<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934 (no fee required)
For the quarterly period ended September 30, 1996
---------------------
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (no fee required)
For the transition period from ________ to ________
Commission File No. 0-25988
CNB, Inc.
----------------------------------
(NAME OF SMALL BUSINESS ISSUER)
FLORIDA 59-2958616
--------------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Post Office Box 3239
201 North Marion Street
Lake City, Florida 32056
---------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 755-3240
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 of the registrant's common stock outstanding as of
October 31, 1996 was 1,937,905 shares, $0.01 par value per share.
<PAGE>
CNB, INC.
FINANCIAL REPORT ON FORM 10-QSB
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) .................... 3
Consolidated Statements of Income (Unaudited) .............. 4
Consolidated Statements of Shareholders' Equity (Unaudited). 5
Consolidated Statements of Cash Flows (Unaudited) .......... 6
Notes to Consolidated Financial Statements (Unaudited) ..... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Consolidated Financial Highlights .......................... 9
Overview ................................................... 10
Results of Operations ...................................... 10
Earning Assets ............................................. 13
Funding Sources ............................................ 18
Interest Rate Sensitivity/Liquidity ........................ 18
Capital Resources .......................................... 20
PART II - OTHER INFORMATION ................................................ 21
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
CNB, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
Sept. 30, Sept. 30,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 13,607 $ 7,006
Federal funds sold 12,015 2,800
Interest bearing deposits 410 402
----------- -----------
Cash and cash equivalents 26,032 10,208
Securities available for sale 56,279 15,667
Securities held to maturity 11,324 40,193
Loans:
Commercial, financial and agricultural 59,319 43,173
Real estate - construction 5,628 2,370
Real estate - residential 52,994 35,772
Installment and consumer lines 19,152 15,777
----------- -----------
Total loans, net of unearned discount 137,093 97,092
Less: Allowance for loan losses (1,419) (927)
----------- -----------
Net loans 135,674 96,165
Premises and equipment, net 8,770 6,458
Other assets 4,147 2,821
----------- -----------
TOTAL ASSETS $ 242,226 $ 171,512
=========== ===========
LIABILITIES
Non-interest bearing deposits $ 29,777 $ 18,511
Interest bearing deposits:
NOW, money market, savings, and other time deposits 166,093 121,993
Time deposits of $100,000 or more 22,365 13,450
----------- -----------
Total deposits 218,235 153,954
Notes payable 2,950 1,250
Other liabilities 2,003 1,733
----------- -----------
TOTAL LIABILITIES 223,188 156,937
----------- -----------
Mandatory convertible subordinated debentures 274 274
----------- -----------
SHAREHOLDERS' EQUITY
Common stock - $.01 par value, 10,000,000
shares authorized; issued and outstanding
1,937,905 in 1996 and 1,639,733 in 1995 19 16
Additional paid-in capital 12,683 9,784
Retained earnings 6,227 4,504
Net unrealized loss on securities available for (165) (3)
sale
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 18,764 14,301
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 242,226 $ 171,512
=========== ===========
</TABLE>
3
<PAGE>
CNB, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------- ------- --------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loan interest and fees $ 2,797 $ 2,385 $ 7,810 $ 6,703
Securities available for sale 654 258 1,740 712
Securities held to maturity 189 543 539 1,669
Federal funds sold 152 85 368 329
Interest bearing deposits
in other financial institutions 5 4 17 15
------- ------- --------- ---------
Total interest income 3,797 3,275 10,474 9,428
INTEREST EXPENSE
Interest on deposits 1,610 1,498 4,505 4,301
Interest on debentures 6 7 18 19
Interest on borrowed funds 20 33 53 109
------- ------- --------- ---------
Total interest expense 1,636 1,538 4,576 4,429
------- ------- --------- ---------
NET INTEREST INCOME 2,161 1,737 5,898 4,999
Provision for possible loan losses (80) (50) (285) (170)
------- ------- --------- ---------
Net interest income after provision for
possible loan losses 2,081 1,687 5,613 4,829
NON-INTEREST INCOME
Service charges 347 311 948 871
Other fees and charges 68 62 288 187
------- ------- --------- ---------
Total non-interest income 415 373 1,236 1,058
NON-INTEREST EXPENSE
Salaries and employee benefits 778 675 2,163 2,032
Occupancy and equipment 252 215 667 609
Other 809 382 1,654 1,249
------- ------- --------- ---------
Total non-interest expenses 1,839 1,272 4,484 3,890
Realized losses on securities
available for sale - - (25) (3)
------- ------- --------- ---------
Income before income taxes 657 788 2,340 1,994
Provision for income taxes (226) (275) (817) (697)
------- ------- --------- ---------
NET INCOME (1) $ 431 $ 513 $ 1,523 $ 1,297
======= ======= ========= =========
Per Common Share
Net income per common share $ 0.25 $ 0.31 $ 0.91 $ 0.79
Cash dividends paid 0.06 0.05 0.16 0.13
Book value $ 9.68 $ 8.72
Weighted average shares outstanding 1,672,380 1,639,733
Return on average shareholders' equity 12.92% 12.67%
</TABLE>
(1) Includes one time SAIF recapitalization assessment of $326,823.34
($204,918.23 or $.12 per share net of income taxes) paid during the third
quarter of 1996. See note 4.
