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, 1997
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, 1997 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, 1997 was 479,055.
<PAGE>
CNB Corporation
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1997, 1
December 31, 1996 and June 30, 1996
Consolidated Statement of Income for the Three Months 2
and Six Months Ended June 30, 1997 and 1996
Consolidated Statement of Changes in Stockholders' 3
Equity for the Six Months Ended June 30, 1997
and 1996
Consolidated Statement of Cash Flows for the Six Months 4
Ended June 30, 1997 and 1996
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 23
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURE 24
<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,
1997 1996 1997
ASSETS:
<S> <C> <C> <C>
Cash and due from banks $ 15,981 $ 14,350 $ 14,252
Interest bearing deposits with banks 0 0 0
Investment Securities 68,734 70,149 74,058
(Fair values of $68,834 at
June 30, 1997, $70,306 at
December 31, 1996, and $73,306
at June 30, 1996)
Securities Available for Sale 62,184 62,138 66,593
(Amortized cost of $62,186 at
June 30, 1997, $62,093 at
December 31, 1996, and $67,199
at June 30, 1996)
Federal Funds sold and securities
purchased under agreement
to resell 14,350 0 7,200
Loans:
Gross Loans 207,786 185,933 172,149
Less unearned income (1,075) (1,058) (1,088)
Loans, net of unearned income 206,711 184,875 171,061
Less reserve for possible
loan losses (2,707) (2,370) (2,321)
Net loans 204,004 182,505 168,740
Bank premises and equipment 6,957 6,866 6,876
Other assets 6,344 5,810 6,059
Total assets 378,554 341,818 343,778
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing 60,455 49,885 55,413
Interest-bearing 243,344 218,528 212,012
Total deposits 303,799 268,413 267,425
Federal funds purchased and
securities sold under agreement
to repurchase 31,489 33,018 38,682
Other short-term borrowings 3,866 2,319 2,579
Obligations under mortgages and
capital leases 0 6 8
Other liabilities 2,540 3,541 1,792
Minority interest in subsidiary 26 25 24
Total liabilities 341,720 307,322 310,510
Stockholders' equity:
Common stock, par value $10 per
share: Authorized 1,500,000 in
1997 and 500,000 in 1996;
issued 479,093 shares 4,791 4,791 4,791
Surplus 15,701 15,697 15,686
Undivided Profits 16,348 14,082 13,314
Net Unrealized Holding (2) 27 (363)
Gains (Losses) on
Available-For-Sale Securities
Less: Treasury stock (4) (101) (160)
Total stockholders' equity 36,834 34,496 33,268
Total liabilities
and stockholders' equity 378,554 341,818 343,778
</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,
1997 1996 1997 1996
Interest Income:
<S> <C> <C> <C> <C>
Interest and fees on loans $ 4,690 $ 3,888 $ 9,199 $ 7,596
Interest on investment securities:
Taxable investment securities 1,825 1,881 3,582 3,753
Tax-exempt investment securities 176 181 356 371
Other securities 3 3 3 3
Interest on federal funds sold and securities
purchased under agreement to resell 170 104 299 228
Total interest income 6,864 6,057 13,439 11,951
Interest Expense:
Interest on deposits 2,509 2,108 4,875 4,216
Interest on federal funds purchased and
securities sold under agreement to
repurchase 395 515 810 1,065
Interest on other short-term borrowings 18 12 35 29
Interest on obligation under mortgages and
capital leases 0 0 0 0
Total interest expense 2,922 2,635 5,720 5,310
Net interest income 3,942 3,422 7,719 6,641
Provision for possible loan losses 210 90 450 140
Net interest income after provision for
possible loan losses 3,732 3,332 7,269 6,501
Other income:
Service charges on deposit accounts 526 468 1,060 952
Gains/(Losses) on securities 0 0 0 38
Other operating income 293 227 479 395
Total other income 819 695 1,539 1,385
Other expenses:
Minority interest in income of subsidiary 1 0 2 1
Salaries and employee benefits 1,563 1,503 3,076 2,934
Occupancy expense 424 448 844 910
Other operating expenses 699 622 1,306 1,210
Total operating expenses 2,687 2,573 5,228 5,055
Income before income taxes 1,864 1,454 3,580 2,831
Income tax provision 712 498 1,315 948
Net Income 1,152 956 2,265 1,883
Per share data:
Net income per weighted average shares
outstanding $ 2.40 $ 2.01 $ 4.73 $ 3.95
Cash dividend paid per share $ 0 $ 0 $ 0 $ 0
Book value per actual number of shares
outstanding $ 76.89 $ 69.70 $ 76.89 $ 69.70
Weighted average number of shares outstanding 478,721 477,257 478,721 477,257
Actual number of shares outstanding 479,055 477,272 479,055 477,272
</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,
1997 1996
<S> <C> <C>
Common Stock:
$10 par value; 1,500,000 shares authorized in
1997 and 500,000 in 1996;
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 15,697 15,676
Issuance of Common Stock None None
Gain on sale of treasury stock 4 11
Balance at end of period 15,701 15,686
Undivided profits:
Balance, January 1 14,082 11,431
Net Income 2,265 1,883
Cash dividends declared None None
Balance at end of period 16,348 13,314
Net unrealized holding gains/(losses) on
available-for-sale securities:
Balance, January 1 27 430
Change in net unrealized gains/(Losses) (29) (794)
Balance at end of period (2) (363)
Treasury stock:
Balance, January 1 (101) (133)
Purchase of treasury stock (12) (105)
Reissue of treasury stock 109 78
Balance at end of period (4) (160)
Total stockholders' equity 36,834 33,268
</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,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,265 $ 1,883
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 324 414
Provision for loan losses 450 140
Provision for deferred income taxes 70 (336)
Loss (gain) on sale of investment
securities 0 38
(Increase) decrease in accrued interest
receivable (604) (430)
(Increase) decrease in other assets 70 180
(Decrease) increase in other liabilities 322 (958)
Increase in minority interest in
subsidiary 1 1
Net cash provided by operating
activities 2,898 932
INVESTING ACTIVITIES
Proceeds from sale of investment securities
available for sale 0 2,000
Proceeds from maturities of investment
securities held to maturity 10,875 14,935
Proceeds from maturities of investment
securities available for sale 6,500 1,465
Purchase of investment securities held to
maturity (9,460) (9,449)
Purchase of investment securities
available for sale (6,546) (10,950)
Decrease (increase) in interest-bearing
deposits in banks 0 0
(Increase) decrease in federal funds sold (14,350) 100
(Increase) decrease in loans (21,836) (18,657)
Premises and equipment expenditures (415) (124)
Net cash provided by (used for)
investing activities (35,232) (20,680)
FINANCING ACTIVITIES
Dividends paid (1,433) (1,432)
Increase (Decrease) in deposits 35,386 16,269
(Decrease) increase in securities sold
under repurchase agreement (1,529) 1,747
(Decrease) increase in other
short-term borrowings 1,547 1,813
Increase (decrease)in obligation under
mortgages and capital leases (6) (2)
Net cash provided by (used for)
financing activities 33,965 18,395
Net increase (decrease) in cash
and due from banks 1,631 (1,353)
CASH AND DUE FROM BANKS, BEGINNING OF YEAR 14,350 15,605
CASH AND DUE FROM BANKS, JUNE 30, 1997 AND 1996 $15,981 $14,252
CASH PAID (RECEIVED) FOR:
Interest $ 5,358 $ 5,331
Income taxes $ 1,326 $ 990
</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, 478,721 for the six-
month period ended June 30, 1997 and 477,257 for the six-month period ended
June 30, 1996.
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, 1997 and
for the years ended December 31, 1996 and 1995 were approximately $5,553,
$5,112, and $4,306, respectively.
5
<PAGE>
NOTE 3 - INVESTMENT SECURITIES
Investment securities with a par value of approximately $67,788 at June 30,
1997 and $55,665 at December 31, 1996 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, 1997 and at December 31, 1996.
<TABLE>
<CAPTION>
June 30, 1997
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 $13,997 $ 43 $ 8 $14,032 5.96%
One to five years 16,232 117 22 16,327 6.41
30,229 160 30 30,359 6.21
Federal agencies
Within one year 2,000 0 8 1,992 4.56
One to five years 27,413 36 157 27,292 6.14
Six to ten years 1,375 4 0 1,379 6.89
After ten years 727 0 16 711 6.24
31,515 40 181 31,374 6.07
State, county and
municipal
Within one year 0 0 0 0 -
One to five years 326 9 0 335 7.85
326 9 0 335 7.85
Other Securities(Equity) 116 0 0 116 -
Total available for sale $62,186 $ 209 $ 211 $62,184 6.14%
HELD TO MATURITY
United States Treasury
Within one year 16,026 13 43 15,996 5.46%
One to five years 18,666 106 94 18,678 5.92
34,692 119 137 34,674 5.71
Federal agencies
Within one year 0 0 0 0 -
One to five years 18,232 91 120 18,203 6.33
Six to ten years 2,007 0 36 1,971 6.40
20,239 91 156 20,174 6.34
State, county and
municipal
Within one year 1,655 16 2 1,669 8.30%
One to five years 5,951 199 11 6,139 8.58
Six to ten years 5,828 33 53 5,808 7.05
After ten years 369 4 3 370 7.63
13,803 252 69 13,986 7.88
Total held to maturity $68,734 $ 462 $ 362 $68,834 6.33%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended June 30, 1997, 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 $(2) as of June 30, 1997.
6
<PAGE>
NOTE 3 - INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
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 $15,533 $ 52 $ 22 $15,563 5.95%
One to five years 16,262 169 27 16,404 6.46
31,795 221 49 31,967 6.21
Federal agencies
Within one year 0 0 0 0 -
One to five years 29,072 48 169 28,951 6.08
After ten years 784 0 18 766 6.08
29,856 48 187 29,717 6.04
State, county and
municipal
One to five years 326 12 0 338 7.85
326 12 0 338 7.85
Other Securities (Equity) 116 - - 116 -
Total available for sale $62,093 $ 281 $ 236 $62,138 6.14%
HELD TO MATURITY
United States Treasury
Within one year 17,066 20 30 17,056 5.36%
One to five years 23,703 154 176 23,681 5.67
40,769 174 206 40,737 5.54
Federal agencies
Within one year 0 0 0 0 -
One to five years 13,320 97 110 13,307 6.27
Six to ten years 2,002 0 35 1,967 6.40%
15,322 97 145 15,274 6.28
State, county and
municipal
Within one year 1,112 2 2 1,112 8.87
One to five years 6,950 302 15 7,237 8.72
Six to ten years 5,626 20 75 5,571 6.98
After ten years 370 5 0 375 7.89
14,058 329 92 14,295 8.01
Total held to maturity $70,149 $ 600 $ 443 $70,306 6.20%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended December 31, 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 $27 as of December 31, 1996.
