,058 $ 350 $1,102 $73,306 6.24%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended June 30, 1996, the Bank did not hold any securities
of an issuer that exceeded 10% of stockholders' equity. The net unrealized
holding gains/(losses) on available-for-sale securities component of capital
is $(363) as of June 30, 1996.
6
<PAGE>
NOTE 3 - INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
December 31, 1995
Book Unrealized Holding Fair
Value Gains Losses Value Yield(1)
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
United States Treasury
Within one year $11,022 $ 19 $ 21 $11,020 5.04%
One to five years 28,674 591 37 29,228 6.31
39,696 610 58 40,248 5.96
Federal agencies
Within one year 417 3 - 420 7.98
One to five years 20,181 179 19 20,341 5.94
After ten years 913 1 15 899 6.34
21,511 183 34 21,660 6.00
State, county and
municipal
One to five years 326 16 - 342 7.85
326 16 - 342 7.85
Total available for sale $61,533 $ 809 $ 92 $62,250 5.98%
HELD TO MATURITY
United States Treasury
Within one year 13,077 59 5 13,131 5.85%
One to five years 38,875 378 145 39,108 5.48
51,952 437 150 52,239 5.57
Federal agencies
Within one year 5,007 69 - 5,076 8.04%
One to five years 3,004 65 - 3,069 6.12
Six to ten years 2,002 34 - 2,036 6.40%
10,013 168 - 10,181 7.14
State, county and
municipal
Within one year 1,674 17 1 1,690 9.33
One to five years 6,216 273 8 6,481 8.81
Six to ten years 6,069 120 35 6,154 7.28
After ten years 478 8 - 486 7.61
14,437 418 44 4,811 8.19
Total held to maturity $76,402 $1,023 $ 194 $77,231 6.27%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended December 31, 1995, the Bank did not hold any
securities of an issuer that exceeded 10% of stockholders' equity. The
net unrealized holding gains/(losses) on available-for-sale securities
component of capital is $430 as of December 31, 1995.
On December 6, 1995, the Bank transferred a portion of the portfolio from
securities held to maturity to the available for sale classification.
These securities had an amortized cost of $11,566 and an unrealized loss
of $68 on the date of transfer. This one-time reassessment of securities
was done in compliance with the "Guide to Implementation of Statement 115
on Accounting for Certain Investments in Debt and Equity Securities,"
issued by the Financial Accounting Standards Board.
7
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
The following is a summary of loans at June 30, 1996 and December 31,
1995 by major classification:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Real estate loans - mortgage $ 104,924 $ 95,451
- construction 8,806 5,453
Commercial and industrial loans 27,075 23,133
Loans to individuals for household,
family and other consumer expenditures 28,496 28,095
Agriculture 2,675 1,032
All other loans, including overdrafts 173 334
Gross loans 172,149 153,498
Less unearned income (1,088) (1,094)
Less reserve for loan losses (2,321) (2,242)
Net loans 168,740 150,162
</TABLE>
8
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, continued
Changes in the reserve for loan losses for the quarter ended and six-
month period ended June 30, 1996 and the year ended December 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended December
June 30, June 30, 31,
1996 1995 1996 1995 1995
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $ 2,267 $ 2,310 $ 2,242 $ 2,220 $ 2,220
Charge-offs:
Commercial, financial, and agricultural 11 2 41 57 133
Real Estate - construction and mortgage 3 0 3 3 3
Loans to individuals 79 91 139 144 313
Total charge-offs $ 93 $ 93 $ 183 $ 204 $ 449
Recoveries:
Commercial, financial, and agricultural $ 15 $ 10 $ 39 $ 114 $ 166
Real Estate - construction and mortgage 3 8 6 12 44
Loans to individuals 39 77 77 105 151
Total recoveries $ 57 $ 95 $ 122 $ 231 $ 361
Net charge-offs/(recoveries) $ 36 $ (2) $ 61 $ (27) $ 88
Additions charge to operations $ 90 $ 15 $ 140 $ 80 $ 110
Balance, end of period $ 2,321 $ 2,327 $ 2,321 $ 2,327 $ 2,242
Ratio of net charge-offs during the period
to average loans outstanding during the
period .02% - .04% - .06%
</TABLE>
The entire balance is available to absorb future loan losses.
At June 30, 1996 and December 31, 1995 loans on which no interest was being
accrued totalled approximately $451 and $479, respectively and foreclosed
real estate totalled $0 and $0, respectively.