4
<PAGE>
CNB, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
Additional Total
Common Paid-in Retained Shareholders'
Stock Capital Earnings Equity
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $ 16 $ 9,784 $ 3,420 $ 12,927
Net income for the nine months
Ended September 30, 1995 - - 1,297 1,297
Cash dividends - - (213) (213)
Change in unrealized loss on securities
Available for sale, net of taxes - - - 290
-------- -------- -------- --------
Balance at September 30, 1995 $ 16 $ 9,784 $ 4,504 $ 14,301
======== ======== ======== ========
Balance at December 31, 1995 $ 16 $ 9,784 $ 4,967 $ 14,754
Acquisition of Riherd Bank Holding
Company, effective September 1, 1996 3 2,899 - 2,902
Net income for the nine months
Ended September 30, 1996 - - 1,523 1,523
Cash Dividends - - (263) (263)
Change in unrealized loss on securities
Available for sale, net of taxes - - - (152)
-------- -------- -------- --------
Balance at September 30, 1996 $ 19 $ 12,683 $ 6,227 $ 18,764
======== ======== ======== ========
5
<PAGE>
CNB, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, dollar amounts in thousands)
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 1,523 $ 1,297
Cash and Cash Equivalents Acquired in Merger 2,885 -
Adjustments to Reconcile Net Income to
Cash Provided By(Used In) Operating
Activities :
Depreciation and Amortization 397 379
Provision for Loan Loss 285 170
Security Amortization, net 177 193
Changes In Period-End Balances of:
Other Assets 460 (689)
Other Liabilities 374 733
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,101 2,083
-------- --------
INVESTING ACTIVITIES
Purchases of Securities Available for Sale (9,995) (2,030)
Purchases of Securities Held to Maturity - (9,548)
Maturities of Securities Available for Sale 1,500 6,350
Maturities of Securities Held to Maturity - 500
Sales of Securities Available for Sale 4,039 1,500
Securities Available for Sale Called by Issuer 2,500 -
Securities Held to Maturity Called by Issuer - 8,000
Mortgage Backed Securities - Principal Payments 4,702 2,088
Net Increase in Loans (9,836) (11,115)
Net Increase in Premises & Equipment (500) (565)
Net Cash Paid Related to Acquisition (2,674) -
Net Cash Paid Related to Acquisition (250) -
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (10,514) (4,820)
-------- --------
FINANCING ACTIVITIES
Net Increase In Deposits 15,736 1,342
Proceeds from Note Payable 2,650 -
Principal Repayments of Note Payable (650) (450)
Cash Dividend(s) (263) (213)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 17,473 679
-------- --------
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS $ 13,060 $ (2,058)
Beginning Balance 12,972 12,266
-------- --------
Cash and cash equivalents at end of period $ 26,032 $ 10,208
======== ========
SUPPLEMENTAL DISCLOSURES
Interest Paid $ 4,640 $ 4,062
Taxes Paid 993 605
</TABLE>
6
<PAGE>
CNB, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
Note 1. Consolidation
The consolidated financial statements include the accounts of CNB, Inc. and its
subsidiary bank, CNB National Bank. All significant intercompany accounts and
transactions have been eliminated.
Note 2. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB which do not require all information and
footnotes necessary for a complete presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles. In the opinion of management, such financial statements reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair statement of the results for the interim periods presented. Operating
results for the nine months ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.
Note 3. Completed Acquisitions
On September 1, 1996 the Company issued 298,172 shares of common stock and paid
$2.7 million in cash to acquire all the outstanding common stock of Riherd Bank
Holding Company of Lake Butler, Florida. CNB borrowed $2.7 million to fund the
cash portion of this acquisition. Pursuant to this merger, all of Riherd's
assets were acquired and liabilities assumed by the Company, and accordingly,
are included in the accompanying September 30, 1996 balances.
