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 SECURITIE EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999
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 March 31, 1999 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): (843) 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 March 31, 1999 was 597,321.
<PAGE>
CNB Corporation
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1999, 1
December 31, 1998 and March 31, 1998
Consolidated Statement of Income for the Three Months 2
Ended March 31, 1999 and 1998
Consolidated Statement of Comprehensive Income 3
for the Three Months Ended March 31, 1999 and 1998
Consolidated Statement of Changes in Stockholders' 4
Equity for the Three Months Ended March 31, 1999
and 1998
Consolidated Statement of Cash Flows for the Three Months 5
Ended March 31, 1999 and 1998
Notes to Consolidated Financial Statements 6-13
Item 2. Management's Discussion and Analysis of Financial 14-21
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURE 23
<PAGE>
CNB Corporation and Subsidiary
Consolidated Balance Sheets
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1999 1998 1998
ASSETS:
<S> <C> <C> <C>
Cash and due from banks $ 16,086 $ 17,864 $ 15,683
Interest bearing deposits with banks 0 0 0
Investment Securities 58,876 60,648 63,195
(Fair values of $59,715 at
March 31, 1999, $61,928 at
December 31, 1998, and $63,983
at March 31, 1998)
Securities Available for Sale 82,973 80,582 59,300
(Amortized cost of $82,937 at
March 31, 1999, $79,874 at
December 31, 1998, and $58,874
at March 31, 1998)
Federal Funds sold and securities
purchased under agreement
to resell 37,175 27,100 34,575
Loans:
Gross Loans 239,609 230,099 227,140
Less unearned income (811) (970) (1,089)
Loans, net of unearned income 238,798 229,129 226,051
Less reserve for possible
loan losses (3,199) (3,132) (3,014)
Net loans 235,599 225,997 223,037
Bank premises and equipment 7,326 7,258 6,780
Other assets 7,149 6,910 6,654
Total assets 445,184 426,359 409,224
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing 74,496 66,303 61,743
Interest-bearing 292,610 279,809 266,447
Total deposits 367,106 346,112 328,190
Federal funds purchased and
securities sold under agreement
to repurchase 32,257 32,518 37,098
Other short-term borrowings 1,131 1,148 1,672
Other liabilities 2,394 5,380 3,275
Total liabilities 402,888 385,158 370,235
Stockholders' equity:
Common stock, par value $10 per
share: Authorized 1,500,000 in
1999 and 1998; issued 598,687
1n 1999 and 1998 5,987 5,987 5,987
Surplus 24,545 24,538 24,551
Undivided Profits 11,876 10,448 8,266
Net Unrealized Holding 22 425 255
Gains (Losses) on
Available-For-Sale Securities
Less: Treasury stock (134) (197) (70)
Total stockholders' equity 42,296 41,201 38,989
Total liabilities
and stockholders' equity 445,184 426,359 409,224
</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
March 31,
1999 1998
Interest Income:
<S> <C> <C>
Interest and fees on loans $ 5,097 $ 5,093
Interest on investment securities:
Taxable investment securities 1,929 1,687
Tax-exempt investment securities 180 179
Other securities 0 0
Interest on federal funds sold and securities
purchased under agreement to resell 282 228
Total interest income 7,488 7,187
Interest Expense:
Interest on deposits 2,809 2,742
Interest on federal funds purchased and securities
sold under agreement to repurchase 337 398
Interest on other short-term borrowings 14 26
Total interest expense 3,160 3,166
Net interest income 4,328 4,021
Provision for possible loan losses 150 190
Net interest income after provision for possible
loan losses 4,178 3,831
Other income:
Service charges on deposit accounts 612 590
Gains/(Losses) on securities 0 0
Other operating income 294 226
Total other income 906 816
Other expenses:
Salaries and employee benefits 1,843 1,661
Occupancy expense 389 423
Other operating expenses 730 670
Total operating expenses 2,962 2,754
Income before income taxes 2,122 1,893
Income tax provision 694 657
Net Income 1,428 1,236
Per share data:
Net income per weighted average shares outstanding $ 2.39 $ 2.07
Cash dividend paid per share $ 0 $ 0
Book value per actual number of shares outstanding $ 70.81 $ 65.21
Weighted average number of shares outstanding 597,180 598,098
Actual number of shares outstanding 597,321 597,900
</TABLE>
2
<PAGE>
CNB Corporation and Subsidiary
Consolidated Statements of Comprehensive Income
(All Dollar Amounts, Except Per Share Data, in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1999 1998
<S> <C> <C>
Net Income $1,428 $1,236
Other comprehensive income, net of tax
Unrealized gains/(losses)
on securities:
Unrealized holding gains/(losses) (403) 58
during period
Net Comprehensive Income $1,025 $1,294
</TABLE>
3
<PAGE>
CNB Corporation and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
(All Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
<S> <C> <C>
Common Stock:
($10 par value; 500,000 shares authorized)
Balance, January 1 5,987 5,987
Issuance of Common Stock None None
Balance at end of period 5,987 5,987
Surplus:
Balance, January 1 24,538 24,552
Issuance of Common Stock None None
Gain on sale of treasury stock 7 0
Balance at end of period 24,545 24,551
Undivided profits:
Balance, January 1 10,448 7,030
Net Income 1,428 1,236
Cash dividends declared None None
Balance at end of period 11,876 8,266
Net unrealized holding gains/(losses) on
available-for-sale securities:
Balance, January 1 425 197
Change in net unrealized gains/(Losses) (403) 58
Balance at end of period 22 255
Treasury stock:
Balance, January 1 (197) (49)
Purchase of treasury stock (63) (127)
Reissue of treasury stock 126 106
Balance at end of period (134) (70)
Total stockholders' equity 42,296 38,989
</TABLE>
Note: Columns may not add due to rounding.