NOTE 5 - PREMISES AND EQUIPMENT
Property at June 30, 1996 and December 31, 1995 is summarized as
follows:
June 30, December 31,
1996 1995
Land and buildings $ 8,175 $ 8,175
Furniture, fixtures and equipment 5,299 5,454
Construction in progress - -
$ 13,474 $ 13,629
Less accumulated depreciation and
amortization 6,598 6,463
$ 6,876 $ 7,166
Depreciation and amortization of bank premises and equipment charged to
operating expense was $171 and $414 for the quarter ended and the six month
period ended June 30, 1996, respectively and $666 for the year ended December
31, 1995.
9
<PAGE>
NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000
At June 30, 1996 and December 31, 1995, certificates of deposit of
$100,000 or more included in time deposits totaled approximately $30,822 and
$28,507 respectively. Interest expense on these deposits was approximately
$392 and $767 for the quarter ended and the six-month period ended June 30,
1996 and $1,182 for the year ended December 31, 1995.
NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
At June 30, 1996 and December 31, 1995, securities sold under repurchase
agreements totaled approximately $38,682 and $36,935. U.S. Government
securities with a book value of $49,255 ($48,768 market value) and $52,193
($52,543 market value), respectively, are used as collateral for the
agreements. The weighted-average interest rate of these agreements was 4.81
percent and 5.10 percent at June 30, 1996 and December 31, 1995.
NOTE 8 - LINES OF CREDIT
At June 30, 1996, the Bank had unused short-term lines of credit to
purchase Federal Funds from unrelated banks totaling $17,000. These lines of
credit are available on a one to seven day basis for general corporate
purposes of the Bank. All of the lenders have reserved the right to withdraw
these lines at their option.
The Bank has a demand note through the U.S. Treasury, Tax and Loan
system with the Federal Reserve Bank of Richmond. The Bank may borrow up to
$5,000 under the arrangement at a variable interest rate. The note is
secured by U.S. Treasury Notes with a market value of $5,924 at June 30,
1996. The amount outstanding under the note totaled $2,579 and $766 at June
30, 1996 and December 31, 1995, respectively.
NOTE 9 - INCOME TAXES
Income tax expense for the quarter ended June 30, 1996 and June 30, 1995
on pretax income of $1,454 and $1,252 totalled $498 and $415 respectively.
Income tax expense for the six-month period ended June 30, 1996 and June 30,
1995 on pretax income of $2,831 and $2,595 totalled $948 and $829
respectively. The provision for federal income taxes is calculated by
applying the 34% statutory federal income tax rate and increasing or reducing
this amount due to any tax-exempt interest, state bank tax (net of federal
benefit), business credits, surtax exemption, tax preferences, alternative
minimum tax calculations, or other factor. A summary of income tax
components and a reconciliation of income taxes to the federal statutory rate
is included in fiscal year-end reports.
Effective January 1, 1992, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes". SFAS 109 replaces SFAS 96 beginning in 1993, with early
implementation permitted. The impact of the adoption of SFAS 109 is not
considered to be material.
10
<PAGE>
NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES
From time to time the bank subsidiary is a party to various litigation,
both as plaintiff and as defendant, arising from its normal operations. No
material losses are anticipated in connection with any of these matters at
June 30, 1996.
Also, in the normal course of business, the bank subsidiary has
outstanding commitments to extend credit and other contingent liabilities,
which are not reflected in the accompanying financial statements. At June
30, 1996, commitments to extend credit totalled $14,090; financial standby
letters of credit totalled $603; and performance standby letters of credit
totalled $792. In the opinion of management, no material losses or
liabilities are expected as a result of these transactions.
NOTE 11 - EMPLOYEE BENEFIT PLAN
The Bank has a defined contribution pension plan covering all employees
who have attained age twenty-one and have a minimum of one year of service.
Upon ongoing approval of the Board of Directors, the Bank matches one-hundred
percent of employee contributions up to one percent of employee salary
deferred and fifty percent of employee contributions in excess of one percent
and up to six percent of salary deferred. The Board of Directors may also
make discretionary contributions to the Plan. For the three-month and six
month period ended June 30, 1996 and years ended December 31, 1995, 1994 and
1993, $85, $166, $266, $295, and $273, respectively, was charged to
operations under the plan.