RIHERD BANK HOLDING COMPANY
August 31, 1996
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Amount
-------
<S> <C>
ASSETS
Cash and cash equivalents $ 2,885
Earning assets 42,303
All other assets 2,823
-------
Total assets $48,011
-------
LIABILITIES
Deposits $43,372
All other liabilities 6
-------
Total liabilities 43,378
-------
Net assets acquired $ 4,633
=======
</TABLE>
Note 4. Commitments and Contingencies
At the end of 1995, $65.3 million of "adjustable attributable deposits",
resulting from thrift acquisitions, were insured through the Savings Association
Insurance Fund (SAIF). During the third quarter of 1996 legislation was enacted
to recapitalize the SAIF. This resulted in a one-time assessment of $326,823
during the third quarter. As part of the recapitalization plan, the SAIF
assessment schedule will be reduced and management does not expect any
additional one-time or ongoing assessments that will have a significant adverse
effect on the operating expenses and results of operations of CNB.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following tables and discussion set forth certain selected financial
information and should be read in conjunction with the consolidated financial
statements (unaudited) of the Company and the Bank included in "Item 1.
Financial Statements" above. The Company has no foreign operations;
accordingly, there are no assets or liabilities attributable to foreign
operations.
8
<PAGE>
CNB, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited, dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995 Change%
--------- --------- -------
DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION
=========================================================================================
<S> <C> <C> <C>
SUMMARY OF OPERATIONS
Total Interest Income $ 10,474 $ 9,428 11%
Total Interest Expense (4,576) (4,429) 3
--------- ---------
Net Interest Income 5,898 4,999 18
Provision for Possible Loan Losses (285) (170) 68
--------- ---------
Net Interest Income After
Loan Loss Provision 5,613 4,829 16
Non-Interest Income 1,236 1,058 17
Non-Interest Expense (4,484) (3,890) 15
--------- ---------
Gains (losses) on securities sold (25) (3)
--------- ---------
Income Before Income Taxes 2,340 1,994 17
Provision For Income Taxes (817) (697) 17
--------- ---------
Net Income $ 1,523 $ 1,297 17
========= =========
=========================================================================================
PER COMMON SHARE
Net Income Per Common Share $ 0.91 $ 0.79 15%
Book Value 9.68 8.72 11
Dividends 0.16 0.13 23
Shares Outstanding 1,937,905 1,639,733 18
Weighted Average Shares Outstanding 1,672,380 1,639,733 2
=========================================================================================
KEY RATIOS
Return on Average Assets 1.09 1.01 8%
Return on Average Shareholders' Equity 12.92 12.67 2
Dividend Payout 17.23 16.44 5
Overhead Ratio 65.47 66.08 (1)
Total Risk-Based Capital Ratio 14.07 15.06 (7)
Average Shareholders' Equity to Assets 8.43 7.98 6
Tier 1 Leverage 8.52 7.80 9
=========================================================================================
FINANCIAL CONDITION AT PERIOD END
Assets 242,226 171,512 41%
Total Loans, net of unearned discount 137,093 97,092 41
Total Deposits 218,235 153,954 42
Common Shareholders' Equity 18,764 14,301 31
</TABLE>
9
<PAGE>
Overview
Earnings for the nine months ended September 30, 1996 were $1.5 million, or
$0.91 per share, representing a 15.2% increase when compared to $1.3 million, or
$0.79 per share, for the same period in 1995. During the third quarter the bank
absorbed an FDIC assessment of $327,000 to recapitalize the SAIF, which had an
after tax impact of $205,000 or $.12 per share. Without the SAIF charge,
earnings would have been $1.03 per share, which was an increase of 30% from a
year earlier. Year-to-date earnings have produced a return on average
shareholders' equity and return on average assets of 12.92% and 1.09%,
respectively, compared to 12.67% and 1.01%, one year ago. Total assets were up
41.2% to $242.2 million on September 30, 1996, compared to $171.5 million on
September 30, 1995. Total loans and deposits were also up 41.1% and 41.8% to
$135.7 million and $218.2 million, respectively. Shareholders' equity was $18.8
million at September 30, 1996, up 31.2% from the same period ended in 1995 of
which $2.9 million is attributable to the merger and $1.7 million resulted from
retained earnings.