4
<PAGE>
CNB CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three-month period ended March 31,
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,428 $ 1,236
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 131 172
Provision for loan losses 150 190
Provision for deferred income taxes (656) 49
Loss (gain) on sale of investment
securities 0 0
(Increase) decrease in accrued interest
receivable (135) (240)
(Increase) decrease in other assets (65) (79)
(Decrease) increase in other liabilities (695) 267
Net cash provided by operating
activities 158 1,595
INVESTING ACTIVITIES
Proceeds from sale of investment securities
available for sale 0 0
Proceeds from maturities of investment
securities held to maturity 2,642 10,044
Proceeds from maturities of investment
securities available for sale 5,609 3,884
Purchase of investment securities held to
Maturity (870) (3,000)
Purchase of investment securities
available for sale (8,000) (10,000)
Decrease (increase) in interest-bearing
deposits in banks 0 0
(Increase) decrease in federal funds sold (10,075) (23,200)
(Increase) decrease in loans (9,669) (4,330)
Premises and equipment expenditures (199) (154)
Net cash provided by (used for)
investing activities (20,562) (26,756)
FINANCING ACTIVITIES
Dividends paid (2,090) (1,794)
Increase (Decrease) in deposits 20,994 26,863
(Decrease) increase in securities sold
under repurchase agreement (261) 4,732
(Decrease) increase in other
short-term borrowings (17) (3,328)
Net cash provided by (used for)
financing activities 18,626 26,473
Net increase (decrease) in cash
and due from banks (1,778) 1,312
CASH AND DUE FROM BANKS, BEGINNING OF YEAR 17,864 14,371
CASH AND DUE FROM BANKS, MARCH 31, 1999 AND 1998 $16,086 $ 15,683
CASH PAID (RECEIVED) FOR:
Interest $ 3,545 $ 3,200
Income taxes $ 530 $ 131
</TABLE> 5
<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, 597,180 for the
three-month period ended March 31, 1999 and 599,098 for the three-month period
ended March 31, 1998.
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 three-month period ended March 31, 1999 and for the years
ended December 31, 1998 and 1997 were approximately $7,429, $6,839, and $5,909,
respectively.
6
<PAGE>
NOTE 3 - INVESTMENT SECURITIES
Investment securities with a par value of approximately $77,395 at March 31,
1999 and $74,500 at December 31, 1998 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 March 31, 1999 and at December 31, 1998.
<TABLE>
<CAPTION>
March 31, 1999
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 $ 5,006 $ 30 $ - $ 5,036 6.08%
One to five years 5,967 109 - 6,076 6.09
10,973 139 - 11,112 6.09
Federal agencies
Within one year 6,176 29 - 6,205 6.19
One to five years 65,347 294 430 65,211 5.63
71,523 323 430 71,416 5.68
State, county and
municipal
One to five years 325 4 - 329 7.90
325 4 - 329 7.90
Other Securities(Equity) 116 - - 116 -
Total available for sale $82,937 $ 466 $ 430 $82,973 5.74%
HELD TO MATURITY
United States Treasury
Within one year 8,002 78 - 8,080 6.35
One to five years 1,016 10 - 1,026 5.50
9,018 88 - 9,106 6.25
Federal agencies
Within one year 3,020 15 - 3,035 5.74
One to five years 32,331 355 36 32,650 6.14
35,351 370 36 35,685 6.10
State, county and
municipal
Within one year 1,095 23 - 1,118 9.82%
One to five years 8,436 223 - 8,659 7.48
Six to ten years 4,805 174 3 4,976 7.40
After ten years 171 - - 171 6.73
14,507 420 3 14,924 7.62
Total held to maturity $58,876 $ 878 $ 39 $59,715 6.50%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended March 31, 1999, 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 $22 as of March 31, 1999.