7
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
The following is a summary of loans at June 30, 1997 and December 31,
1996 by major classification:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
Real estate loans - mortgage $ 127,147 $ 111,474
- construction 14,861 15,148
Commercial and industrial loans 33,475 28,105
Loans to individuals for household,
family and other consumer expenditures 29,128 29,642
Agriculture 2,971 1,328
All other loans, including overdrafts 204 236
Gross loans 207,786 185,933
Less unearned income (1,075) (1,058)
Less reserve for loan losses (2,707) (2,370)
Net loans 204,004 182,505
</TABLE>
8
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, continued
Changes in the reserve for loanlosses for the quarter ended and six-
month period ended June 30, 1997 and 1996 and the year ended December 31,
1996 are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended December
June 30, June 30, 31,
1997 1996 1997 1996 1996
<S> <C> <C> <C> <C> <C>
Balance, beginning of period $ 2,534 $ 2,267 $ 2,370 $ 2,242 $ 2,242
Charge-offs:
Commercial, financial,
and agricultural 36 11 64 41 108
Real Estate - construction
and mortgage 4 3 4 3 22
Loans to individuals 76 79 157 139 299
Total charge-offs $ 116 $ 93 $ 225 $ 183 $ 429
Recoveries:
Commercial, financial, and
agricultural $ 17 $ 15 $ 22 $ 39 $ 47
Real Estate - construction
and mortgage 14 3 14 6 15
Loans to individuals 48 39 76 77 135
Total recoveries $ 79 $ 57 $ 112 $ 122 $ 197
Net charge-offs/(recoveries) $ 37 $ 36 $ 113 $ 61 $ 232
Additions charge to operations $ 210 $ 90 $ 450 $ 140 $ 360
Balance, end of period $ 2,707 $ 2,321 $ 2,707 $ 2,321 $ 2,370
Ratio of net charge-offs during
the period to average loans
outstanding during the period .02% .02% .06% .04% .14%
</TABLE>
The entire balance is available to absorb future loan losses.
At June 30, 1997 and December 31, 1996 loans on which no interest was being
accrued totalled approximately $90 and $377, respectively and foreclosed real
estate totalled $0 and $0, respectively; and loans 90 days past due and still
accruing totalled $132 and $77, respectively.
OTHER INTEREST-BEARING ASSETS
The Bank maintains an investment in an executive life insurance program
through Confederation Life Insurance and Annuity Company, Inc.. During 1994
the Michigan Insurance Commission seized control of this United States
Corporation due to a similar action by the Canadian regulatory authorities
over the company's parent corporation, Confederation Life Insurance Company.
Regulatory oversight began as concerns regarding investment losses of the
parent corporation developed during 1993 and 1994. Management determined
that any impairment of the approximate $2,100,000 cash surrender value of the
policies was remote due to the financial stability of the U.S. subsidiary.
Subsequently, on October 23, 1996, a plan of Rehabilitation for Confederation
Life Insurance Company (U.S.) was confirmed by the State of Michigan in the
Circuit Court for the County of Ingham. The plan provides for the assumption
of company owned life insurance policies (COLI), such as the Bank's to be
assumed by Pacific Mutual Life Insurance Company. Under the agreement,
holders of COLI policies will have the option to have a policy reinsured by
Pacific Mutual which is expected to have the same account value and
substantially the same contract terms as the original policy or to receive
the liquidation or "opt-out" value of the policy. Management anticipates the
Bank's COLI policies to be reinsured by Pacific Mutual prior to year-end
1997.
The Bank's independent external auditors have revisited the facts and
circumstances regarding the investment in the COLI program and have read the
significant uncertainties requiring the recognition of a loss contingency as
of the date of this report.
As of June 30, 1997, the Company does not have any other interest-bearing
assets that would be required to be disclosed under Item III.C.1. or 2. if
such assets were loans. 9<PAGE>
NOTE 5 - PREMISES AND EQUIPMENT
Property at June 30, 1997 and December 31, 1996 is summarized as
follows:
June 30, December 31,
1997 1996
Land and buildings $ 8,693 $ 8,358
Furniture, fixtures and equipment 5,258 5,404
Construction in progress - 45
$ 13,951 $ 13,807
Less accumulated depreciation and
amortization 6,994 6,941
$ 6,957 $ 6,866
Depreciation and amortization of bank premises and equipment charged to
operating expense was $157 and $324 for the quarter ended and the six month
period ended June 30, 1997, respectively and $757 for the year ended December
31, 1996.
NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000
At June 30, 1997 and December 31, 1996, certificates of deposit of
$100,000 or more included in time deposits totaled approximately $54,253 and
$34,318 respectively. Interest expense on these deposits was approximately
$727 and $1,357 for the quarter ended and the six-month period ended June 30,
1997 and $1,639 for the year ended December 31, 1996.
NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
At June 30, 1997 and December 31, 1996, securities sold under repurchase
agreements totaled approximately $31,489 and $29,018. U.S. Government
securities with a book value of $36,474 ($36,530 market value) and $42,181
($42,174 market value), respectively, are used as collateral for the
agreements. The weighted-average interest rate of these agreements was 4.68
percent and 4.71 percent at June 30, 1997 and December 31, 1996.
NOTE 8 - LINES OF CREDIT
At June 30, 1997, 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 $5,621 at June 30,
1997. The amount outstanding under the note totaled $3,866 and $2,319 at
June 30, 1997 and December 31, 1996, respectively.
NOTE 9 - INCOME TAXES
Income tax expense for the quarter ended June 30, 1997 and June 30, 1996
on pretax income of $1,864 and $1,454 totalled $712 and $498 respectively.
Income tax expense for the six-month period ended June 30, 1997 and June 30,
1996 on pretax income of $3,580 and $2,831 totalled $1,315 and $948
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, 1997.
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, 1997, commitments to extend credit totalled $22,555; financial standby
letters of credit totalled $72; and performance standby letters of credit
totalled $1,449. 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, 1997 and years ended December 31, 1996, 1995 and
1994, $91, $178, $336, $266, and $295, 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, 1997:
To be
well capitalized
For under prompt
capital adequacy corrective action
purposes provisions
Actual Minimum Minimum
Amount Ratio Amount Ratio Amount Ratio
Total Capital (to risk $37,534 17.55% $17,107 8.0% $21,383 10.0%
weighted assets)
Tier I Capital (to risk 34,861 16.30 8,553 4.0 12,830 6.0
weighted assets)
Tier I Capital (to avg. 34,861 9.53 14,639 4.0 18,299 5.0
assets)
11
<PAGE>
NOTE 13 - CONDENSED FINANCIAL INFORMATION
Following is condensed financial information of CNB Corporation (parent
company only):
CONDENSED BALANCE SHEET
JUNE 30, 1997
(Unaudited)
ASSETS
Cash $ 1,312
Investment in subsidiary 34,834
Fixed assets 651
Other assets 37
$ 36,834
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liability $ 0
Stockholders' equity 36,834
$ 36,834
CONDENSED STATEMENT OF INCOME
For the six-month period ended June 30, 1997
(Unaudited)
EQUITY IN NET INCOME OF SUBSIDIARY $ 2,292
OTHER INCOME 0
OTHER EXPENSES (27)
Net Income $ 2,265
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 and 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 20.8% from $171,061 at June 30, 1996 to $206,711 at June 30, 1997
and have increased as a percentage of total assets from 49.8% to 54.6% over
the same period as loan demand has remained strong in our market.
Correspondingly, securities and federal funds sold have decreased as a
percentage of total assets from 43.0% at June 30, 1996 to 38.4% at June 30,
1997. 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 remained fairly constant as a percentage of total assets from
16.1% at June 30, 1996 to 16.0% at June 30, 1997. 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 61.7% of
total assets at June 30, 1996 to 64.3% at June 30, 1997 while securities sold
under agreement to repurchase have decreased from 11.2% to 8.3% over the same
period. Some migration from term repurchase agreements to certificates of
deposits occurred during 1996 and 1997 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,
1997 and 1996:
<TABLE>
<CAPTION>
June 30,
<S> <C> <C>
Assets: 1997 1996
Earning assets:
Loans, net of unearned income 54.6% 49.8%
Investment securities 18.2 21.5
Securities Available for Sale 16.4 19.4
Federal funds sold and securities purchased
under agreement to resell 3.8 2.1
Other earning assets - -
Total earning assets 93.0 92.8
Other assets 7.0 7.2
Total assets 100.0% 100.0%
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits 64.3% 61.7%
Federal funds purchased and securities sold
under agreement to repurchase 8.3 11.2
Other short-term borrowings 1.0 .8
Obligations under mortgages and capital leases - -
Total interest-bearing liabilities 73.6 73.7
Noninterest-bearing deposits 16.0 16.1
Other liabilities .7 .5
Stockholders' equity 9.7 9.7
Total liabilities and stockholders' equity 100.0% 100.0%
</TABLE>
13<PAGE>
RESULTS OF OPERATION
CNB Corporation experienced earnings for the three-month period ended
June 30, 1997 and 1996 of $1,152 and $956, respectively, resulting in a
return on average assets of 1.23% and 1.12% and a return on average
stockholders' equity of 12.83% and 11.60%.
CNB Corporation experienced earnings for the six-month period ended June 30,
1997 and 1996 of $2,265 and $1,883, respectively, resulting in a return on
average assets of 1.24% and 1.12% and a return on average stockholders'
equity of 12.99% and 11.50%.