Improved earnings for the year-to-date are mainly attributable to an 18.0%
increase in net interest income to $5.9 million, from $5.0 million for the
comparable period in 1995. The increased net interest income is primarily a
result of loan growth, improved yields on securities, and a slightly lower cost
of funds. Provision for loan losses for the period was $285,000 compared to
$170,000 in 1995, an increase of $115,000, or 67.7%, due mainly to loan growth
and a low provision requirement in the first three quarters of 1995. Non-
interest expenses, net of non-interest income, increased $416,000, or 14.7%,
during the first nine months of 1996 compared to 1995. The one-time SAIF
assessment of $327,000 during the third quarter contributed significantly to
this increase. The provision for income taxes for 1996 was $817,000 compared to
$697,000 in 1995, representing an increase of 17.2%, due solely to the increased
earnings.
Cash dividends paid for the first nine months of 1996 were $0.16 per share, a
23% increase when compared to $0.13 per share for the comparable period in 1995.
The Board of Directors has declared a cash dividend payable on November 5, 1996
of $0.06 per share, which is unchanged from the previous quarter.
Results Of Operations
Net Interest Income
Net interest income, the primary source of revenue for the Bank, was $5.9
million for the first nine months of 1996, an increase of $.9 million, or
18.0%, compared to the same period last year. This increase was primarily a
result of loan growth and a higher net interest margin. The earning asset yield
has grown at a rate of 1.9% while the funding liability cost decreased 3.7%.
The Company's net interest margin of 4.60%, an increase of 8.2%, was positively
impacted by loan growth coupled with a $3.2 million, or 17.7%, increase in
average non-interest bearing deposits. Total loans have averaged 64.1% of
earning assets, up from 58.2% for the same period in 1995. The improved loan
ratio is a result of increasing average total loans by $18.2 million, or 19.9%,
while earning assets have increased by $14.0 million, or 8.9%.
There was a significant reallocation of interest income between the securities
portfolios due to a FASB ruling which allowed banks to reclassify securities as
available for sale or held to maturity at the end of 1995. Interest on federal
funds sold increased during the third quarter due to increased liquidity in 1996
compared to 1995. Interest on notes payable declined 44.5% as a result of
management's decision to make payments on the indebtedness in excess of the
scheduled amortization, combined with lower interest rates. Table 1: Average
Balances - Yields and Rates, below, indicates the Company's average volume of
interest earning assets and interest bearing liabilities for the first nine
months of 1996 and 1995.
The net interest margin for the first nine months of 1996 increased to 4.60%
from 4.25% a year ago. The 35 basis point improvement over last year is due
mainly to the increase in loans as a percentage of earning assets, combined with
securities yields increasing to 5.89% in 1996 from 5.49% in 1995. The 28 basis
point decrease in the loan portfolio's yield is due mainly to lower market rates
in the first nine months of 1996, compared to the same period in 1995.
10
<PAGE>
Average time deposits for the first nine months of 1996 represented 51.6% of
total average deposits, compared to 53.2% a year earlier. Average interest
bearing deposits increased 7.8% from $136.2 million to $146.7 million, while the
average rate on these deposits declined from 4.21% to 4.09% in 1996. Table 1a:
Analysis of Changes in Interest Income and Expense, below, indicates that the
change in interest income was due mainly to volume increases in the loan
portfolio.
TABLE 1: AVERAGE BALANCES AND RATES
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
------------------ ------------------
Interest Interest
Average Income or Average Average Income or Average
Balance Expense Rate Balance Expense Rate
-------- --------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 9,537 $ 368 5.15 % $ 7,537 $ 329 5.84 %
Securities available for sale 39,091 1,740 5.95 17,409 712 5.47
Securities held to maturity 12,485 539 5.77 40,405 1,669 5.52
Loans, net unearned (1) 109,624 7,810 9.52 91,451 6,703 9.80
Interest bearing deposits 404 17 5.62 354 15 5.66
-------- --------- ------- -------- --------- -------
Total earning assets 171,142 10,474 8.17 157,156 9,428 8.02
All other assets 15,810 14,267
-------- --------
TOTAL ASSETS $186,951 $171,423
======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Deposits:
NOW and money market accounts 46,881 933 2.66 41,670 786 2.52
Savings 12,933 202 2.09 12,220 250 2.74
Time deposits 86,903 3,370 5.18 82,260 3,265 5.31
Notes payable and debentures 1,121 71 8.44 1,723 128 9.62
-------- --------- ------- -------- --------- -------
Total interest bearing liabilities 147,838 4,576 4.13 137,873 4,429 4.29
Demand deposits 21,629 18,384
Other liabilities 1,733 1,486
Shareholders' equity 15,751 13,680
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $186,951 $171,423
======== ========
------- -------
INTEREST SPREAD (2) 4.04 % 3.73 %
--------- ======= --------- =======
NET INTEREST INCOME $ 5,898 $ 4,999
========= =========
NET INTEREST MARGIN (3) 4.60 % 4.25 %
======= =======
</TABLE>
- - ---------------------------------------------------------------
(1) Interest income on average loans includes loan fee recognition
of $274,000 and $301,000 in 1996 and 1995 respectively.