7
<PAGE>
NOTE 3 - INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
December 31, 1998
Book Unrealized Fair
Value Gains Losses Value Yield(1)
<S> <C> <C> <C> <C> <C>
AVAILABLE FOR SALE
United States Treasury
Within one year $ 8,011 $ 59 $ - $ 8,070 6.28%
One to five years 5,962 179 - 6,141 6.09%
13,973 238 - 14,211 6.20%
Federal agencies
Within one year 5,171 30 - 5,201 6.20%
One to five years 60,289 520 87 60,722 5.77%
65,460 550 87 65,923 5.81%
State, county and
municipal
One to five years 325 7 - 332 7.90%
Other - restricted
Federal Reserve
Bank Stock 116 - - 116 6.03%
Total available for sale $79,874 $ 795 $ 87 $80,582 5.88%
HELD TO MATURITY
United States Treasury
Within one year 6,995 81 - 7,076 6.56%
One to five years 4,019 76 - 4,095 6.05%
11,014 157 - 11,171 6.38%
Federal agencies
Within one year 2,036 6 - 2,042 5.50%
One to five years 33,350 615 - 33,965 6.14%
35,386 621 - 36,007 6.10%
State, county and
municipal
Within one year 1,236 11 - 1,247 9.57%
One to five years 8,430 260 - 8,690 7.69%
Six to ten years 4,582 231 - 4,813 7.56%
14,248 502 - 14,750 7.81%
Total held to maturity $60,648 $1,280 $ - $61,928 6.56%
</TABLE>
(1) Tax equivalent adjustment based on a 34% tax rate.
As of the quarter ended December 31, 1998, 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 $425 as of December 31, 1998.
8
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES
The following is a summary of loans at March 31, 1999 and December 31,
1998 by major classification:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
Real estate loans - mortgage $ 144,186 $ 142,039
- construction 14,875 15,560
Commercial and industrial loans 44,278 36,393
Loans to individuals for household,
family and other consumer expenditures 32,235 32,669
Agriculture 2,297 1,487
All other loans, including overdrafts 1,738 1,951
Gross loans 239,609 230,099
Less unearned income (811) (970)
Less reserve for loan losses (3,199) (3,132)
Net loans 235,599 225,997
</TABLE>
9
<PAGE>
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES, continued
Changes in the reserve for loan losses for the quarter ended March 31,
1999 and 1998 and the year ended December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
Quarter Ended
March 31, December 31,
1999 1998 1998
<S> <C> <C> <C>
Balance, beginning of period $ 3,132 $ 2,879 $ 2,879
Charge-offs:
Commercial, financial, and agricultural 23 46 189
Real Estate - construction and mortgage 0 1 14
Loans to individuals 143 116 553
Total charge-offs $ 166 $ 163 $ 756
Recoveries:
Commercial, financial, and agricultural $ 34 $ 30 $ 89
Real Estate - construction and mortgage 0 1 5
Loans to individuals 49 77 235
Total recoveries $ 83 $ 108 $ 329
Net charge-offs/(recoveries) $ 83 $ 55 $ 427
Additions charge to operations $ 150 $ 190 $ 680
Balance, end of period $ 3,199 $ 3,014 $ 3,132
Ratio of net charge-offs during the period
to average loans outstanding during the
period .04% .02% .19%
</TABLE>
The entire balance is available to absorb future loan losses.
At March 31, 1999 and December 31, 1998 loans on which no interest was being
accrued totalled approximately $433 and $422, respectively; foreclosed real
estate totalled $0 and $0, respectively; and loans 90 days past due and still
accruing totalled $121 and $100, respectively.
OTHER INTEREST-BEARING ASSETS
The Bank maintained 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 provided 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
had the option to have a policy reinsured by Pacific Mutual which was 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.
The Bank's independent external auditors revisited the facts and circumstances
regarding the investment in the COLI program and read the related guidance in
SFAS No. 5 and SAB Topic 5(Y). There continues to be no significant
uncertainties requiring the recognition of a loss contingency.
The Bank's COLI policies were reinsured by Pacific Mutual during the third
quarter of 1997. Management received permission from the Office of the
Comptroller of the Currency to return this asset to accrual status and to adjust
the carrying value during the first quarter of 1998 with the total cash
surrender values totalling approximately $85,000 above the carrying value on the
bank's books.