NOTE 12 - REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory -and possibly additional
discretionary - actions by regulators that, if undertaken, could have a
direct material effect on the financial statements. The regulations require
the Bank to meet specific capital adequacy guidelines that involve
quantitative measures of assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The capital
classification is also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the maintenance of minimum amounts and ratios (set forth in
the table below) of Tier I capital to adjusted total assets (Leverage Capital
ratio) and minimum ratios of Tier I and total capital to risk-weighted
assets. To be considered adequately capitalized under the regulatory
framework for prompt corrective action, the Bank must maintain minimum Tier
I leverage, Tier I risk-based and total risked-based ratios as set forth in
the table. The Bank's actual capital ratios are presented in the table below
as of June 30, 1996:
Conway National Bank
Ratios
Required
Minimum Actual
Tier I Leverage Capital 4.0% 9.3%
Tier I Risk-based Capital 4.0% 17.7%
Total Risk-based Capital 8.0% 18.9%
11
<PAGE>
NOTE 13 - CONDENSED FINANCIAL INFORMATION
Following is condensed financial information of CNB Corporation (parent
company only):
CONDENSED BALANCE SHEET
JUNE 30, 1996
(Unaudited)
ASSETS
Cash $ 1,452
Investment in subsidiary 31,534
Fixed assets 245
Other assets 37
$ 33,268
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liability $ 0
Stockholders' equity 33,268
$ 33,268
CONDENSED STATEMENT OF INCOME
For the six-month period ended June 30, 1996
(Unaudited)
EQUITY IN NET INCOME OF SUBSIDIARY $ 1,910
OTHER INCOME 0
OTHER EXPENSES (27)
Net Income $ 1,883
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's Discussion and Analysis is provided to afford a clearer
understanding of the major elements of the corporation's results of
operations, financial condition, liquidity,and capital resources. The
following discussion should be read in conjunction with the corporation's
financial statements and notes thereto and other detailed information
appearing elsewhere in this report. In addition, the results of operations
for the interim periods shown in this report are not necessarily indicative
of results to be expected for the fiscal year. In the opinion of management,
the information contained herein reflects all adjustments necessary to make
the results of operations for the interim periods a fair statement of such
operations. All such adjustments are of a normal recurring nature.
DISTRIBUTION OF ASSETS AND LIABILITIES
The Company maintains a conservative approach in determining the
distribution of assets and liabilities. Loans, net of unearned income, have
increased 13.0% from $151,388 at June 30, 1995 to $171,061 at June 30, 1996
and have increased as a percentage of total assets from 46.8% to 49.8% over
the same period as loan demand has been very strong in our market.
Correspondingly, securities and federal funds sold have decreased as a
percentage of total assets from 46.3% at June 30, 1995 to 43.0% at June 30,
1996. This level of investments and federal funds sold provides for a more
than adequate supply of secondary liquidity. Management has sought to build
the deposit base with stable, relatively non-interest-sensitive deposits
by offering the small to medium deposit account holders a wide array of
deposit instruments at competitive rates. Non-interest-bearing demand
deposits increased as a percentage of total assets from 15.4% at June 30,
1995 to 16.1% at June 30, 1996. However, as more customers, both business
and personal, are attracted to interest-bearing deposit accounts, we expect
a decline in the percentage of demand deposits over the long-term.
Interest-bearing deposits have increased from 58.8% of total assets at June
30, 1995 to 61.7% at June 30, 1996 while securities sold under agreement to
repurchase have decreased from 14.8% to 11.2% over the same period. Some
migration from term repurchase agreements to certificates of deposits
occurred during 1996 due to lower FDIC premium levels.
The following table sets forth the percentage relationship to total assets of
significant component's of the corporation's balance sheet as of June 30,
1996 and 1995:
<TABLE>
<CAPTION>
June 30,
<S> <C> <C>
Assets: 1996 1995
Earning assets:
Loans, net of unearned income 49.8% 46.8%
Investment securities 21.5 25.4
Securities Available for Sale 19.4 13.3
Federal funds sold and securities purchased
under agreement to resell 2.1 7.6
Other earning assets - -
Total earning assets 92.8 93.1
Other assets 7.2 6.9
Total assets 100.0% 100.0%
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits 61.7% 58.8%
Federal funds purchased and securities sold
under agreement to repurchase 11.2 14.8
Other short-term borrowings .8 .6
Obligations under mortgages and capital leases - -
Total interest-bearing liabilities 73.7 74.2
Noninterest-bearing deposits 16.1 15.4
Other liabilities .5 .6
Stockholders' equity 9.7 9.8
Total liabilities and stockholders' equity 100.0% 100.0%
</TABLE>
<PAGE> 13
RESULTS OF OPERATION
CNB Corporation experienced earnings for the three-month period ended
June 30, 1996 and 1995 of $956 and $837, respectively, resulting in a return
on average assets of 1.12% and 1.07% and a return on average stockholders'
equity of 11.60% and 10.90%.
CNB Corporation experienced earnings for the six-month period ended June 30,
1996 and 1995 of $1,883 and $1,766, respectively, resulting in a return on
average assets of 1.12% and 1.16% and a return on average stockholders'
equity of 11.50% and 11.75%.