(2) Represents the average rate earned minus average rate paid.
(3) Represents net interest income divided by total earning assets.
11
<PAGE>
TABLE 1A: ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
NET CHANGE SEPTEMBER 30, NET CHANGE SEPTEMBER 30,
1995-1996 ATTRIBUTABLE TO: 1994-1995 ATTRIBUTABLE TO:
----------------------------- -----------------------------
Net Net
Volume(1) Rate(2) Change Volume(1) Rate(2) Change
--------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Federal funds sold $ 88 $ (49) $ 39 $ (1) $ 109 $ 108
Securities available for sale 889 139 1,028 (302) 145 (157)
Securities held to maturity (1,153) 23 (1,130) 139 124 263
Loans, net of unearned 1,340 (233) 1,107 943 796 1,739
Interest bearing deposits 2 - 2 3 5 8
--------- --------- -------- --------- --------- --------
TOTAL INTEREST INCOME $ 1,166 $ (120) $1,046 $ 782 $1,179 $1,961
INTEREST EXPENSE
Deposits
NOW and money market accounts $ 99 $ 48 $ 147 $ (37) $ 52 $ 15
Savings 15 (63) (48) 1 49 50
Time deposits 190 (85) 105 218 781 999
Notes payable and debentures (43) (10) (53) (30) 26 (4)
--------- --------- -------- --------- --------- --------
TOTAL INTEREST EXPENSE 261 (110) 151 152 908 1,060
--------- --------- -------- --------- --------- --------
NET INTEREST INCOME $ 905 $ (10) $ 895 $ 630 $ 271 $ 901
========= ========= ======== ========= ========= ========
</TABLE>
- - ---------------------------------------------------------------
(1) The volume variance reflects the change in the average balance outstanding
multiplied by the actual average rate during the prior period.
(2) The rate variance reflects the change in the actual average rate
multiplied by the average balance outstanding during the prior period.
Also includes changes in interest income and expense not due soley
to volume or rate changes.
Provision for Loan Losses
The allowance for loan losses represents a reserve for potential losses in the
loan portfolio. The provision for loan losses is a charge to earnings in the
current period to maintain the allowance at a level management has determined to
be adequate. Management periodically evaluates the adequacy of the allowance
for loan losses based on a review of all significant loans, with a particular
emphasis on past due and other loans that management believes require attention.
As a result of this procedure, the provision was increased from 1995 levels to
help ensure that the allowance would be adequate to absorb possible future loan
losses in the portfolio. The provision for loan losses increased $115,000, or
67.7%, to $285,000 during the first nine months of 1996, as compared to $170,000
for the comparable period in 1995. This increase is also a result of loan
growth and a low provision requirement in the first three quarters of 1995.
Non-Interest Income
Non-interest income at September 30, 1996 was $1.2 million, an increase of $.2
million, or 16.8%, from one year earlier. This increase is due mainly to fees
and revenues associated with demand deposit accounts and safe deposit box rental
income. As a result, non-interest income as a percentage of average total
assets increased to 0.88% for the first nine months of 1996, from 0.82% for
1995.
Non-Interest Expense
Non-interest expense increased by $.6 million, or 15.3% for the first nine
months of 1996, as compared to 1995. The one-time SAIF assessment was
responsible for 55.1% of this increase. Salaries and employee benefits
increased 6.5%, due mainly to additional staff and wage increases. However, as
a percent of average total assets, personnel costs decreased from 1.58% in 1995
to 1.55% in 1996. There were 133 full-time equivalent employees at September
30, 1996, which is up significantly from the prior year due primarily to the
merger.
Occupancy and equipment expenses increased 9.5% due to higher operating costs
associated with ownership and maintenance, such as taxes, insurance, service
contracts, utilities, and maintenance of building and grounds. Additional
facilities and equipment acquired in the merger increased depreciation during
the third quarter.