As of March 31, 1999, the Company does not have any interest-bearing assets
that would be required to be disclosed under Item III.C.1. or 2. if such assets
were loans.
10
<PAGE>
NOTE 5 - PREMISES AND EQUIPMENT
Property at March 31, 1999 and December 31, 1998 is summarized as follows:
March 31, December 31,
1999 1998
Land and buildings $ 9,580 $ 9,581
Furniture, fixtures and equipment 5,315 5,188
Construction in progress 92 19
$ 14,987 $ 14,788
Less accumulated depreciation and
amortization 7,661 7,530
$ 7,326 $ 7,258
Depreciation and amortization of bank premises and equipment charged to
operating expense was $131 for the quarter ended March 31, 1999 and $693 for
the year ended December 31, 1998.
NOTE 6 - CERTIFICATES OF DEPOSIT IN EXCESS OF $100,000
At March 31, 1999 and December 31, 1998, certificates of deposit of
$100,000 or more included in time deposits totalled approximately $66,595 and
$61,328 respectively. Interest expense on these deposits was approximately $841
for the quarter ended March 31, 1999 and $3,455 for the year ended December 31,
1998.
NOTE 7 - SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
At March 31, 1999 and December 31, 1998, securities sold under repurchase
agreements totalled $32,257 and $32,518. U.S. Government securities with a
book value of $36,950 ($37,358 market value) and $35,127 ($35,672 market
value), respectively, are used as collateral for the agreements. The weighted-
average interest rate of these agreements was 4.13 percent and 4.12 percent at
March 31, 1999 and December 31, 1998.
NOTE 8 - LINES OF CREDIT
At March 31, 1999, the Bank had unused short-term lines of credit to
purchase Federal Funds from unrelated banks totalling $23,000. 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 $7,000
under the arrangement at a variable interest rate. The note is secured by U.S.
Treasury and Agency Securities with a market value of $7,947 at March 31, 1999.
The amount outstanding under the note totalled $1,131 and $1,148 at March 31,
1999 and December 31, 1998, respectively.
NOTE 9 - INCOME TAXES
Income tax expense for the quarter ended March 31, 1999 and March 31, 1998
on pretax income of $2,122 and $1,893 totalled $694 and $657, 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.
11
<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
March 31, 1999.
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 March 31, 1999,
commitments to extend credit totalled $23,404; financial standby letters of
credit totalled $162; and performance standby letters of credit totalled $343.
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 three percent of employee salary
deferred and fifty percent of employee contributions in excess of three percent
and up to five percent of salary deferred. The Board of Directors may also make
discretionary contributions to the Plan. For the quarter ended March 31, 1999
and years ended December 31, 1998, 1997 and 1996, $101, $378, $361, and $336,
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 also presented in the table below as of March 31,
1999:
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 $42,764 16.74% $20,431 8.0% $25,539 10.0%
weighted assets)
Tier I Capital (to risk 39,572 15.49 10,216 4.0 15,323 6.0
weighted assets)
Tier I Capital (to avg. 39,572 9.14 17,317 4.0 21,647 5.0
assets)
12
<PAGE>
NOTE 13 - CONDENSED FINANCIAL INFORMATION
Following is condensed financial information of CNB Corporation (parent
company only):
CONDENSED BALANCE SHEET
MARCH 31, 1999
(Unaudited)
ASSETS
Cash $ 2,420
Investment in subsidiary 39,594
Fixed assets 245
Other assets 37
$ 42,296
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liability $ 0
Stockholders' equity 42,296
$ 42,296
CONDENSED STATEMENT OF INCOME
For the three-month period ended March 31, 1999
(Unaudited)
EQUITY IN NET INCOME OF SUBSIDIARY $ 1,455
OTHER INCOME 0
OTHER EXPENSES (27)
Net Income $ 1,428
DISCUSSION OF FORWARD-LOOKING STATEMENTS
Information in the enclosed report, other than historical information, may
contain forward-looking statements that involve risks and uncertainties,
including, but not limited to, timing of certain business initiatives of the
Company, the Company's interest rate risk condition, and future regulatory
actions of the Comptroller of the Currency and Federal Reserve System. It is
important to note that the Company's actual results may differ materially and
adversely from those discussed in forward-looking statements.