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 $34,776 or 10.1% from
$343,778 at June 30, 1996 to $378,554 at June 30, 1997. The following table
sets forth the financial highlights for the three-month and six-month periods
ending June 30, 1997 and June 30, 1996:
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
1997 1996 (Decrease) 1997 1996 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Net interest income after
provision for loan losses 3,732 3,332 12.0% 7,269 6,501 11.8%
Income before income taxes 1,864 1,454 28.2 3,580 2,831 26.5
Net Income 1,152 956 20.5 2,265 1,883 20.3
Per Share 2.40 2.01 19.4 4.73 3.95 19.7
Cash dividends declared 0 0 - 0 0 -
Per Share 0 0 - 0 0 -
Total assets 378,554 343,778 10.1% 378,554 343,778 10.1%
Total deposits 303,799 267,425 13.6 303,799 267,425 13.6
Loans, net of unearned income 206,711 171,061 20.8 206,711 171,061 20.8
Investment securities and
securities available for
sale 130,918 140,651 (6.9) 130,918 140,651 (6.9)
Stockholders' equity 36,834 33,268 10.7 36,834 33,268 10.7
Book value per share 76.89 69.70 10.3 76.89 69.70 10.3
Ratios (1):
Annualized return on average
total assets 1.23% 1.12% 9.8% 1.24% 1.12% 10.7%
Annualized return on average
stockholders' equity 12.83% 11.60% 10.6% 12.99% 11.50% 12.96%
</TABLE>
(1) For the three-month period ended June 30, 1997 and June 30, 1996,
average total assets amounted to $373,364 and $341,544 with average
stockholders' equity totaling $35,903 and $32,957, respectively. For the
six-month period ended June 30, 1997 and June 30, 1996, average total
assets amounted to $365,981 and $336,817 with average stockholders'
equity totaling $34,860 and $32,756, 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 1997 and 1996. 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, 1997 and 1996 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 14.7% increase from $3,515
for the three-month period ended June 30, 1996 to $4,032 for the
three-month period ended June 30, 1997. During the same period, total
fully-tax-equivalent interest income increased by 13.1% from $6,150 to
$6,954 and total interest expense increased by 10.9% from $2,635 to $2,922.
Fully-tax-equivalent net interest income as a percentage of total
earning assets has shown an increase of .21% from 4.42% for the three-month
period ended June 30, 1996 to 4.63% for the three-month period ended June 30,
1997.
Fully-tax-equivalent net interest income showed a 15.7% increase from $6,832
for the six-month period ended June 30, 1996 to $7,902 for the six-month
period ended June 30, 1997. During the same period, total fully-tax-
equivalent interest income increased by 12.2% from $12,142 to $13,622 and
total interest expense increased by 7.7% from $5,310 to $5,720. Fully-tax-
equivalent net interest income as a percentage of total earning assets has
shown an increase of .27% from 4.35% for the six-month period ended June 30,
1996 to 4.62% for the six-month period ended June 30, 1997.
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 6/30/97 Three Months Ended 6/30/96
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 $202,950 $ 4,690 9.24% $168,372 $ 3,888 9.24%
Securities:
Taxable 119,752 1,828 6.11 127,814 1,884 5.90
Tax-exempt 13,542 266 7.86 13,425 274 8.16
Federal funds sold and
securities purchased under
agreement to resell 12,456 170 5.46 8,490 104 4.90
Other earning assets 0 0 - 0 0 -
Total earning assets 348,700 6,954 7.98 318,101 6,150 7.73
Other assets 24,664 23,443
Total assets $373,364 $341,544
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits $241,654 2,509 4.15 $211,590 $ 2,108 3.99
Federal funds purchased and
securities sold under
agreement to repurchase 33,799 395 4.67 42,596 515 4.84
Other short-term borrowings 1,555 18 4.63 1,008 12 4.76
Obligations under mortgages
and capitalized leases 2 0 8.00 9 0 8.00
Total interest-bearing
liabilities $277,010 $ 2,922 4.22 $255,203 $ 2,635 4.13
Noninterest-bearing deposits 58,252 52,575
Other liabilities 2,199 809
Stockholders' equity 35,903 32,957
Total liabilities and
stockholders' equity $373,364 $341,544
Net interest income as a percent
of total earning assets $348,700 $ 4,032 4.63 $318,101 $ 3,515 4.42
(1) Tax-equivalent adjustment
based on a 34% tax rate $ 90 $ 93
Ratios:
Annualized return on average total assets 1.23 1.12
Annualized return on average stockholders' equity 12.83 11.60
Cash dividends declared as a percent of net income 0 0
Average stockholders' equity as a percent of:
Average total assets 9.62 9.65
Average total deposits 11.97 12.48
Average loans, net of unearned income 17.69 19.57
Average earning assets as a percent of
average total assets 93.39 93.14
</TABLE>
16
<PAGE>
CNB Corporation and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
Six Months Ended 6/30/97 Six Months Ended 6/30/96
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 $196,909 $ 9,199 9.34% $163,190 $ 7,596 9.31%
Securities:
Taxable 119,482 3,585 6.00 127,992 3,756 5.87
Tax-exempt 13,747 539 7.84 13,859 562 8.11
Federal funds sold and
securities purchased under
agreement to resell 11,628 299 5.14 8,771 228 5.20
Other earning assets 0 0 - 0 0 -
Total earning assets 341,766 13,622 7.97 313,812 12,142 7.74
Other assets 24,215 23,005
Total assets $365,981 $336,817
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits $237,663 4,875 4.10 $208,990 $ 4,216 4.03
Federal funds purchased and
securities sold under
agreement to repurchase 34,872 810 4.65 43,702 1,065 4.87
Other short-term borrowings 1,396 35 5.01 1,002 29 5.79
Obligations under mortgages
and capitalized leases 3 0 8.00 9 0 8.00
Total interest-bearing
liabilities $273,934 $ 5,720 4.18 $253,705 $ 5,310 4.19
Noninterest-bearing deposits 54,299 49,430
Other liabilities 2,888 926
Stockholders' equity 34,860 32,756
Total liabilities and
stockholders' equity $365,981 $336,817
Net interest income as a percent
of total earning assets $341,766 $ 7,902 4.62 $313,812 $ 6,832 4.35
(1) Tax-equivalent adjustment
based on a 34% tax rate $ 183 $ 191
Ratios:
Annualized return on average total assets 1.24 1.12
Annualized return on average stockholders' equity 12.99 11.50
Cash dividends declared as a percent of net income 0 0
Average stockholders' equity as a percent of:
Average total assets 9.53 9.73
Average total deposits 11.94 12.68
Average loans, net of unearned income 17.70 20.07
Average earning assets as a percent of
average total assets 93.38 93.17
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Three Months Ended June 30, 1997 and 1996
(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
1997 1996 1997 (1) 1996 (1) 1997 (1) 1996 (1) Variance Rate Volume Volume
Earning Assets:
Loans, Net of unearned
income (2) 202,950 168,372 9.24% 9.24% 4,690 3,888 802 - 802 -
Investment securities:
Taxable 119,752 127,814 6.11% 5.90% 1,828 1,884 (56) 67 (119) (4)
Tax-exempt 13,542 13,425 7.86% 8.16% 266 274 (8) (10) 2 -
Federal funds sold and
securities purchased under
agreement to resell 12,456 8,490 5.46% 4.90% 170 104 66 12 48 6
Other earning assets 0 0 - - 0 0 0 - - -
Total Earning Assets 348,700 318,101 7.98% 7.73% 6,954 6,150 804 69 733 2
Interest-bearing Liabilities:
Interest-bearing deposits 241,654 211,590 4.15% 3.99% 2,509 2,108 401 85 300 16
Federal funds purchased and
securities sold under
agreement to repurchase 33,799 42,596 4.67% 4.84% 395 515 (120) (18) (106) 4
Other short-term borrowings 1,555 1,008 4.63% 4.76% 18 12 6 - 6 -
Mortgage indebtedness and
obligations under capital-
ized leases 2 9 8.00% 8.00% 0 0 0 - - -
Total Interest-bearing
Liabilities 277,010 255,203 4.22% 4.13% 2,922 2,635 287 67 200 20
Interest-free Funds
Supporting Earning Assets 71,690 62,898
Total Funds Supporting
Earning Assets 348,700 318,101 3.35% 3.31% 2,922 2,635 287 67 200 20
Interest Rate Spread 3.76% 3.60%
Impact of Non-interest-bearing
Funds on Net Yield on Earning
Assets .87% .82%
Net Yield on Earning Assets 4.63% 4.42% 4,032 3,515
</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, 1997 and 1996
(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
1997 1996 1997 (1) 1996 (1) 1997 (1) 1996 (1) Variance Rate Volume Volume
Earning Assets:
Loans, Net of unearned
income (2) 196,909 163,190 9.34% 9.31% 9,199 7,596 1,603 24 1,570 9
Investment securities:
Taxable 119,482 127,992 6.00% 5.87% 3,585 3,756 (171) 83 (250) (4)
Tax-exempt 13,747 13,859 7.84% 8.11% 539 562 (23) (19) (2) (2)
Federal funds sold and
securities purchased under
agreement to resell 11,628 8,771 5.14% 5.20% 299 228 71 (3) 74 -
Other earning assets 0 0 - - 0 0 0 - - -
Total Earning Assets 341,766 313,812 7.97% 7.74% 13,622 12,142 1,480 85 1,392 3
Interest-bearing Liabilities:
Interest-bearing deposits 237,663 208,990 4.10% 4.03% 4,875 4,216 659 73 577 9
Federal funds purchased and
securities sold under
agreement to repurchase 34,872 43,704 4.65% 4.87% 810 1,065 (255) (48) (215) 8
Other short-term borrowings 1,396 1,002 5.01% 5.79% 35 29 6 (4) 11 (1)
Mortgage indebtedness and
obligations under capital-
ized leases 3 9 8.00% 8.00% 0 0 0 - - -
Total Interest-bearing
Liabilities 273,934 253,705 4.18% 4.19% 5,720 5,310 410 21 373 16
Interest-free Funds
Supporting Earning Assets 67,832 60,171
Total Funds Supporting
Earning Assets 341,766 313,812 3.35% 3.39% 5,720 5,310 410 21 373 16
Interest Rate Spread 3.79% 3.55%
Impact of Non-interest-bearing
Funds on Net Yield on Earning
Assets .83% .80%
Net Yield on Earning Assets 4.62% 4.35% 7,902 6,832
</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>
NET 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 $210 for the three-month period
ended June 30, 1997 and $90 for the three-month period ended June 30, 1996.