The earnings were primarily attributable to net interest margins in
each period (see Net Income-Net Interest Income). Other factors include
management's ongoing effort to maintain other income at adequate levels (see
Net Income - Other Income) and to control other expenses (see Net Income -
Other Expenses). This level of earnings, coupled with a conservative
dividend policy, have supplied the necessary capital funds to support the
growth in total assets. Total assets have increased $20,570 or 6.4% from
$323,208 at June 30, 1995 to $343,778 at June 30, 1996. The following table
sets forth the financial highlights for the three-month and six-month periods
ending June 30, 1996 and June 30, 1995:
CNB Corporation
CNB Corporation and Subsidiary
FINANCIAL HIGHLIGHTS
(All Dollar Amounts, Except Per Share Data, in Thousands)
<TABLE>
<CAPTION>
Three-Month Period Six-Month Period
Ended June 30, Ended June 30,
Percent Percent
Increase Increase
1996 1995 (Decrease) 1996 1995 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Net interest income after
provision for loan losses 3,332 3,137 6.2% 6,501 6,217 4.6%
Income before income taxes 1,454 1,252 16.1 2,831 2,595 9.1
Net Income 956 837 14.2 1,883 1,766 6.6
Per Share 2.01 1.75 14.9 3.95 3.69 7.0
Cash dividends declared 0 0 - 0 0 -
Per Share 0 0 - 0 0 -
Total assets 343,778 323,208 6.4% 343,778 323,208 6.4%
Total deposits 267,425 239,887 11.5 267,425 239,887 11.5
Loans, net of unearned income 171,061 151,388 13.0 171,061 151,388 13.0
Investment securities and
securities available for
sale 140,651 125,053 12.5 140,651 125,053 12.5
Stockholders' equity 33,268 31,543 5.5 33,268 31,543 5.5
Book value per share 69.70 65.96 5.7 69.70 65.96 5.7
Ratios (1):
Annualized return on average
total assets 1.12% 1.07% 4.7% 1.12% 1.16% (3.4)%
Annualized return on average
stockholders' equity 11.60% 10.90% 6.4% 11.50% 11.75% (2.1)%
</TABLE>
(1) For the three-month period ended June 30, 1996 and June 30, 1995,
average total assets amounted to $341,544 and $312,422 with average
stockholders' equity totaling $32,957 and $30,713, respectively. For the
six-month period ended June 30, 1996 and June 30, 1995, average total
assets amounted to $336,817 and $305,706 with average stockholders'
equity totaling $32,756 and $30,051, respectively.
14
<PAGE>
NET INCOME
Net Interest Income - Earnings are dependent to a large degree on net
interest income, defined as the difference between gross interest and fees
earned on earning assets, primarily loans and securities, and interest paid
on deposits and borrowed funds. Net interest income is effected by the
interest rates earned or paid and by volume changes in loans, securities,
deposits, and borrowed funds.
Interest rates paid on deposits and borrowed funds and earned on loans and
investments have generally followed the fluctuations in market interest rates
in 1996 and 1995. However, fluctuations in market interest rates do not
necessarily have a significant impact on net interest income, depending on
the bank's rate sensitivity position. A rate sensitive asset (RSA) is any
loan or investment that can be repriced either up or down in interest rate
within a certain time interval. A rate sensitive liability (RSL) is an
interest paying deposit or other liability that can be repriced either up or
down in interest rate within a certain time interval. When a proper balance
between RSA and RSL exists, market interest rate fluctuations should not
have a significant impact on earnings. The larger the imbalance, the greater
the interest rate risk assumed by the bank and the greater the positive or
negative impact of interest rate fluctuations on earnings. The bank seeks to
manage its assets and liabilities in a manner that will limit interest rate
risk and thus stabilize longrun earning power. Management believes that a
rise or fall in interest rates will not materially effect earnings.
The Bank has maintained adequate net interest margins for the three-month and
six-month periods ended June 30, 1996 and 1995 by earning satisfactory
yields on loans and securities and funding these assets with a favorable
deposit mix containing a significant level of noninterest-bearing demand
deposits.
Fully-tax-equivalent net interest income showed a 7.7% increase from $3,265
for the three-month period ended June 30, 1995 to $3,515 for the
three-month period ended June 30, 1996. During the same period, total
fully-tax-equivalent interest income increased by 5.9% from $5,807 to $6,150
and total interest expense increased by 3.7% from $2,542 to $2,635.
Fully-tax-equivalent net interest income as a percentage of total
earning assets has shown a decrease of .06% from 4.48% for the three-month
period ended June 30, 1995 to 4.42% for the three-month period ended June 30,
1996.
Fully-tax-equivalent net interest income showed a 4.6% increase from $6,529
for the six-month period ended June 30, 1995 to $6,832 for the six-month
period ended June 30, 1996. During the same period, total fully-tax-
equivalent interest income increased by 6.8% from $11,367 to $12,142 and
total interest expense increased by 9.8% from $4,838 to $5,310. Fully-tax-
equivalent net interest income as a percentage of total earning assets has
shown a decrease of .23% from 4.58% for the six-month period ended June 30,
1995 to 4.35% for the six-month period ended June 30, 1996.