13
<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 5.6%
from $226,051 at March 31, 1998 to $238,798 at March 31, 1998 but have decreased
as a percentage of total assets from 55.2% to 53.6% over the same period as loan
demand has moderated in our market. Securities and federal funds sold have
increased as a percentage of total assets from 38.4% at March 31, 1998 to 40.2%
at March 31, 1999 as we have utilized funds in the investments area. This level
of investments and federal funds sold provides for a more than adequate supply
of secondary liquidity. Management has sought to build the deposit base with
stable, relatively non-interest-sensitive deposits by offering the small to
medium deposit account holders a wide array of deposit instruments at
competitive rates. Non-interest-bearing demand deposits increased as a
percentage of total assets from 15.1% at March 31, 1998 to 16.7% at March 31,
1999. However, as more customers, both business and personal, are attracted to
interest-bearing deposit accounts, we expect the percentage of demand deposits
to decline over the long-term. Interest-bearing deposits have increased
slightly from 65.1% of total assets at March 31, 1998 to 65.7% at March 31, 1999
while securities sold under agreement to repurchase have decreased from 9.1%
to 7.2% over the same period.
The following table sets forth the percentage relationship to total assets of
significant component's of the corporation's balance sheet as of March 31, 1999
and 1998:
<TABLE>
<CAPTION>
March 31,
<S> <C> <C>
Assets: 1999 1998
Earning assets:
Loans, net of unearned income 53.6% 55.2%
Investment securities 13.2 15.4
Securities Available for Sale 18.6 14.5
Federal funds sold and securities purchased
under agreement to resell 8.4 8.5
Other earning assets - -
Total earning assets 93.8 93.6
Other assets 6.2 6.4
Total assets 100.0% 100.0%
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing deposits 65.7% 65.1%
Federal funds purchased and securities sold
under agreement to repurchase 7.2 9.1
Other short-term borrowings .3 .4
Total interest-bearing liabilities 73.2 74.6
Noninterest-bearing deposits 16.7 15.1
Other liabilities .6 .8
Stockholders' equity 9.5 9.5
Total liabilities and stockholders' equity 100.0% 100.0%
</TABLE>
14
<PAGE>
RESULTS OF OPERATION
CNB Corporation experienced earnings for the three-month period ended March
31, 1999 and 1998 of $1,428 and $1,236, respectively, resulting in a return on
average assets of 1.32% and 1.25% and a return on average stockholders' equity
of 13.68% and 12.88%.
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 $35,960 or 8.8% from $409,224 at March 31, 1998
to $445,184 at March 31, 1999. The following table sets forth the financial
highlights for the three-month periods ending March 31, 1999 and March 31, 1998:
CNB Corporation
CNB Corporation and Subsidiary
FINANCIAL HIGHLIGHTS
(All Dollar Amounts, Except Per Share Data, in Thousands)
Three-Month Period Ended March 31,
<TABLE>
<CAPTION>
Percent
Increase
1999 1998 (Decrease)
<S>
Net interest income after provision for <C> <C> <C>
loan losses 4,178 3,831 9.1%
Income before income taxes 2,122 1,893 12.1
Net Income 1,428 1,236 15.5
Per Share 2.39 2.07 15.5
Cash dividends declared 0 0 0
Per Share 0 0 0
Total assets 445,184 409,224 8.8%
Total deposits 367,106 328,190 11.9
Loans, net of unearned income 238,798 226,051 5.6
Investment securities 141,849 122,495 15.8
Stockholders' equity 42,296 38,989 8.5
Book value per share 70.81 65.21 8.6
Ratios (1):
Annualized return on average total assets 1.32% 1.25% 5.6%
Annualized return on average stockholders'
equity 13.68% 12.88% 6.2%
</TABLE>
(1) For the three-month period ended March 31, 1999 and March 31, 1998, average
total assets amounted to $432,937 and $394,051 with average stockholders'
equity totaling $41,754 and $38,384, respectively.
15
<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 1999 and 1998. 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
period ended March 31, 1999 and 1998 by earning satisfactory yields on loans
and investments and funding these assets with a favorable deposit mix containing
a significant level of noninterest-bearing demand deposits.
Fully-tax-equivalent net interest income showed a 7.5% increase from $4,113 for
the three-month period ended March 31, 1998 to $4,421 for the three-month
period ended March 31, 1999. During the same period, total fully-tax-equivalent
interest income increased by 4.1% from $7,279 to $7,581 and total interest
expense decreased by .2% from $3,166 to $3,160. Fully-tax-equivalent net
interest income as a percentage of total earning assets has shown a decrease
of .08% from 4.46% for the three-month period ended March 31, 1998 to 4.38% for
the three-month period ended March 31, 1999.
The tables on the following two pages present selected financial data and an
analysis of net interest income.