Net loan charge-offs/(recoveries) totaled $37 for the three-month period
ended June 30, 1997 and $36 for the same period in 1996.
The provision for possible loan losses was $450 for the six-month period
ended June 30, 1997 and $140 for the six-month period ended June 30, 1996.
Net loan charge-offs/(recoveries) totaled $113 for the six-month period ended
June 30, 1997 and $61 for the same period in 1996.
The reserve for possible loan losses as a percentage of net loans was 1.33%
at June 30, 1997 and 1.38% at June 30, 1996. The increased provision
during the three-month and six-month period ended June 30, 1997 was due to
the increased level of loan growth. Continued low net charge-offs through
the remainder of 1997 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. There
were no security sales during the second quarter of 1996 or during the six
month period ending June 30, 1997. Management sold approximately $2 million
in treasury bonds to fund loan growth and to adjust the Bank's interest
sensitivity position. At June 30, 1997, December 31, 1996, and June 30, 1996
market value appreciation/(depreciation) in the securities portfolio totaled
$98, $202, and $(1,358). As indicated, market value has declined somewhat in
1997 due to rising market interest rates.
Other Income - Other income, net of any gains/losses on security
transactions, increased by 17.8% from $695 for the three-month period ended
June 30, 1996 to $819 for the three-month period ended June 30, 1997.
Other income, net of any gains/losses on security transactions, increased by
14.3% from $1,347 for the six-month period ended June 30, 1996 to $1,539 for
the six-month period ended June 30, 1996.
This increase in the three-month and six-month period ended June 30, 1997 was
due to an increase in deposit account volumes; higher merchant discount
income, and a June 1, 1997 increase in overall service charge rates.
Other Expenses - Other expenses increased by 4.4% from $2,573 for the
three-month period ended June 30, 1996 to $2,687 for the three-month period
ended June 30, 1997. The major components of other expenses are salaries
and employee benefits which increased 4.0% from $1,503 to $1,563; occupancy
expense which decreased 5.4% from $448 to $424; and other operating
expenses which increased by 12.4% from $622 to $699.
Occupany expense has declined as depreciation expense has decreased 8.2% from
$171 during the second quarter of 1996 to $157 for the same period in 1997.
20
<PAGE>
Other Expenses (continued) - Other expenses increased by 3.4% from $5,055 for
the six-month period ended June 30, 1996 to $5,228 for the six-month period
ended June 30, 1997. The major components of other expenses are salaries and
employee benefits which increased 4.8% from $2,934 to $3,076; occupancy
expense which decreased 7.3% from $910 to $844; and other operating expense
which increased by 7.9% from $1,210 to $1,306. Occupancy expense has
declined as depreciation expense has decreased 21.7% from $414 during the
first half of 1996 to $324 for the same period in 1997.
Income Taxes - Provisions for income taxes increased 43.0% from $498 for the
three-month period ended June 30, 1996 to $712 for the three-month period
ended June 30, 1997. Income before income taxes less interest on tax-exempt
investment securities increased by 32.6% from $1,273 for the three-month
period ended June 30, 1996 to $1,688 for the same period in 1997. State tax
liability increased as income before income taxes increased 28.2% from $1,454
to $1,864 during the same period.
Provisions for income taxes increased 38.7% from $948 for the six-month
period ended June 30, 1996 to $1,315 for the six-month period ended June 30,
1997. Income before income taxes less interest on tax-exempt investment
securities increased by 31.1% from $2,460 for the six-month period ended June
30, 1996 to $3,224 for the same period in 1997 and state tax liability
increased as income before income taxes increased 26.5% from $2,831 to $3,580
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 $36,834, $34,496, $32,195, and $28,857 at June
30, 1997, December 31, 1996, December 31, 1995, and December 31, 1994,
representing 9.73%, 10.09%, 9.91%, and 9.71% of total assets, respectively.
At June 30, 1997, 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 March 1995, the FASB issued SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The
statement requires that long-lived assets and certain identified intangibles
to be held and used by an entity be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The statement is effective for the Company for the
fiscal year ending December 31, 1996 and does not have a significant impact
on the Company's financial statements.
In May 1995, the FASB issued SFAS 122, "Accounting For Mortgage Servicing
Rights," which amends SFAS No. 65, "Accounting For Mortgage Banking
Activities." This statement allows the capitalization of servicing-related
costs associated with mortgage loans that are originated for sale, and to
create servicing assets for such loans. Prior to this statement, originated
mortgage servicing rights were generally accorded off-balance sheet
treatment. The statement is effective for the Company for the fiscal year
ending December 31, 1996. The adoption will have no material effect on the
Company's financial condition or results of operations.
The FASB issued SFAS No. 123, "Accounting For Stock-based Compensation," in
October 1995. This statement supersedes APB Opinion No. 25, "Accounting For
Stock Issued to Employees" and established financial accounting and reporting
standards for stock-based employee compensation plans. Those plans include
all arrangements by which employees receive shares of stock or other equity
instruments of the employer or the employer incurs liabilities to employees
in amounts based on the price of the employer's stock. The statement also
applies to transactions in which an entity issued its equity instruments to
acquire goods or services from nonemployees. This pronouncement does not
apply to the Company and therefore will have no effect upon adoption.
In June 1996, the FASB issued SFAS 125 "Accounting For Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." FASB's
objective is to develop consistent accounting standards for such
transactions, including determining when financial assets should be
considered sold and removed from the statement of financial position and when
related revenues and expenses should be recognized. This approach focuses
when analyzing the components of financial asset transfers and requires each
party to a transfer to recognize the financial assets it controls and
liabilities it has incurred and remove such assets from the statement of
financial position when control over them has been relinquished. The
statement is not expected to have a significant impact on the accounting
practices of the Company and is generally effective for transactions entered
into after December 31, 1996.
22
<PAGE>
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 May 13, 1997.
The purpose of the Annual Meeting was to: (1) elect four Directors; (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, 1997; and (3) to amend CNB Corporation's Articles of
Incorporation to increase the authorized number of shares of common stock to
1,500,000.
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 436,140 of the 478,841 shares issued present or represented by
proxy and all shares were voted for the election of the four Directors listed
as management's nominees in the proxy statement; for the ratification of
Elliott, Davis, and Company as the Company's 1997 independent public
accountant; and for the amendment to CNB Corporation's Articles of
Incorporation to increase the authorized number of shares of common stock to
1,500,000.
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
3 Articles of Incorporation of the Company - Filed herewith as
Exhibit 3(a) (pages 25-34).
By-laws of the Company - Filed herewith as Exhibit 3(b) (pages
35-49).
27 Financial Data Schedule - Article 9 Financial Data Schedule for
10-Q for electronic filers (pages 50 and 51).
All other exhibits, the filing of which are required with this Form, are not
applicable.
23
<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, 1997
24
<PAGE>
EXHIBIT 3(a)
ARTICLES OF INCORPORATION
OF
CNB CORPORATION
I, the undersigned, being a person of full age, do make and acknowledge
these Articles of Incorporation (the "Articles") for the purpose of forming
a business corporation under and by virtue of the laws of the State of South
Carolina.
ARTICLE I
The name of the Corporation is CNB Corporation.
ARTICLE II
The purposes for which the Corporation is organized are:
(a) to be a bank holding company and to perform any and all lawful acts
relating to its business as a bank holding company; and (b) to engage in any
other lawful activity for which a corporation may be organized under Title 33
of the Code of Laws of South Carolina.
ARTICLE III
The period of duration of the Corporation shall be perpetual.
ARTICLE IV
The Corporation shall have authority to issue Five Hundred Thousand
(500,000) shares of Common Stock having a par value of Ten Dollars ($10.00)
per share. The total authorized capital stock is 5,000,000.
ARTICLE V
The existence of the Corporation shall begin as of the filing date of
these Articles of Incorporation.
ARTICLE VI
The initial registered office of the Corporation is 1400 Third Avenue,
located in the City of Conway, County of Horry, State of South Carolina and
the name of the initial registered agent at such address is W. Jennings
Duncan.
ARTICLE VII
SECTION 1. The number of directors of the Corporation shall be fixed
from time to time by or pursuant to the By-Laws. The directors shall be
divided into three classes, Class I, Class II and Class III, as nearly equal
in number as possible, Class I to hold office initially for a term expiring
at the annual meeting of shareholders to be held in 1986, Class II to hold
office initially for a term expiring at the annual meeting of shareholders to
be held in 1987, and Class III to hold office initially for a term expiring
at the annual meeting of shareholders to be held in 1988, with the members of
each class to hold office until their successors are elected and qualified.
At each annual meeting of the shareholders of the Corporation, the
successors to the class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their election.
The classification of the Board of Directors pursuant to this Section 1 of
Article VII shall become effective at the first annual meeting of
shareholders in 1985.
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SECTION 2. The number of directors constituting the initial Board of
Directors is one person whose name and address are: T.L. Benson, 1400 Third
Avenue, Conway, South Carolina 29526. The initial director shall serve as
the Board of Directors of the Corporation until the first annual meeting of
shareholders or until his successors are elected and qualified.
SECTION 3. The Board of Directors shall have the power to make, alter,
amend and repeal the By-Laws (except insofar as the By-Laws adopted by the
shareholders shall otherwise provide). Any By-Laws adopted by the directors
under the powers conferred hereby may be altered, amended or repealed by the
directors or by the shareholders. Notwithstanding the foregoing and anything
contained in the Articles of Incorporation to the contrary, Sections 8 and 11
of Article II, Sections 2, 3, 4 and 5 of Article III, Section 5 of Article
IV, and Section 5 of Article IX of the By-Laws shall not be altered, amended
or repealed and no provision inconsistent therewith shall be adopted without
the affirmative vote of the holders of at least 80% of the combined voting
power of the then outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as
a single class.