The tables on the following four pages present selected financial data and
an analysis of net interest income.
15
<PAGE>
CNB Corporation and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
Three Months Ended 6/30/96 Three Months Ended 6/30/95
Avg. Interest Avg. Ann. Avg. Interest Avg.Ann.
Balance Income/ Yield or Balance Income/ Yield or
Expense(1) Rate Expense(1) Rate
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning assets:
Loans, net of unearned income $168,372 $ 3,888 9.24% $151,701 $ 3,642 9.60%
Securities:
Taxable 127,814 1,884 5.90 107,708 1,593 5.92
Tax-exempt 13,425 274 8.16 15,045 333 8.85
Federal funds sold and
securities purchased under
agreement to resell 8,490 104 4.90 16,878 239 5.66
Other earning assets 0 0 - 0 0 -
Total earning assets 318,101 6,150 7.73 291,332 5,807 7.97
Other assets 23,443 21,090
Total assets $341,544 $312,422
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits $211,590 2,108 3.99 $189,158 $ 1,969 4.16
Federal funds purchased and
securities sold under
agreement to repurchase 42,596 515 4.84 42,593 559 5.25
Other short-term borrowings 1,008 12 4.76 963 14 5.82
Obligations under mortgages
and capitalized leases 9 0 8.00 15 0 8.00
Total interest-bearing
liabilities $255,203 $ 2,635 4.13 $232,729 $ 2,542 4.37
Noninterest-bearing deposits 52,575 46,612
Other liabilities 809 2,368
Stockholders' equity 32,957 30,713
Total liabilities and
stockholders' equity $341,544 $312,422
Net interest income as a percent
of total earning assets $318,101 $ 3,515 4.42 $291,332 $ 3,265 4.48
(1) Tax-equivalent adjustment
based on a 34% tax rate $ 93 $ 113
Ratios:
Annualized return on average total assets 1.12 1.07
Annualized return on average stockholders' equity 11.60 10.90
Cash dividends declared as a percent of net income 0 0
Average stockholders' equity as a percent of:
Average total assets 9.65 9.83
Average total deposits 12.48 13.03
Average loans, net of unearned income 19.57 20.25
Average earning assets as a percent of
average total assets 93.14 93.25
</TABLE>
16
<PAGE>
CNB Corporation and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
Six Months Ended 6/30/96 Six Months Ended 6/30/95
Avg. Interest Avg. Ann. Avg. Interest Avg.Ann.
Balance Income/ Yield or Balance Income/ Yield or
Expense(1) Rate Expense(1) Rate
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning assets:
Loans, net of unearned income $163,190 $ 7,596 9.31% $149,261 $ 7,112 9.53%
Securities:
Taxable 127,992 3,756 5.87 108,879 3,235 5.94
Tax-exempt 13,859 562 8.11 15,262 682 8.94
Federal funds sold and
securities purchased under
agreement to resell 8,771 228 5.20 11,842 338 5.71
Other earning assets 0 0 - 0 0 -
Total earning assets 313,812 12,142 7.74 285,244 11,367 7.97
Other assets 23,005 20,462
Total assets $336,817 $305,706
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits $208,990 4,216 4.03 $190,240 $ 3,819 4.01
Federal funds purchased and
securities sold under
agreement to repurchase 43,704 1,065 4.87 38,832 982 5.06
Other short-term borrowings 1,002 29 5.79 1,305 37 5.67
Obligations under mortgages
and capitalized leases 9 0 8.00 16 0 8.00
Total interest-bearing
liabilities $253,705 $ 5,310 4.19 $230,393 $ 4,838 4.20
Noninterest-bearing deposits 49,430 43,275
Other liabilities 926 1,987
Stockholders' equity 32,756 30,051
Total liabilities and
stockholders' equity $336,817 $305,706
Net interest income as a percent
of total earning assets $313,812 $ 6,832 4.35 $285,244 $ 6,529 4.58
(1) Tax-equivalent adjustment
based on a 34% tax rate $ 191 $ 232
Ratios:
Annualized return on average total assets 1.12 1.16
Annualized return on average stockholders' equity 11.50 11.75
Cash dividends declared as a percent of net income 0 0
Average stockholders' equity as a percent of:
Average total assets 9.73 9.83
Average total deposits 12.68 12.87
Average loans, net of unearned income 20.07 20.13
Average earning assets as a percent of
average total assets 93.17 93.31
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Three Months Ended June 30, 1996 and 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Change