16
<PAGE>
CNB Corporation and Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
Three Months Ended 3/31/99 Three Months Ended 3/31/98
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 $233,549 $ 5,097 8.73% $223,932 $ 5,093 9.10%
Securities:
Taxable 131,690 1,929 5.86 111,894 1,687 6.03
Tax-exempt 14,746 273 7.41 13,843 271 7.83
Federal funds sold and
securities purchased under
agreement to resell 24,074 282 4.69 19,474 228 4.68
Other earning assets 0 0 - 0 0 -
Total earning assets 404,059 7,581 7.50 369,143 7,279 7.89
Other assets 28,878 24,908
Total assets $432,937 $394,051
Liabilities and stockholder equity
Interest-bearing liabilities:
Interest-bearing deposits $286,315 2,809 3.92 $257,784 $ 2,742 4.25
Federal funds purchased and
securities sold under
agreement to repurchase 33,127 337 4.07 35,263 398 4.51
Other short-term borrowings 1,064 14 5.26 1,471 26 7.07
Total interest-bearing
liabilities $320,506 $ 3,160 3.94 $294,518 $ 3,166 4.30
Noninterest-bearing deposits 66,471 57,807
Other liabilities 4,206 3,342
Stockholders' equity 41,754 38,384
Total liabilities and
stockholders' equity $432,937 $394,051
Net interest income as a percent
of total earning assets $404,059 $ 4,421 4.38 $369,143 $ 4,113 4.46
(1) Tax-equivalent adjustment
based on a 34% tax rate $ 93 $ 92
</TABLE)
</TABLE>
<TABLE>
<S> <C> <C>
Ratios:
Annualized return on average total assets 1.32 1.25
Annualized return on average stockholders' equity 13.68 12.88
Cash dividends declared as a percent of net income 0 0
Average stockholders' equity as a percent of:
Average total assets 9.64 9.74
Average total deposits 11.84 12.16
Average loans, net of unearned income 17.88 17.14
Average earning assets as a percent of
average total assets 93.33 93.68
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
CNB Corporation and Subsidiary
Rate/Volume Variance Analysis
For the Three Months Ended March 31, 1999 and 1998
(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
1999 1998 1999 (1) 1998 (1) 1999 (1) 1998 (1) Variance Rate Volume Volume
Earning Assets:
Loans, Net of unearned
income (2) 233,549 223,932 8.73% 9.10% 5,097 5,093 4 (207) 219 (8)
Investment securities:
Taxable 131,690 111,894 5.86% 6.03% 1,929 1,687 242 (48) 298 (8)
Tax-exempt 14,746 13,843 7.41% 7.83% 273 271 2 (14) 17 (1)
Federal funds sold and
securities purchased under
agreement to resell 24,074 19,474 4.69% 4.68% 282 228 54 - 54 -
Other earning assets 0 0 - - 0 0 0 - - -
Total Earning Assets 404,059 369,143 7.50% 7.89% 7,581 7,279 302 (269) 588 (17)
Interest-bearing Liabilities:
Interest-bearing deposits 286,315 257,784 3.92% 4.25% 2,809 2,742 67 (213) 303 (23)
Federal funds purchased and
securities sold under
agreement to repurchase 33,127 35,263 4.07% 4.51% 337 398 (61) (39) (24) 2
Other short-term borrowings 1,064 1,471 5.26% 7.07% 14 26 (12) (7) (7) 2
Total Interest-bearing
Liabilities 320,506 294,518 3.94% 4.30% 3,160 3,166 (6) (259) 272 (19)
Interest-free Funds
Supporting Earning Assets 83,553 74,625
Total Funds Supporting
Earning Assets 404,059 369,143 3.12% 3.43% 3,160 3,166 (6) (259) 272 (19)
Interest Rate Spread 3.56% 3.59%
Impact of Non-interest-
bearing Funds on Net Yield
on Earning Assets .82% .87%
Net Yield on Earning Assets 4.38% 4.46% 4,421 4,113
</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>
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 $150 for the three-month period
ended March 31, 1999 and $190 for the three-month period ended March 31, 1998.
Net loan charge-offs totalled $83 for the three-month period ended March 31,
1999 and $55 for the same period in 1998.
The reserve for possible loan losses as a percentage of net loans was 1.36% at
March 31, 1999 and 1.35% at March 31, 1998. The provision for possible loan
losses decreased from $190 during the first quarter of 1998 to $150 during the
first quarter of 1999 due to a decrease in the rate of loan growth.