SECTION 4. Notwithstanding anything contained in these Articles of
Incorporation or the By-Laws to the contrary, the affirmative vote of the
holders of at least 80% of the combined voting power of the outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be required
to amend, alter, adopt any provision inconsistent with, or repeal, this
Article VII or any provision hereof.
ARTICLE VIII
The name and address of the incorporator are:
Name Address
W. Jennings Duncan 1400 Third Avenue
Conway, South Carolina 29526
ARTICLE IX
SECTION 1. VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
A. Higher Vote for Certain Business Combinations. In
addition to any affirmative vote required by law, and except as otherwise
expressly provided in Section 2 of this Article IX:
(i) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter
defined) with (a) any Interested Shareholder (as
hereinafter defined) or (b) any other corporation
(whether or not itself an Interested Shareholder)
which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of
an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate of any
Interested Shareholder of any assets of the Corpo-
ration or any Subsidiary having an aggregate Fair
Market Value (as hereinafter defined) of $10 million
or more; or
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(iii) the issuance or transfer by the Corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or
any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange
for cash, securities or other property (or a combi-
nation thereof) having an aggregate Fair Market Value
of $10 million or more; or
(iv) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of any Interested Share-
holder or any Affiliate of any Interested Share-
holder; or
(v) any reclassification of securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or
otherwise involving an Interested Shareholder) which
has the effect, directly or indirectly, of increasing
the proportionate share of the outstanding shares of any
class of Equity Security (as hereinafter defined) of
the Corporation or any Subsidiary which is directly
or indirectly owned by any Interested Shareholder or
any Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of the
voting power of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (the
"Voting Stock"), voting together as a single class. Such affirmative vote
shall be required notwithstanding the fact that no vote may be required or
that a lesser percentage may be specified by law or otherwise.
B. Definition of "Business Combination." The term
"Business Combination" used in this Article IX shall mean any transaction
which is referred to in any one or more of clauses (i) through (v) of
Paragraph A of this Section 1.
SECTION 2. When Higher Vote is Not Required. The provisions of Section
1 of this Article IX shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such
affirmative vote as is required by law and any other provision of these
Articles if all of the conditions specified in either of the following
paragraphs A and B are met:
A. Approval by Disinterested Directors. The Business
Combination shall have been approved by a majority of the Disinterested
Directors (as hereinafter defined).
B. Price and Procedure Requirements. All of the following
requirements shall have been met:
(i) The aggregate amount of the cash and the
Fair Market Value as of the date of the consummation
of the Business Combination of consideration other
than cash to be received per share by holders of the
Corporation's Common Stock (the "Common Stock") in
such Business Combination shall be at least equal to
the higher of the following:
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(a) (if applicable) the highest per share
(including any brokerage commissions, transfer taxes
soliciting dealers' fees) paid by the Interested
Shareholder for any shares of Common Stock acquired
by it (1) within the two-year period immediately
prior to the first public announcement of the terms
of the proposed Business Combination (the "Announcement
Date") or (2) in the transaction in which it became
an Interested Shareholder, whichever is higher; and
(b) the Fair Market Value per share of
Common Stock on the Announcement Date or on the
date on which the Interested Shareholder became an
Interested Shareholder (such latter date is referred
to in this Article IX as the "Determination Date"),
whichever is higher.
(ii) The consideration to be received by holders
of Common Stock in such Business Combination shall
be in cash or in the same form as the Interested
Shareholder has previously paid for shares of Common
Stock. If the Interested Shareholder has paid for
shares of Common Stock with varying forms of consider-
ation, the form of consideration for shares of Common
Stock in such Business Combination shall be either
cash or the form used to acquire the largest number
of shares of Common Stock previously acquired by it.
The price determined in accordance with paragraph
B(i) of this Section 2 shall be subject to appropriate
adjustment in the event of any stock dividend, stock
split, combination of shares or similar event.
(iii) After such Interested Shareholder has
become an Interested Shareholder and prior to the
consummation of such Business Combination: (a)
there shall have been (1) no reduction in the annual
rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the
Disinterested Directors, and (2) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of the Common Stock,
unless the failure so to increase such annual rate
is approved by a majority of the Disinterested Directors;
and (b) such Interested Shareholder shall have not
become the beneficial owner of any additional shares
of the Common Stock except as part of the transaction
which results in such Interested Shareholder becoming
an Interested Shareholder.
(iv) After such Interested Shareholder has become
an Interested Shareholder, such Interested Shareholder
shall not have received the benefit, directly or
indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax
advantages provided by the Corporation, whether in
anticipation of or in connection with such Business
Combination or otherwise.
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(v) A proxy or information statement describing
the proposed Business Combination and complying with
the requirements of the Securities Exchange Act of
1934 and the rules and regulations thereunder (or
any subsequent provisions replacing such Act, rules
or regulations) shall be mailed to shareholders of
the Corporation at least 30 days prior to the
consummation of such Business Combination (whether
or not such proxy or information statement is
required to be mailed pursuant to such Act or
subsequent provisions).
SECTION 3. Certain Definitions. For the purpose of this Article IX:
A. A "person" shall mean any individual, firm,
corporation or other entity.
B. "Interested Shareholder" shall mean any person (other
than the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or
indirectly, of 5% or more of the voting power of
the outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at
any time within the two-year period immediately
prior to the date in question was the beneficial
owner, directly or indirectly, of 5% or more of the
voting power of the then outstanding Voting Stock;
or
(iii) is an assignee of or has otherwise
succeeded to any shares of Voting stock which were
at any time within the two-year period immediately
prior to the date in question beneficially owned by
any Interested Shareholder, if such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving
a public offering within the meaning of the Securities
Act of 1933.
C. A person shall be a "beneficial owner" of any Voting
Stock:
(i) which such person or any of its Affiliates or
Associates (as hereinafter defined beneficially owns
directly or indirectly; or
(ii) which such person or any of its Affiliates
or Associates has (a) the right to acquire (whether
such right is exercisable immediately or only after
the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise
of conversion rights, exchange rights, warrants or
options, or otherwise, or (b) the right to vote
pursuant to any agreement, arrangement or under-
standing; or
(iii) which is beneficially owned, directly or
indirectly, by any other person with which such person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Voting Stock.
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D. For the purpose of determining whether a person is an
Interested Shareholder pursuant to paragraph B of this Section 3, the number
of shares of Voting Stock deemed to be outstanding shall include shares
deemed owned through application of paragraph C of this Section 3 but shall
not include any other shares of Voting Stock which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
E. "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
January 1, 1985.
F. "Subsidiary" means any corporation of which a
majority of any class of Equity Security is owned, directly or indirectly, by
the Corporation, provided, however, that for the purposes of the definition
of Interested Shareholder set forth in paragraph B of this Section 3, the
term "Subsidiary" shall mean only a corporation of which a majority of each
class of Equity Security is owned, directly or indirectly, by the
Corporation.
G. "Disinterested Director" means any member of the
Board of Directors who is unaffiliated with the Interested Shareholder and
was a member of the Board of Directors prior to the time that the Interested
Shareholder became an Interested Shareholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested Shareholder
and is recommended to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board of Directors.
H. "Equity Security" shall have the meaning ascribed to
such term in Section 3(a)(11) of the Securities Exchange Act of 1934, as in
effect on January 1, 1985.
I. "Fair Market Value" means: (i) in the case of stock,
the highest closing sale price during the 30-day period immediately preceding
the date in question of a share of such stock on the Composite Tape for New
York Stock Exchange -- Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in
use, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the Board of
Directors in good faith; and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in question as
determined by the Board of Directors in good faith.
J. In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to be
received" as used in paragraph B(i) of Section 2 of this Article IX shall
include the shares of Common Stock retained by the holders of such shares.
SECTION 4. Powers of the Board of Directors. A majority of the
directors shall have the power and duty to determine for the purpose of this
Article IX, on the basis of information known to them after reasonable
inquiry, (A) whether a person is an Interested Shareholder, (B) the number
of shares of Voting Stock beneficially owned by any person, (C) whether a
person is an Affiliate or Associate of another, (D) whether the assets which
are the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the corporation in any
Business Combination has, an aggregate Fair Market Value of $10 million or
more. A majority of the directors shall have the further power to interpret
all of the terms and provisions of this Article IX.
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SECTION 5. No Effect on Fiduciary Obligations of Interested
Shareholders. Nothing contained in this Article IX shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
SECTION 6. Amendment, Repeal, etc. Notwithstanding any other provisions
of these Articles of Incorporation or the By-Laws (and notwithstanding the
fact that a lesser percentage may be specified by law, these Articles of
Incorporation or the By-Laws) the affirmative vote of the holders of 80% or
more of the outstanding Voting Stock, voting together as a single class,
shall be required to amend or repeal, or adopt any provisions inconsistent
with, this Article IX or any provision hereof.
ARTICLE X
SECTION 1. Any direct or indirect purchase or other acquisition by the
Corporation of any Equity Security (as hereinafter defined) of any class from
any Interested Security holder (as hereinafter defined) who has beneficially
owned such securities for less than two years prior to the date of such
purchase or any agreement in respect thereof shall, except as hereinafter
expressly provided, require the affirmative vote of the holders of a least a
majority of the voting power of the then outstanding shares of capital stock
of the corporation entitled to vote generally in the election of directors
(the "Voting Stock"), excluding Voting Stock beneficially owned by such
Interested Securityholder, voting together as a single class. Such
affirmative vote shall be required notwithstanding the fact that no vote may
be required or that a lesser percentage may be specified by law or otherwise,
but no such affirmative vote shall be required with respect to any purchase
or other acquisition of securities made as part of a tender or exchange offer
by the Corporation to purchase securities of the same class made on the same
terms to all holders of such securities and complying with the applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder (or any subsequent provisions replacing such Act,
rules or regulations).
SECTION 2. Certain Definitions. For the purposes of this Article X:
A. A "person" shall mean any individual, firm, corporation or other
entity.
B. "Interested Securityholder" shall mean any person (other than the
Corporation or any corporation of which a majority of any class of Equity
Security is owned, directly or indirectly, by the Corporation) who or which:
(i) is the beneficial owner, directly or indirectly, of 5% or more
of the class of securities to be acquired; or
(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 5% or more of the class of
securities to be acquired; or
(iii) is an assignee or has otherwise succeeded to any shares of the
class of securities to be acquired which were at any time within the
two-year period immediately prior to the date in question beneficially
owned by an Interested Securityholder,if such assignment or succession
shall have occurred in the course of a transaction or transactions not
involving a public offering within the meaning of the Securities Act of
1933.