Average Average Interest Interest Change Change Due To
Volume Volume Yield/Rate Yield/Rate Earned/Paid Earned/Paid Due to Due To Rate X
1996 1995 1996 (1) 1995 (1) 1996 (1) 1995 (1) Variance Rate Volume Volume
Earning Assets:
Loans, Net of unearned
income (2) 168,372 151,701 9.24% 9.60% 3,888 3,642 246 (137) 398 (15)
Investment securities:
Taxable 127,814 107,708 5.90% 5.92% 1,884 1,593 291 (5) 297 (1)
Tax-exempt 13,425 15,045 8.16% 8.85% 274 333 (59) (26) (36) 3
Federal funds sold and
securities purchased under
agreement to resell 8,490 16,878 4.90% 5.66% 104 239 (135) (32) (119) 16
Other earning assets 0 0 - - 0 0 0 - - -
Total Earning Assets 318,101 291,332 7.73% 7.97% 6,150 5,807 343 (200) 540 3
Interest-bearing Liabilities:
Interest-bearing deposits 211,590 189,158 3.99% 4.16% 2,108 1,969 139 (81) 230 (10)
Federal funds purchased and
securities sold under
agreement to repurchase 42,596 42,593 4.84% 5.25% 515 559 (44) (44) - -
Other short-term borrowings 1,008 963 4.76% 5.82% 12 14 (2) (3) 1 -
Mortgage indebtedness and
obligations under capital-
ized leases 9 15 8.00% 8.00% 0 0 0 - - -
Total Interest-bearing
Liabilities 255,203 232,729 4.13% 4.37% 2,635 2,542 93 (128) 231 (10)
Interest-free Funds
Supporting Earning Assets 62,898 58,603
Total Funds Supporting
Earning Assets 318,101 291,332 3.31% 3.49% 2,635 2,542 93 (128) 231 (10)
Interest Rate Spread 3.60% 3.60%
Impact of Non-interest-bearing
Funds on Net Yield on Earning
Assets .82% .88%
Net Yield on Earning Assets 4.42% 4.48% 3,515 3,265
</TABLE>
(1) Tax-equivalent adjustment based on a 34% tax rate.
(2) Includes non-accruing loans which does not have a material effect on the
Net Yield on Earning Assets.
18
<PAGE>
<TABLE>
<CAPTION>
CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Six Months Ended June 30, 1996 and 1995
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Change
Average Average Interest Interest Change Change Due To
Volume Volume Yield/Rate Yield/Rate Earned/Paid Earned/Paid Due to Due To Rate X
1996 1995 1996 (1) 1995 (1) 1996 (1) 1995 (1) Variance Rate Volume Volume
Earning Assets:
Loans, Net of unearned
income (2) 163,190 149,261 9.31% 9.53% 7,596 7,112 484 (164) 664 (16)
Investment securities:
Taxable 127,992 108,879 5.87% 5.94% 3,756 3,235 521 (38) 567 (8)
Tax-exempt 13,859 15,262 8.11% 8.94% 562 682 (120) (63) (63) 6
Federal funds sold and
securities purchased under
agreement to resell 8,771 11,842 5.20% 5.71% 228 338 (110) (30) (87) 7
Other earning assets 0 0 - - 0 0 0 - - -
Total Earning Assets 313,812 285,244 7.74% 7.97% 12,142 11,367 775 (295) 1,081 (11)
Interest-bearing Liabilities:
Interest-bearing deposits 208,990 190,240 4.03% 4.01% 4,216 3,819 397 19 376 2
Federal funds purchased and
securities sold under
agreement to repurchase 43,704 38,832 4.87% 5.06% 1,065 982 83 (37) 123 (3)
Other short-term borrowings 1,002 1,305 5.79% 5.67% 29 37 (8) 1 (9) -
Mortgage indebtedness and
obligations under capital-
ized leases 9 16 8.00% 8.00% 0 0 0 - - -
Total Interest-bearing
Liabilities 253,705 230,393 4.19% 4.20% 5,310 4,838 472 (17) 490 (1)
Interest-free Funds
Supporting Earning Assets 60,107 54,851
Total Funds Supporting
Earning Assets 313,812 285,244 3.39% 3.39% 5,310 4,838 472 (17) 490 (1)
Interest Rate Spread 3.55% 3.77%
Impact of Non-interest-bearing
Funds on Net Yield on Earning
Assets .80% .81%
Net Yield on Earning Assets 4.35% 4.58% 6,832 6,529
</TABLE>
(1) Tax-equivalent adjustment based on a 34% tax rate.
(2) Includes non-accruing loans which does not have a material effect on the
Net Yield on Earning Assets.
19
<PAGE>
0NET INCOME (continued)
Provision for Possible Loan Losses - It is the policy of the bank to maintain
the reserve for possible loan losses at the greater of 1.20% of net loans or
the percentage based on the actual loan loss experience over the previous
five years. In addition, management may increase the reserve to a level
above these guidelines to cover potential losses identified in the portfolio.