12
<PAGE>
Other operating expenses increased from $1.2 million in 1995 to $1.7 million in
1996, primarily due to the SAIF assessment. This increase of 32.4% would have
only been 6.3% if the assessment had not been imposed. Other Operating Expenses
were .88% of average assets, compared to .73% in 1995. Adjusting for the
assessment would result in a decline to .71% of average assets. The bank's data
processor also doubled their fees during the third quarter.
At September 30, 1996 and 1995, non-interest expenses as a percentage of average
total assets were 3.2% and 3.0%, respectively. Without the SAIF assessment,
this ratio would have been 3.0% for 1996.
The overhead efficiency ratio, which is the percentage of overhead expense to
total revenue less interest expense and provision for loan losses, decreased
from 66.1% to 65.5% for the nine months ended September 30, 1996, compared to
1995. Excluding the impact of the special SAIF assessment during the third
quarter, the overhead ratio would have declined to 60.7% from 65.5%,
representing an efficiency ratio improvement of 7.3%. The following table
details the areas of significant non-interest expense.
Table 2: Other Operating Expenses
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine months Ended September 30,
1996 1995
----- -----
<S> <C> <C>
Marketing $208 $151
Data processing 181 159
Regulatory fees (1) 480 244
Loan Expenses 74 67
Amortization of intangible assets 110 110
Postage and delivery 99 106
Supplies 106 82
Telephone 71 70
Administrative 64 61
Legal and professional 89 71
Courier 54 44
Other 118 84
---------- ---------
Total other operating expenses $ 1,654 $ 1,249
========== =========
</TABLE>
- - -------------------------
(1) Includes one-time SAIF recapitalization assessment of $326,823 in 1996.
Income Taxes
The Company's income tax expense in interim reporting periods is determined by
estimating the combined federal and state effective tax rate for the year and
applying this rate to taxable income. The Company's estimated tax rate for 1996
is 35%. The provision for income taxes was $226,000 and $817,000 in the third
quarter and first nine months of 1996, compared to $275,000 and $697,000 in the
same periods last year.
Earning Assets
Total earning assets at September 30, 1996 were $215.7 million, an increase of
39.0% from $155.3 million one year ago. Average earning assets during the first
nine months increased 8.9% from $157.2 million to $171.1 million.
Loans
During the first nine months of 1996, average loans were $109.6 million and were
64.1% of average earning assets, compared to $91.5 million and 58.2% for 1995.
Total loans have increased by $40.0 million, or 41.2%, since September 30, 1995
to $137.1 million from $97.1 million. Of this increase, 63%, or $25.1 million,
13
<PAGE>
can be attributed to the merger. The remaining $14.9 million of the increase
resulted from internal growth of the loan portfolio, up 15% from the previous
year.
Due mainly to the merger, the Company's loan-to-deposit ratio has slightly
declined from 63.1% at September 30, 1995 to 62.8% in 1996. The following table
compares the composition of the Company's loan portfolio as of September 30,
1996, to 1995. Management expects this loan portfolio composition to stay
approximately the same throughout 1996.
Table 3: Loan Portfolio Composition
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
September 30,
1996 1995
-------- --------
<S> <C> <C>
Commercial, financial and agricultural $ 59,319 $ 43,173
Real estate construction 5,628 2,370
Real estate residential 52,994 35,772
Installment and consumer lines 19,152 15,777
-------- --------
Total loans, net of unearned discount 137,093 97,092
Less: Allowance for loan losses (1,419) (927)
-------- --------
Net loans $135,674 $ 96,165
======== ========
</TABLE>
The following table sets forth the maturity distribution for selected components
of the Company's loan portfolio on September 30, 1996. Loan maturity is based
upon scheduled principal payments.
Table 4: Maturity Schedule of Selected Loans
September 30, 1996
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
0-12 1-5 Over5
Months Years Years Total
------- ------- -------- --------
<S> <C> <C> <C> <C>
All loans other than construction $13,970 $54,242 $ 63,467 $131,679
Real estate construction 4,049 396 1,183 5,628
------- ------- -------- --------
Total $18,019 $54,638 $ 64,650 $137,307
======= ======= ======== ========
Fixed interest rate $ 7,768 $32,778 $ 13,913 $ 54,459
Variable interest rate $10,251 $21,860 $ 50,737 $ 82,848
</TABLE>
Non-Performing Assets
Total non-performing assets have decreased $63,000, or 12.8%, to $429,000 on
September 30, 1996 from $492,000 on September 30, 1995. Non-accrual loans have
decreased $260,000 since December 31, 1995. Of the decrease in non-accrual
loans since year-end, $55,000 was the result of a single charge-off, while the
remainder was attributable to loans which have been liquidated without
significant losses, or paid off without loss.