Securities Transactions - The bank had no security sales during the first
quarter of 1999 or 1998. At March 31, 1999, December 31, 1998, and March 31,
1998 market value appreciation/(depreciation) in the investment portfolio
totalled $875, $1,988, and $1,214, respectively. As indicated, market values
remained strong in 1998 and 1999 due to relatively lower market interest rates.
Other Income - Other income, net of any gains/losses on security transactions,
increased by 11.0% from $816 for the three-month period ended March 31, 1998 to
$906 for the three-month period ended March 31, 1999 primarily due to an
increase in deposit account volumes and higher merchant discount income.
Other Expenses - Other expenses increased by 7.6% from $2,754 for the
three-month period ended March 31, 1998 to $2,962 for the three-month period
ended March 31, 1999. The major components of other expenses are salaries and
employee benefits which increased 11.0% from $1,661 to $1,843; occupancy expense
which decreased 8.0% from $423 to $389; and other operating expenses which
increased by 9.0% from $670 to $730. Occupancy expense has declined as
depreciation expense has decreased 23.8% from $172 during the first quarter of
1998 to $131 for the same period in 1999. Salaries and employee benefits expense
has increased due to an increase of full-time-equivalent employees from 190 at
March 31, 1998 to 206 at March 31, 1999 as the bank opened the new "West Conway
Office" in the late fall of 1998.
Income Taxes - Provisions for income taxes increased 5.6% from $657 for the
three-month period ended March 31, 1998 to $694 for the three-month period ended
March 31, 1999. Income before income taxes less interest of tax-exempt
investment securities increased by 13.3% from $1,714 for the three-month period
ended March 31, 1998 to $1,942 for the same period in 1999. State tax
liability increased as income before income taxes increased 12.1% from $1,893
to $2,122 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 to borrow funds from the Federal
Reserve System and the Federal Home Loan Bank of Atlanta. Management feels
that short-term and long-term liquidity sources are more than adequate to meet
funding needs.
19
<PAGE>
CAPITAL RESOURCES
Total stockholders' equity was $42,296, $41,201, $37,717, and $34,496 at March
31, 1999, December 31, 1998, December 31, 1997, and December 31, 1996,
representing 9.50%, 9.66%, 9.90%, and 10.09% of total assets, respectively. At
March 31, 1999, 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.
The Company paid an approximate 25% stock dividend on September 12, 1997. The
Board increased the $3.00 per share annual cash dividend paid at year-end 1997
to $3.50 per share at year-end 1998 which increased the cash dividend payout
ratio and cash dividend yield.
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.
ACCOUNTING ISSUES
In an effort to simplify the current standards in the United States for
computing earnings per share ("EPS") and make them more compatible with
international standards, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share" in February 1997. SFAS 128
applies to entities with publicly traded common stock or potential common
stock and is effective for financial statements for periods ending after
December 15, 1997, including interim periods. SFAS 128 simplifies the
standards for computing EPS previously found in APB Opinion 15, "Earnings
per Share." It replaces the presentation of primary EPS with a presentation
of basic EPS. It also requires dual presentation of basic and diluted EPS
on the face of the income statement for all companies with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted
EPS computation. The Company does not have any dilutive common stock or
equivalents and accordingly the adoption of SFAS had no effect on earnings
per share computations.
The FASB also issued SFAS No. 129, "Disclosure of Information about Capital
Structure" in February 1997. The purpose of SFAS 129 is to consolidate
existing disclosure requirements for ease of retrieval. SFAS 129 contains
no change in disclosure requirements for companies that were subject to the
previously existing requirements. It applies to all entities and is
effective for Financial Statements for periods ending after December 15,
1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and
losses) in a full set of general purpose financial statements. SFAS 130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS 130 requires that companies (i) classify items of other
comprehensive income by their nature in a financial statement and (ii)
display the accumulated balance of other comprehensive income separately
from retained earnings and additional paid-in-capital in the equity section
of the statement of financial condition. SFAS 130 is effective for fiscal
years beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comprehensive purposes is
required. The adoption of SFAS 130 had no effect on the Company's net income
or stockholders' equity.
In June, 1997, the FASB also issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS 131 establishes
standards for the way public enterprises are to report information about
operating segments in annual financial statements and requires those
enterprises to report selected information about operating segments in
interim financial reports issued to shareholders. It also
20
<PAGE>
ACCOUNTING ISSUES (continued)
establishes standards for related disclosures about products and services,
geographic areas, and major customers. SFAS 131 supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
becomes effective for financial statements for periods beginning after
December 15, 1997, and requires that comparative information from earlier
years be restated to conform to its requirements. The adoption of the
provisions of SFAS 131 is not expected to have a material impact on the
Company.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instrument and Hedging Activities." All derivatives are to be measured at
fair value and recognized in the balance sheet as assets or liabilities.