The provision for possible loan losses was $90 for the three-month period
ended June 30, 1996 and $15 for the three-month period ended June 30, 1995.
Net loan charge-offs/(recoveries) totaled $36 for the three-month period
ended June 30, 1996 and $(2) for the same period in 1995.
The provision for possible loan losses was $140 for the six-month period
ended June 30, 1996 and $80 for the six-month period ended June 30, 1995.
Net loan charge-offs/(recoveries) totaled $61 for the six-month period ended
June 30, 1996 and $(27) for the same period in 1995.
The reserve for possible loan losses as a percentage of net loans was 1.38%
at June 30, 1996 and 1.56% at June 30, 1995. The increased provision
during the three-month and six-month period ended June 30, 1996 was due to
the increased level of loan growth. Continued low net charge-offs through
the remainder of 1996 are anticipated by management.
Securities Transactions - The Bank recognized a gain on available-for-sale
security transactions for the quarter ended March 31, 1996 of $38 and
recognized a $26 gain during the first quarter of 1995. There were no
security sales during the second quarter of 1996 or 1995. Management sold
approximately $2 million and $3 million, respectively, in treasury bonds to
fund loan growth and to adjust the Bank's interest sensitivity position. At
June 30, 1996, December 31, 1995, and June 30, 1995 market value
appreciation/(depreciation) in the securities portfolio totaled $(1,358),
$1,546, and $569. As indicated, market value has been reduced due to rising
market interest rates in 1996.
Other Income - Other income, net of any gains/losses on security
transactions, increased by 4.5% from $665 for the three-month period ended
June 30, 1995 to $695 for the three-month period ended June 30, 1996.
Other income, net of any gains/losses on security transactions, increased by
7.1% from $1,258 for the six-month period ended June 30, 1995 to $1,347 for
the six-month period ended June 30, 1996.
This increase in the three-month and six-month period ended June 30, 1996 was
primarily due to an increase in deposit account volumes and higher merchant
discount income.
Other Expenses - Other expenses increased by 1.0% from $2,550 for the
three-month period ended June 30, 1995 to $2,573 for the three-month period
ended June 30, 1996. The major components of other expenses are salaries
and employee benefits which increased 4.2% from $1,442 to $1,503; occupancy
expense which increased 20.8% from $371 to $448; and other operating
expenses which decreased by 17.8% from $757 to $622.
20
<PAGE>
Other Expenses (continued) - Other expenses increased by 3.0% from $4,906 for
the six-month period ended June 30, 1995 to $5,055 for the six-month period
ended June 30, 1996. The major components of other expenses are salaries and
employee benefits which increased 6.2% from $2,764 to $2,934; occupancy
expense which increased 23.5% from $737 to $910; and other operating expense
which decreased by 13.8% from $1,404 to $1,210.
As anticipated, overhead expenses associated with substantial 1994-1995
purchases of electronic data processing equipment and drive-up automated
teller machines, as well as the construction, equipping, and staffing of the
Myrtle Beach Office, continue to impact earnings. However, total operating
expense growth has been offset somewhat by a decrease of $263 in FDIC
insurance premium expense as reflected in the decline in other operating
expense.
Income Taxes - Provisions for income taxes increased 20.0% from $415 for the
three-month period ended June 30, 1995 to $498 for the three-month period
ended June 30, 1996. Income before income taxes less interest on tax-exempt
investment securities increased by 23.4% from $1,032 for the three-month
period ended June 30, 1995 to $1,273 for the same period in 1996. State tax
liability increased as income before income taxes increased 23.4% from $1,252
to $1,454 during the same period.
Provisions for income taxes increased 14.4% from $829 for the six-month
period ended June 30, 1995 to $948 for the six-month period ended June 30,
1996. Income before income taxes less interest on tax-exempt investment
securities increased by 14.7% from $2,145 for the six-month period ended June
30, 1995 to $2,460 for the same period in 1996 and state tax liability
increased as income before income taxes increased 9.1% from $2,595 to $2,831
during the same period.
LIQUIDITY
The bank's liquidity position is primarily dependent on short-term demands
for funds caused by customer credit needs and deposit withdrawals and upon
the liquidity of bank assets to meet these needs. The bank's liquidity
sources include cash and due from banks, federal funds sold, and short-term
investments. In addition, the bank has established federal funds lines of
credit from correspondent banks and has the ability, on a short-term basis,
to borrow funds from the Federal Reserve System. Management feels that
liquidity sources are more than adequate to meet funding needs.
CAPITAL RESOURCES
Total stockholders' equity was $33,268, $32,195, $28,857, and $26,820 at June
30, 1996, December 31, 1995, December 31, 1994, and December 31, 1993,
representing 9.68%, 9.91%, 9.71%, and 9.46% of total assets, respectively.