14
<PAGE>
Table 5: Non-Performing Assets
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
September 30, Year-end
1996 1995 1995
----- ----- -----
<S> <C> <C> <C>
Non-accrual loans $ 112 $ 364 $ 372
Past due loans 90 days or more
and still accruing 192 7 159
Other real estate owned 125 121 126
----- ----- -----
Total non-performing assets $ 429 $ 492 $ 657
===== ===== =====
Percent of total assets 0.18% 0.29% 0.37%
Percent covered by the allowance
for loan losses 331% 188% 144%
</TABLE>
The allowance for loan losses on September 30, 1996, was 1.04% of total loans,
compared to 0.95% on September 30, 1995. Table 6 Allocation of Allowance for
Loan Losses, set forth below, indicates the specific reserves allocated by loan
type.
Table 6: Allocation of Allowance for Loan Losses
(Dollars amounts in thousands)
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
--------------------- ---------------------
Percent of Percent of
Loans in Each Loans in Each
Category to Category to
Amount Total Loans Amount Total Loans
------- ------------- ------ -------------
<S> <C> <C> <C> <C>
Commercial, financial and agricultural $805 57% $476 52%
Real estate construction 16 1% 4 -
Real estate residential 142 10% 65 7%
Consumer 397 28% 369 40%
Unallocated 59 4% 13 1%
------- ---- ----- ----
Total $ 1,419 100% $ 927 100%
======= ==== ===== ====
</TABLE>
The determination of the reserve level rests upon management's judgment about
factors affecting loan quality and assumptions about the economy. Management
considers the period-end allowance appropriate and adequate to cover possible
losses in the loan portfolio; however, management's judgment is based upon a
number of assumptions about future events, which are believed to be reasonable,
but which may or may not prove to be valid. Thus, there can be no assurance
that charge-offs in future periods will not exceed the allowance for loan losses
or that additional increases in the allowance for loan losses will not be
required.
Net charge-offs increased by $113,000 to $183,000 or .17% of average loans for
the first nine months of 1996. This compares to $70,000 or .08% of average loans
for the same period of 1995. A significant portion of this increase is
attributable to the charge-off of a single commercial loan in the first quarter
of 1996, along with a higher volume of small consumer charge-offs earlier in the
year. During the third quarter, loan charge-off activity declined from that of
the first two quarters. Table 7: Activity in Allowance for Loan Losses, below,
indicates activity in the allowance for loan losses for the first nine month
period of 1996 as compared to 1995.
15
<PAGE>
TABLE 7: ACTIVITY IN ALLOWANCE FOR LOAN LOSSES
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Nine months Ended September 30,
1996 1995
------ ------
<S> <C> <C>
Allowance for loan loss balance applicable to
Balance at beginning of year $ 946 $ 827
Allowance acquired in merger 371 -
Loans charged-off
Commercial, financial, and agricultural 61 -
Real estate construction - -
Real estate residential 1 -
Consumer 142 114
------ ------
Total loans charged-off 204 114
------ ------
Recoveries on loans previously charged-off
Commercial, financial, and agricultural 7 6
Real estate construction - -
Real estate residential 1 -
Consumer 13 38
------ ------
Total loans recoveries 21 44
------ ------
Net loans charged-off 183 70
------ ------
Provision for loan losses charged to expense 285 170
------ ------
Balance at end of period $1,419 $ 927
====== ======
Total loans outstanding $ 137,093 $ 97,092
Average loans outstanding $ 109,624 $ 91,451
Allowance for loan losses to loans outstanding 1.04% 0.95%
Net charge-offs to average loans outstanding 0.17% 0.08%
</TABLE>
Securities
When the Company's liquidity position exceeds expected loan demand, other
investments are considered by management as a secondary earnings alternative.
Typically, management remains short-term (under 5 years) in its decision to
invest in certain securities and always strives to ensure a portion of its
investment portfolio to be maturing in the next quarter. As these investments
mature, they will be used to meet cash needs or will be reinvested to maintain a
desired liquidity position. A portion of the investment portfolio is also
designated as available for sale in case an immediate need for liquidity arises.
The Federal Reserve Bank and the Federal Home Loan Bank also require equity
investments to be maintained by the Bank as a member of their services.