C. A person shall be a "beneficial owner" of any security of any class
of the corporation:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
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(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (b) any right to
vote pursuant to any agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any security of
any class of the Corporation.
D. For the purposes of determining whether a person is an Interested
Securityholder pursuant to paragraph B of this Section 2, the relevant class
of securities outstanding shall be deemed to comprise all such securities
deemed owned through application of paragraph C of this Section 2, but shall
not include other securities of such class which may be issuable pursuant to
any agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on January 1, 1985.
F. "Equity Security" shall have the meaning ascribed to such term in
Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
January 1, 1985.
ARTICLE XI
No holder of any stock of the Corporation shall be entitled as such, as
a matter of right, to subscribe for or purchase any part of any new or
additional issue of stock of any class whatsoever of the Corporation, or of
securities convertible into stock of any class whatsoever, whether now or
hereafter authorized, or whether issued for cash or other consideration or by
way of dividend.
ARTICLE XII
No holder of any class of the shares of capital stock of the Corporation
shall be entitled to cumulative voting rights in the election of directors or
the election of any class of directors of the Corporation. The affirmative
vote of the holders of 80% of the voting power of the then outstanding shares
of capital stock of the Corporation entitled to vote generally in the
election of directors shall be required to amend or repeal, or adopt any
provisions inconsistent with, this Article XII or any provision hereof.
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STATE OF SOUTH CAROLINA )
COUNTY OF HORRY )
The undersigned W. Jennings Duncan does hereby certify that he is
the incorporator of CNB Corporation and is authorized to execute this
verification; that the undersigned does hereby certify that he has read the
foregoing document, understands the meaning and purport of the statements
therein contained and the same are true to the best of his information and
belief.
W. Jennings Duncan
W. JENNINGS DUNCAN, Incorporator
CERTIFICATE OF ATTORNEY
I, William R. Jamison, an attorney licensed to practice in the
State of South Carolina, certify that the corporation, to whose articles of
incorporation this certificate is attached, has complied with the
requirements of Chapter 7 of Title 33 of the Code of Laws of South Carolina
(1976) relating to the organization of corporations, and that in my opinion,
the corporation is organized for a lawful purpose.
March 8, 1985 William R. Jamison
William R. Jamison
1310 Second Avenue
Conway, South Carolina 29526
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STATE OF SOUTH CAROLINA ) MOTION FOR APPROVAL OF COMMON
) STOCK INCREASE AMENDMENT
COUNTY OF HORRY ) TO ARTICLES OF INCORPORATION
I hereby move for the adoption by CNB Board of Directors of the
following resolution:
RESOLVED that CNB Corporation's Articles of Incorporation be amended to
increase the authorized number of shares of common stock to 1,500,000. The
additional shares of Common Stock for which authorization is sought would be
identical to the shares of Common Stock currently authorized. Holders of
Common Stock do not have preemptive rights to subscribe to additional shares
of Common Stock which may be issued.
The shares of authorized Common Stock available for issuance will be
issued from time to time for such purposes and consideration as the Board may
approve such as the payment of stock dividends.
Any further RESOLVED, that this amendment to the Articles of
Incorporation be recommended for approval at the 1997 Annual Meeting of
Shareholders, provided, further, that in order for said Resolution to pass so
as to effectively amend the Articles of Incorporation, the affirmative vote
of the holders of 80% of the outstanding shares of common stock as of the
record date is required for approval and adoption of this amendment.
BY:Willis J. Duncan
Willis J. Duncan
Chairman of the Board of Directors
DATED: FEBRUARY 11, 1997
I hereby certify that at the Annual Meeting of the Shareholders of the CNB
Corporation held May 13, 1997, the above Amendment was approved and adopted
by the affirmative vote of the holders of 91.08% of the outstanding shares of
common stock as of record date, May 2, 1997.
Verta Lee Chestnut
Verta Lee Chestnut, Secretary of Annual Meeting
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EXHIBIT 3(b)
INDEX OF BY-LAWS
of
CNB CORPORATION
ARTICLE I
OFFICES
Section 1. Principal Office
Section 2. Registered Office
Section 3. Other Offices
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting
Section 2. Substitute Annual Meeting
Section 3. Special Meetings
Section 4. Place of Meeting
Section 5. Notice of Meeting
Section 6. Closing of Transfer Books or Fixing of
Record Date
Section 7. Voting Lists
Section 8. Quorum
Section 9. Proxies
Section 10. Voting of Shares
Section 11. Votes Required
Section 12. Informal Action by Shareholders
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers
Section 2. Number, Tenure and Qualifications
Section 3. Nominations
Section 4. Newly Created Directorships and
Vacancies
Section 5. Removal
Section 6. Chairman of Board
Section 7. Compensation
ARTICLE IV
MEETINGS OF DIRECTORS
Section 1. Regular Meetings
Section 2. Special Meetings
Section 3. Notice
Section 4. Waiver of Attendance
Section 5. Quorum
Section 6. Manner of Acting
Section 7. Presumption of Assent
Section 8. Informal Action by Directors
ARTICLE V
EXECUTIVE COMMITTEE
Section 1. Creation
Section 2. Vacancy
Section 3. Removal
Section 4. Minutes
Section 5. Responsibility of Directors
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ARTICLE VI
OFFICERS
Section 1. Officers of the Corporation
Section 2. Election and Term
Section 3. Compensation of Officers
Section 4. Removal of Officers and Agents
Section 5. Bonds
Section 6. President
Section 7. Vice-Presidents
Section 8. Secretary
Section 9. Assistant Secretaries
Section 10. Treasurer
Section 11. Assistant Treasurers
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts
Section 2. Loans
Section 3. Checks and Drafts
Section 4. Deposits
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFERS
Section 1. Certificates for Shares
Section 2. Transfer of Shares
Section 3. Lost Certificate
Section 4. Holder of Record
Section 5. Treasury Shares
ARTICLE IX
GENERAL PROVISIONS
Section 1. Dividends
Section 2. Seal
Section 3. Waiver of Notice
Section 4. Fiscal Year
Section 5. Amendments
ARTICLE X
INDEMNIFICATION
Section 1. Coverage
Section 2. Payment
Section 3. Evaluation
Section 4. Consideration
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BY-LAWS
OF
CNB CORPORATION
ARTICLE I.
OFFICES
Section 1. Principal Office. The principal office of the corporation
shall be located in Conway, South Carolina.
Section 2. Registered Office. The registered office of the corporation
required by law to be maintained in the State of South Carolina
may be, but need not be, identical with the principal office
in the State of South Carolina. The address of the registered
office may be changed from time to time by the Board of
Directors.
Section 3. Other Offices. The corporation may have offices at such
places, either within or without the State of South Carolina,
as the Board of Directors may designate or as the business of
the corporation may require from time to time.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the second Tuesday in the month of March in each
year, beginning with the year 1985, at such time as the Board
of Directors shall fix each year, for the purpose of electing
directors and for the transaction of such other business as may
come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday in the State of South
Carolina, such meeting shall be held on the next succeeding
business day.
Section 2. Substitute Annual Meeting. If the annual meeting shall not be
held on the day designated by these By-Laws for the annual
meeting of shareholders, or at any adjournment thereof, then
a substitute annual meeting may be called in accordance with
Section 3 of this Article and the meeting so called may be
designated as the annual meeting.
Section 3. Special Meetings. Except as otherwise required by law, special
meetings of the shareholders may be called by the Chairman of
the Board, the President, the Board of Directors pursuant to
a resolution approved by a majority of the entire Board of
Directors or, at the written request of the holders of not less
than one-tenth of all shares entitled to vote at the meeting.
Section 4. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of South Carolina,
as the place of meeting for any annual meeting or for any
annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either
within or without the State of South Carolina as the place for
the holding of such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting
shall be the principal office of the corporation in the State
of South Carolina.
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Section 5. Notice of Meeting. Written or printed notice stating the day,
time and place of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten nor more than
fifty days before the date of the meeting, either personally
or by mail, by or at the meeting, either personally or by mail,
by or at the direction of Chairman of the Board, the President,
the Secretary, or the officer or persons calling the meeting,
to each shareholder of record entitled to vote at such meeting.
If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the
shareholder at his address as it appears on the record of
shareholders of the corporation, with postage thereon prepaid.
In addition to the foregoing, notice of a substitute annual
meeting shall state that the annual meeting was not held on the
day designated by these By-Laws and that such substitute annual
meeting is being held in lieu of and is designated as such
annual meeting.
When a meeting is adjourned for thirty days or more, notice of
the adjourned meeting shall be given as in the case of an
original meeting. When a meeting is adjourned for less than
thirty days in any one adjournment, no notice need be given of
the time and place of the adjourned meeting or of the business
to be transacted thereat other than by announcement at the
meeting at which the adjournment is taken.
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors may
provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty days.
If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at
a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of
Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to
be not more than fifty days and, in the case of a meeting of
shareholders, not less than ten full days prior to the date on
which the particular action, requiring such determination of
shareholders, is to be taken.
If the stock transfer books are not closed and no record date
is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders, or
shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment
thereof except where the determination has been made through
the closing of the stock transfer books and the stated period
of closing has expired.
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Section 7. Voting Lists. The Secretary shall make, at least ten days
before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting, or any
adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list,
for a period of ten days prior to such meeting, shall be kept
on file at the registered office of the corporation and shall
be subject to inspection by any shareholder at any time during
usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole
time of the meeting.
Section 8. Quorum. Except as otherwise required by law, the Articles of
Incorporation or these By-Laws, the holders of not less than
one-third of the outstanding shares of the corporation entitled
to vote, represented in person or by proxy, shall constitute
a quorum at a meeting of shareholders and the act of the
majority of such quorum shall be deemed the act of the
shareholders; provided, however, that at any substitute annual
meeting of the shareholders called in accordance with Article
II, Sections 2 and 3 hereof, the shares of the corporation
entitled to vote there represented, in person or by proxy,
shall constitute a quorum and all matters shall be determined
by a majority of votes cast at such meeting.