At June 30, 1996, the Bank exceeds quantitative measures established by
regulation to ensure capital adequacy (see NOTE 12 - REGULATORY MATTERS).
Capital is considered sufficient by management to meet current and
prospective capital requirements and to support anticipated growth in bank
operations.
21
<PAGE>
EFFECTS OF REGULATORY ACTION
The management of the Company and the Bank is not aware of any current
recommendations by the regulatory authorities which, if they were to be
implemented, would have a material effect on liquidity, capital
resources, or operations.
In 1994, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Stockholders' equity has been
restated in the consolidated statement of changes in stockholders' equity to
reflect the effect of the change in accounting principle. Adoption of the
standard had no effect on net income.
Effective January 1, 1994, the Company adopted the provisions of SFAS No.
114, "Accounting by Creditors for Impairment of a Loan." SFAS No. 114, as
amended by SFAS No. 118, requires that impaired loans be measured based on
the present value of expected future cash flows or the underlying collateral
values as defined in the pronouncement. The adoption of SFAS No. 114 had no
effect on the balance sheet or income statement of the Company. The Company
includes the provisions of SFAS No. 114 in the allowance for loan losses.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An Annual Meeting of shareholders of CNB Corporation was held in the main
office building of The Conway National Bank at 1400 Third Avenue, Conway,
South Carolina, at 4:15 p.m., Conway, South Carolina time, on April 9, 1996.
The purpose of the Annual Meeting was to: (1) elect five Directors; and (2)
ratify the appointment of Elliott, Davis, and Company, Certified Public
Accountants, as the Company's independent public accountant for the fiscal
year ending December 31, 1996.
Proxies for the meeting were solicited pursuant to Regulation 14 under the
Act; there was no solicitation in opposition to the management's nominees as
listed in the proxy statement; and all of such nominees were elected.
There were 333,308 of the 477,233 shares issued present or represented by
proxy and all shares were voted for the election of the five Directors listed
as management's nominees in the proxy statement and for the ratification of
Elliott, Davis, and Company as the Company's 1996 independent public
accountant.
EXHIBITS AND REPORTS ON FORM 8-K
See Exhibit Index appearing below.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter covered by this report.
EXHIBIT INDEX
Exhibit
Number
27 Financial Data Schedule - Article 9 Financial Data Schedule for
10-Q for electronic filers (pages 24 and 25).
All other exhibits, the filing of which are required with this Form, are not
applicable. 22
<PAGE>
CNB Corporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CNB Corporation
(Registrant)
Paul R. Dusenbury
_________________________________________
Paul R. Dusenbury
Treasurer
(Chief Financial and Accounting Officer)
Date: August 12, 1996
23
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MORE
DETAILED FINANCIAL STATEMENTS OF THE COMPANY AND SUBSIDIARY AND NOTES THERETO
INCLUDED ELSEWHERE IN THIS REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIALS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 14,252
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 66,593
<INVESTMENTS-CARRYING> 74,058
<INVESTMENTS-MARKET> 73,306
<LOANS> 171,061
<ALLOWANCE> 2,321
<TOTAL-ASSETS> 343,778
<DEPOSITS> 267,425
<SHORT-TERM> 41,261
<LIABILITIES-OTHER> 1,824
<LONG-TERM> 0
0
0
<COMMON> 4,791
<OTHER-SE> 28,477
<TOTAL-LIABILITIES-AND-EQUITY> 343,778
<INTEREST-LOAN> 7,596
<INTEREST-INVEST> 4,124
<INTEREST-OTHER> 231
<INTEREST-TOTAL> 11,951
<INTEREST-DEPOSIT> 4,216
<INTEREST-EXPENSE> 5,310
<INTEREST-INCOME-NET> 6,641
<LOAN-LOSSES> 140
<SECURITIES-GAINS> 38
<EXPENSE-OTHER> 5,055
<INCOME-PRETAX> 2,831
<INCOME-PRE-EXTRAORDINARY> 1,883
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,883
<EPS-PRIMARY> 3.95<F1>
<EPS-DILUTED> 3.95<F1>
<YIELD-ACTUAL> 4.42<F1>
<LOANS-NON> 451
<LOANS-PAST> 53
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,465<F2>
<ALLOWANCE-OPEN> 2,242
<CHARGE-OFFS> 183
<RECOVERIES> 122
<ALLOWANCE-CLOSE> 2,321
<ALLOWANCE-DOMESTIC> 2,321
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>1,000 MULTIPLIER DOES NOT APPLY TO EPS-PRIMARY, EPS-DILUTED, OR
YIELD-ACTUAL.
<F2>INCLUDES NON-ACCRUAL LOANS (451) PLUS CONFEDERATED LIFE (2,014).
</FN>
</TABLE>