The statement is effective for fiscal years and quarters beginning after
June 15, 1999. Because the Company does not use derivative transactions at
this time, management does not expect that this standard will have a
significant effect on the Company.
YEAR 2000
The Year 2000 poses a significant challenge for financial institutions
because of the way date fields have been historically handled. Older
versions of software used a two digit year date field and assumed the first
two digits of the year date to be "19". All software applications using
this dating method must be replaced or modified to avoid computer systems
reverting to the year date of 1900 in the year 2000.
The Board of Directors early in 1997 assigned Year 2000 Project
implementation responsibility to the Electronic Data Processing (EDP)
Steering Committee. The EDP Steering Committee is comprised of the
following members: President, Executive Vice President, Vice President and
Cashier, Vice President-Systems, Vice President-Data Processing, and
Assistant Vice President-Systems. The committee meets at least quarterly
with the meetings being reviewed by the Board Audit Committee and progress
reports made to the full Board. The CPA firm of Tourville, Simpson, &
Henderson has been engaged to assist in Year 2000 Plan development,
implementation, and examination.
All systems used by the bank have been identified and prioritized with a
time line established for projected dates of upgrades, replacement,
certification, and testing. Anticipated Year 2000 costs are projected to be
approximately $276,000. The majority of this amount has been spent on
capital expenditures to be expensed over the next four years. $20,000 will
be spent in 1999 on public information and education.
All mission critical systems have been replaced or upgraded to Year 2000
compliance. All mission critical systems have been tested to ensure Year 2000
functionality. Further testing will be conducted during 1999 as deemed
appropriate. The bank has in place a Business Interruption Plan in case of
unforeseen problems or failures.
In June of 1999, The Conway National Bank and The Conway Chamber of Commerce
will jointly sponsor a Year 2000 Community Forum. Participants will include
local utilities, city and county governments, social security, health services,
the post office and educational institutions. The public will have an
opportunity to hear progress reports on participants' Year 2000 projects.
The bank has completed its Year 2000 Contingency Plan for cash services. This
plan will anticipate and provide for the increased demand for extra cash by
customers as we approach year-end.
21
<PAGE>
EXHIBITS AND REPORTS ON FORM 8-K
See Exhibit Index appearing below.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter
covered by this report.
EXHIBIT INDEX
Exhibit
Number
27 Financial Data Schedule - Article 9 Financial Data Schedule for
10-Q for electronic filers (pages 24 and 25).
All other exhibits, the filing of which are required with this Form, are not
applicable.
22
<PAGE>
CNB Corporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CNB Corporation
(Registrant)
Paul R. Dusenbury
-----------------
Paul R. Dusenbury
Treasurer
(Chief Financial and Accounting Officer)
Date: May 13, 1999
23
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MORE
DETAILED FINANCIAL STATEMENTS OF THE COMPANY AND SUBSIDIARY AND NOTES THERETO
INCLUDED ELSEWHERE IN THIS REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIALS.
</LEGEND>
<CIK> 0000764581
<NAME> CNB CORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 16,086
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 37,175
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 82,973
<INVESTMENTS-CARRYING> 58,876
<INVESTMENTS-MARKET> 59,715
<LOANS> 238,798
<ALLOWANCE> 3,199
<TOTAL-ASSETS> 445,184
<DEPOSITS> 367,106
<SHORT-TERM> 33,388
<LIABILITIES-OTHER> 2,394
<LONG-TERM> 0
0
0
<COMMON> 5,987
<OTHER-SE> 36,309
<TOTAL-LIABILITIES-AND-EQUITY> 445,184
<INTEREST-LOAN> 5,097
<INTEREST-INVEST> 2,109
<INTEREST-OTHER> 282
<INTEREST-TOTAL> 7,488
<INTEREST-DEPOSIT> 2,809
<INTEREST-EXPENSE> 3,160
<INTEREST-INCOME-NET> 4,328
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,962
<INCOME-PRETAX> 2,122
<INCOME-PRE-EXTRAORDINARY> 1,428
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,428
<EPS-PRIMARY> 2.39
<EPS-DILUTED> 2.39
<YIELD-ACTUAL> 4.38
<LOANS-NON> 443
<LOANS-PAST> 121
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 443
<ALLOWANCE-OPEN> 3,132
<CHARGE-OFFS> 166
<RECOVERIES> 83
<ALLOWANCE-CLOSE> 3,199
<ALLOWANCE-DOMESTIC> 3,199
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