The shareholders at a meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
In the absence of a quorum at the opening of any meeting of
shareholders, such meeting may be adjourned from time to time
by a vote of the majority of the shares voting on the motion
to adjourn; and at any adjourned meeting at which a quorum is
present, any business may be transacted which might have been
transacted at the original meeting.
Section 9. Proxies. Shares may be voted either in person or by one or
more agents authorized by a written proxy executed by the
shareholder or by his duly authorized attorney in fact. Except
as otherwise permitted by law, no proxy shall confer authority
to vote at any meeting of the shareholders other than the next
meeting, or any adjournment thereof, to be held after the date
on which the proxy was first sent or given.
Section 10. Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders. Shares of its own stock
owned by the corporation, directly or indirectly, through a
subsidiary corporation or otherwise, or held directly or
indirectly in a fiduciary capacity by it or by a subsidiary
corporation, shall not be voted at any meeting and shall not
be counted in determining the total number of outstanding
shares at a given time entitled to vote.
Section 11. Votes Required. The vote of a majority of the shares voted at
a meeting of shareholders, duly held at which a quorum is
present, shall be sufficient to take or authorize action upon
any matter which may properly come before the meeting except
as otherwise provided by law, by the Articles of Incorporation
or by these By-Laws. Any provision in these By-Laws
prescribing the vote required for any purpose as permitted by
law may not itself be amended by a vote less than the vote
prescribed therein.
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<PAGE>
Section 12. Informal Action by Shareholders. Any action which may be taken
at a meeting of the shareholders may be taken without a meeting
if a consent in writing setting forth the action so taken,
shall be signed by the holders of all outstanding shares
entitled to vote upon such action at a meeting, or their
attorneys-in-fact or a proxy holder thereof, and filed with the
Secretary as part of the corporate records.
ARTICLE III.
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 2. Number, Tenure, and Qualifications. The number of directors
constituting the Board of Directors shall be fixed from time
to time by the Board of Directors but shall not be less than
five. The directors shall be classified as provided in the
Articles of Incorporation, with respect to the time for which
they severally hold office. At each annual meeting of
shareholders, the successors of the class of directors whose
terms expires at that meeting shall be elected to hold office
for a term expiring at the annual meeting of shareholders held
in the third year following the year of their election.
The directors shall be elected at the annual or adjourned
annual meeting of the shareholders (except as herein otherwise
provided for the filling of vacancies or the creation of
directorships) and each director shall hold office until his
death, resignation, retirement, removal, disqualification, or
his successor is elected and qualified.
Except as otherwise required by law, Directors need not be
residents of the State of South Carolina or shareholders of the
corporation.
Section 3. Nominations. Nominations for the election of directors may be
made by the Board of Directors or a committee appointed by the
Board of Directors or by any shareholder entitled to vote in
the election of directors generally. However, any shareholder
entitled to vote in the election of directors generally may
nominate one or more persons for election as directors at a
meeting only if written notice of such shareholder's intent to
make such nomination or nominations has been given, either by
personal delivery or by United States mail, postage prepaid,
to the Secretary of the corporation not later than (i) with
respect to an election to be held at an annual meeting of
shareholders, ninety days prior to the anniversary date of the
immediately preceding annual meeting, and (ii) with respect to
an election to be held at a special meeting of shareholders for
the election of directors, the close of business on the tenth
day following the date on which notice of such meeting is first
given to shareholders. Each such notice shall set forth: (a)
the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b)
a representation that the shareholder is a holder of record of
stock of the corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder;
40
<PAGE>
(d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities
and Exchange Commission; and (e) the consent of each nominee
to serve as a director of the corporation if so elected. The
presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the
foregoing procedure.
Section 4. Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal or other
cause shall be filled solely by the affirmative vote of a
majority of the remaining directors then in office, even though
less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold
office for the remainder of the full term of the class of
directors in which directorship was created or the vacancy
occurred and until such director's successor shall have been
elected and qualified. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of
any incumbent director.
Section 5. Removal. Any director may be removed from office, without
cause, only by the affirmative vote of the holders of 80% of
the combined voting power of the then outstanding shares of
stock entitled to vote generally in the election of directors,
voting together as a single class.
Section 6. Chairman of Board. There may be a Chairman of the Board of
Directors elected by the directors from their number at the
annual meeting of the Board of Directors. The Chairman shall
preside at all meetings of the Board of Directors and perform
such other duties as may be directed by the Board.
Section 7. Compensation. The Board of Directors may compensate directors
for their services as such and may provide for the payment of
all expenses incurred by directors in attending meetings of the
Board.
ARTICLE IV.
MEETINGS OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this By-Law immediately
after, and at the same place as, the annual meeting of
shareholders. The Board of Directors may provide, by
resolution, the time and place, either within or without the
State of South Carolina for the holding of additional regular
meetings without other notice than such resolution.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the President or
any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place,
either within or without the State of South Carolina, as the
place for holding any special meeting of the Board of Directors
called by them.
Section 3. Notice. Notice of special meetings of the Board of Directors
shall be given to each director not less than three days before
the date of the meeting by any usual means of communications.
41
<PAGE>
Except as otherwise required by law, neither the business
transacted at, nor the purposes of, any regular or special
meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 4. Waiver of Attendance. Attendance of a director at a meeting of
the Board of Directors shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 5. Quorum. Except as otherwise provided by law or these By-Laws,
the presence of one-third of the entire Board of Directors
shall be necessary and sufficient to constitute a quorum for
the transaction of business.
Section 6. Manner of Acting. Except as otherwise provided in these By-
Laws, the act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 7. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action
on any corporate matter is taken shall be presumed to have
assented to the action taken unless his contrary vote is
recorded or his dissent is otherwise entered in the minutes of
the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent
by registered mail to the Secretary immediately after the
adjournment of the meeting. Such right to dissent shall not
apply to a director who voted in favor of such action.
Section 8. Informal Action by Directors. Action taken by a majority of
the Board of Directors, or of the members of the Executive
Committee or other committees appointed pursuant to Article V
hereof, then holding office without a meeting is nevertheless
Board or Executive Committee action if written consent to the
action in question is signed by all the directors or members
of the Executive Committee or other committees, as the case may
be, and filed with the minutes of the proceedings of the Board,
whether done before or after the action so taken.
Any one or more directors may participate in a meeting of the
Board or the Executive Committee or other committee by means
of a conference telephone or similar communications device
which allows all persons participating in the meeting to hear
each other, and such participation in a meeting shall be deemed
presence in person at such meeting.
ARTICLE V.
EXECUTIVE COMMITTEE
Section 1. Creation. The Board of Directors, by resolution adopted by a
majority of the directors, may designate one or more directors
to constitute an Executive Committee or members of other
committees, to the extent provided in such resolution, shall
have and may exercise all of the authority of the Board of
Directors to the extent permitted by applicable law.
Section 2. Vacancy. Any vacancy occurring in an Executive Committee or
other committee shall be filled by a majority of the directors
at a regular or special meeting of the Board of Directors.
42
<PAGE>
Section 3. Removal. Any member of an Executive Committee or other
committee may be removed at any time with or without cause by
a majority of the directors.
Section 4. Minutes. The Executive Committee shall keep regular minutes of
its proceedings and report the same to the Board when required.
Section 5. Responsibility of Directors. The designation of an Executive
Committee or other committees and the delegation thereto of
authority shall not operate to relieve the Board of Directors,
or any member thereof, of any responsibility or liability
imposed upon it or him by law.
Any resolutions adopted or other action taken by such Executive
Committee or other committee within the scope of the authority
delegated to it by the Board of Directors shall be deemed for
all purposes to be adopted or taken by the Board of Directors.
If action taken by an Executive Committee or other committee
is not thereafter formally considered by the Board, a director
may dissent from such action by filing his written objection
with the Secretary with reasonable promptness after learning
of such action.
ARTICLE VI.
OFFICERS
Section 1. Officers of the Corporation. The officers of the corporation
shall consist of a President, a Secretary, a Treasurer and such
Vice-Presidents, Assistant Secretaries, Assistant Treasurers,
and other officers as the Board of Directors may from time to
time elect. Any two or more offices may be held by the same
person who may act in more than one capacity where action by
two or more officers is required.
Section 2. Election and Term. The officers of the corporation shall be
elected by the Board of Directors and each officer shall hold
office until his death, resignation, retirement, removal,
disqualification or his successor shall have been elected and
qualified.
Section 3. Compensation of Officers. The compensation of all officers
of the corporation shall be fixed by the Board of Directors and
no officer shall serve the corporation in any other capacity
and receive compensation therefor unless such additional
compensation be authorized by the Board of Directors.
Section 4. Removal of Officers and Agents. Any officer or agent elected
or appointed by the Board of Directors may be removed by the
Board of Directors whenever in its judgment the best interests
of the corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of
the person removed.
Section 5. Bonds. The Board of Directors may by resolution require any
officer, agent, or employee of the corporation to give bond to
the corporation, with sufficient sureties, conditioned upon the
faithful performance of the duties of his respective office or
position, and to comply with such other conditions as may from
time to time be required by the Board of Directors.
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<PAGE>
Section 6. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the
Board of Directors, shall in general supervise and control all
of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the shareholders.
He shall sign, with the Secretary, an Assistant Secretary, or
any other proper officer of the corporation thereunto
authorized by the Board of Directors, certificates for shares
of the corporation, any deeds, mortgages, bonds, contracts, or
other instruments which the Board of Directors has authorized
to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors
or by these By-Laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed
or executed; and in general shall perform all duties incident
to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 7. Vice Presidents. In the absence of the President or in the
event of his death, inability or refusal to act, the Vice
Presidents who are also current members of the Board of
Directors in the order of their length of uninterrupted service
as members of the Board of Directors, unless otherwise
determined by the Board of Directors, shall perform the duties
of the President, and when so acting shall have all the powers
of and be subject to all the restrictions upon the President.
Any Vice President may sign, with the Secretary or an Assistant
Secretary, certificates for shares of the corporation; and
shall perform such other duties as from time to time be
assigned to him by the President or Board of Directors.
Section 8. Secretary. The Secretary shall: (a) attend all meetings of
the shareholders and of the Board of Directors, keep the
minutes of such meetings in one or more books provided for that
purpose and perform like duties for the standing committees
when required; (b) see that all notices are duly given in
accordance with the provisions of these By-Laws or as required
by law; (c) be custodian of the corporate records and of the
seal of the corporation and see that the seal of the
corporation is affixed to all documents the execution of which
on behalf of the corporation under its seal is duly authorized;
(d) keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such
shareholder; (e) have general charge of the stock transfer
books of the corporation, and (f) in general perform all duties
incident to the office of secretary and such other duties as
from time to time may be assigned to him by the Board of
Directors or by the President, under whose supervision he shall
be.
The Secretary shall keep or cause to be kept in the State of
South Carolina at the corporation's principal place of business
a record of the corporation's shareholders, giving the names
and addresses of all shareholders and the number and class of
shares held by each.
Section 9. Assistant Secretaries. In the absence of the Secretary or in
the event of his death, inability or refusal to act, any
Assistant Secretaries in the order of their length of service
as Assistant Secretary, unless otherwise determined by the
Board of Directors, shall perform the duties of the Secretary,
and when so acting shall have all the powers of and be subject
to all the restrictions upon the Secretary. They shall perform
such other duties as may be assigned to them by the Secretary,
by the President, or by the Board of Directors.
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<PAGE>
Any Assistant Secretary may sign, with the President or a Vice
President, certificates for shares of the corporation.
Section 10. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the
corporation; receive and give receipts for money due and
payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such
depositories as shall be selected in accordance with the
provisions of Article VII Section 4 of these By-Laws; and (b)
in general perform all of the duties incident to the office of
treasurer and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
The Treasurer shall prepare, or cause to be prepared, a true
statement of the corporation's assets and liabilities as of the
close of each fiscal year, all in reasonable detail, which
statement shall be made and filed at the corporation's
registered office or principal place of business in the State
of South Carolina within four months after the end of such
fiscal year and thereat kept available for a period of at least
ten years. Such statement shall include, when applicable, a
statement of the then current conversion ratio of any
outstanding securities and a statement of the number of shares
covered by any outstanding options and the price at which the
options are exercisable.
Section 11. Assistant Treasurers. In the absence of the Treasurer or in
the event of his death, inability or refusal to act, the
Assistant Treasurers in the order of their length of service
as Assistant Treasurer, unless otherwise determined by the
Board of Directors, shall perform the duties of the Treasurer,
and when so acting shall have all the powers of and be subject
to all the restrictions upon the Treasurer. They shall perform
such other duties as may be assigned to them by the Treasurer,
by the President, or by the Board of Directors.
ARTICLE VII.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or
execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or
confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued
in its name unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to
specific instances.
Section 3. Checks and Drafts. All checks, drafts or other orders for the
payment of money, issued in the name of the corporation, shall
be signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the
corporation in such depositories as the Board of Directors may
select.
45
<PAGE>
ARTICLE VIII.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of
the corporation shall be in such form as shall be determined
by the Board of Directors. The corporation shall issue and
deliver to each shareholder certificates representing all fully
paid shares owned by him. Certificates shall be signed by the
President or a Vice-President and by the Secretary or an
Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby
are issued, with the number and class of shares and the date
of issue, shall be entered on the stock transfer books of the
corporation.
Section 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the
corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority
to transfer, or by his attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary, and on
surrender for cancellation of the certificate for such shares.
Section 3. Lost Certificate. The Board of Directors may direct a new
certificate to be issued in place of any certificate
theretofore issued by the corporation claimed to have been lost
or destroyed, upon receipt of an affidavit of such fact from
the person claiming the certificate of stock to have been lost
or destroyed. When authorizing such issue of a new
certificate, the Board of Directors shall require that the
owner of such lost or destroyed certificate, or his legal
representative, give the corporation a bond in such sum as the
Board may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate
claimed to have been lost or destroyed, except where the Board
of Directors by resolution finds that in the judgment of the
directors the circumstances justify omission of a bond.
Section 4. Holder of Record. The corporation may treat as an absolute
owner of shares the person in whose name the shares stand of
record on its books just as if that person had full competency,
capacity, and authority to exercise all rights of ownership
irrespective of any knowledge or notice to the contrary or any
description indicating a representative, pledge or other
fiduciary relation or any reference to any other instrument or
to the rights of any other person appearing upon its records
or upon the share certificate except that any person furnishing
to the corporation proof of his appointment as a fiduciary
shall be treated as if he were a holder of record of its
shares.
Section 5. Treasury Shares. Treasury shares of the corporation shall
consist of such shares as have been issued and thereafter
acquired but not cancelled by the corporation. Treasury shares
shall not carry voting or dividend rights except any rights in
share dividends paid on the treasury shares in accordance with
applicable laws.
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<PAGE>
ARTICLE IX.
GENERAL PROVISIONS
Section 1. Dividends. The Board of Directors may from time to time
declare, and the corporation may pay, dividends on its
outstanding shares in cash, property or its own shares pursuant
to law and subject to the provisions of its charter.
Section 2. Seal. The corporate seal of the corporation shall consist of
two concentric circles between which is the name of the
corporation and in the center of which is inscribed SEAL; and
such seal, as impressed on the margin hereof, is hereby adopted
as the corporate seal of the corporation.
Section 3. Waiver of Notice. Whenever any notice is required to be given
to any shareholder or director by law, by the Articles of
Incorporation or by these By-Laws, a waiver thereof in writing
signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be
equivalent to the giving of such notice.
Section 4. Fiscal Year. The fiscal year of the corporation shall be fixed
by the Board of Directors.
Section 5. Amendments. Subject to the provisions of the Articles
of Incorporation, these By-Laws may be amended, altered or
repealed at any regular meeting of the shareholders (or at any
special meeting thereof called for that purpose) by a majority
vote of the shares represented and entitled to vote at such
meeting. Subject to the laws of the State of South Carolina,
the Articles of Incorporation and these By-Laws, the Board of
Directors may by majority vote of those present at any meeting
at which a quorum is present amend these By-Laws, or enact such
other By-Laws as in their judgment may be advisable for the
regulation of the conduct of the affairs of the corporation.
ARTICLE X.
INDEMNIFICATION
Section 1. Coverage. Any person who at any time serves or has served as
a director, officer, employee or agent of the corporation, or
in such capacity at the request of the corporation for any
other corporation, partnership, joint venture, trust or other
enterprise, shall have a right to be indemnified by the
corporation to the fullest extent permitted by law against (a)
expenses, including attorneys' fees, actually incurred by him
in connection with any threatened, pending or completed action,
suit or proceedings, whether civil, criminal, administrative
or investigative, and whether or not brought by or on behalf
of the corporation, seeking to hold him liable by reason of the
fact that he is or was acting in such capacity, and (b)
payments made by him in satisfaction of any judgment, money
decree, fine, penalty or settlement for which he may have
become liable in any such action, suit or proceeding.
Section 2. Payment. Expenses incurred by such person may be paid in
advance of the final disposition of such investigation, action,
suit or proceeding upon receipt of an undertaking by or on
behalf of such person to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified
by the corporation under the laws of the State of South
Carolina.
47
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Section 3. Evaluation. The Board of Directors of the corporation shall
take all such action as may be necessary and appropriate to
authorize the corporation to pay the indemnification required
by this Article X, including without limitation, to the extent
needed, making a good faith evaluation of the manner in which
the claimant for indemnity acted and of the amount of indemnity
due him and giving notice to, and obtaining approval by, the
shareholders of the corporation.
Section 4. Consideration. Any person who at any time after the adoption
of this Article X serves or has served in any of the aforesaid
capacities for or on behalf of the corporation shall be deemed
to be doing or to have done so in reliance upon, and as
consideration for, the right of indemnification provided
herein. Such right shall inure to the benefit of the legal
representatives of any such person and shall not be exclusive
of any other rights to which such person may be entitled apart
from the provision of this Article X.
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<PAGE>
Amendment to Bylaws of the C N B Corporation, Conway, South
Carolina, adopted by the Shareholders, April 8, 1986; with
155,124 of 222,113 shares outstanding present or represented
by proxy;
MEETING OF SHAREHOLDERS
ARTICLE II, SECTION I That part which reads, "The Annual
Meeting of shareholders shall be held on the second Tuesday in
the month of March in each year, beginning with the year 1985"
to "The Annual Meeting of Shareholders shall be held each year
on such date as set by the Board of Directors".
ATTEST: Willis J. Duncan
President
Verta Lee Chestnut
Secretary
Certified to be a True and Exact Copy
this 2nd day of March, 1987.
Verta Lee Chestnut
Secretary
49
<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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 15,981
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,350
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62,184
<INVESTMENTS-CARRYING> 68,734
<INVESTMENTS-MARKET> 68,834
<LOANS> 206,711
<ALLOWANCE> 2,707
<TOTAL-ASSETS> 378,554
<DEPOSITS> 303,799
<SHORT-TERM> 35,355
<LIABILITIES-OTHER> 2,566
<LONG-TERM> 0
0
0
<COMMON> 4,791
<OTHER-SE> 32,043
<TOTAL-LIABILITIES-AND-EQUITY> 378,554
<INTEREST-LOAN> 9,199
<INTEREST-INVEST> 3,938
<INTEREST-OTHER> 302
<INTEREST-TOTAL> 13,439
<INTEREST-DEPOSIT> 4,875
<INTEREST-EXPENSE> 5,720
<INTEREST-INCOME-NET> 7,719
<LOAN-LOSSES> 450
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,228
<INCOME-PRETAX> 3,580
<INCOME-PRE-EXTRAORDINARY> 2,265
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,265
<EPS-PRIMARY> 4.73
<EPS-DILUTED> 4.73
<YIELD-ACTUAL> 4.63
<LOANS-NON> 90
<LOANS-PAST> 132
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,104
<ALLOWANCE-OPEN> 2,370
<CHARGE-OFFS> 225
<RECOVERIES> 112
<ALLOWANCE-CLOSE> 2,707
<ALLOWANCE-DOMESTIC> 2,707
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