The following tables set forth the maturity distribution of securities held to
maturity and available for sale, and the weighted average yields of the
Company's total investment portfolio. Weighted average yields declined in some
maturity ranges due to changes in the distribution resulting from the merger.
In addition to this, normal security calls, maturities, and mortgage-backed
securities paydowns totaled $8.7 million in addition to sales of $4.0 million.
16
<PAGE>
TABLE 8: MATURITY DISTRIBUTION OF SECURITIES HELD TO MATURITY
AND SECURITIES HELD FOR SALE (1)
SEPTEMBER 30, 1996
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
SECURITIES HELD TO MATURITY SECURITIES AVAILABLE FOR SALE
--------------------------- -----------------------------
Amortized Estimated Amortized Estimated
Cost Marktet Value Cost Market Value
---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
U.S. Treasuries
One Year or Less $ - $ - $ 6,538 $ 6,506
Over One Through Five Years - - 19,483 19,400
Over Five Through Ten Years - - - -
Over Ten Years - - - -
------- ------- ------- -------
Total U.S. Treasuries $ - $ - $26,021 $25,906
U.S. Government Agencies and Corporations
One Year or Less 859 864 3,732 3,735
Over One Through Five Years 10,465 10,001 10,918 10,782
Over Five Through Ten Years - - 3,364 3,314
Over Ten Years (4) - - 9,652 9,660
------- ------- ------- -------
Total U.S. Government Agencies $11,324 $10,865 $27,666 $27,491
and Corporations
Obligations of State and Political Subdivisions
One Year or Less - - 150 150
Over One Through Five Years - - 100 104
Over Five Through Ten Years - - 705 737
Over Ten Years - - 857 853
------- ------- ------- -------
Total Obligations of State $ - $ - $ 1,812 $ 1,844
and Political Subdivisions
Other securities
One Year or Less (2) $ - $ - 332 332
Over One Through Five Years (2) - - 78 73
Over Five Through Ten Years - - - -
Over Ten Years (3) - - 1,043 1,038
------- ------- ------- -------
Total Other Securities $ - $ - $ 1,453 $ 1,443
------- ------- ------- -------
Total Securities $11,324 $10,865 $56,952 $56,684
======= ======= ======= =======
</TABLE>
- - -----------------------------------------------------------------
(1) All securities, excluding Obligations of State and Political
Subdivisions, are taxable.
(2) Represents Interest-bearing deposits in other banks.
(3) Represents investment in Federal Reserve Bank and Federal Home
Bank stock and other marketable equity securities.
(4) Represents investments in mortgage-backed securities which are subject
to early repayment.
TABLE 9: WEIGHTED AVERAGE YIELD BY RANGE OF MATURITIES
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1996 1995 1995
------------- ------------- -------------
<S> <C> <C> <C>
One Year or Less 5.79 % 5.83 % 4.64 %
Over One through Five Years 5.95 % 5.63 % 5.65 %
Over Five through Ten Years 6.39 % 7.80 % 5.91 %
Over Ten Years (1) 6.19 % 6.23 % 6.19 %
------ ------ ------
Total Securities 5.99 % 5.83 % 5.64 %
</TABLE>
- - -----------------------------------------------------------------------
(1) Represents adjustable rate mortgage-backed securities which are
repriceable within one year.
17
<PAGE>
Other Earning Assets
Temporary investment needs are created in the day-to-day liquidity movement of
the Bank and are satisfied by selling excess funds overnight (federal funds
sold) to larger, well capitalized banking institutions. If these funds become
excessive, management determines what portion, if any, of the liquidity may be
placed into longer term investments as securities. Due to the present liability
sensitive position of the Bank's balance sheet, management has elected to retain
a larger position in federal funds sold than in the past to guard against rate
sensitivity.
Funding Sources
Deposits
The Company relies on deposits acquired in the local market areas to provide for
funding needs. CNB does not rely on purchased or brokered deposits as a source
of funds. After designating funds for liquidity and lending purposes, the
remaining funds are allocated to the investment portfolio to provide a source of
additional income and liquidity. The increase in deposits at September 30,
1996, compared to the prior year, was $64.3 million of which $43.4 million were
assumed in the merger.
Money market deposits more than doubled, increasing from $13.0 million in 1995
to $28.7 million on September 30, 1996. Although some of this increase is
related to the merger, most of the increase is a result of introducing a Premier
Money Market account designed to compete directly with other ready asset
investment accounts offered by non-banking institutions. The following table
sets forth certain deposit categories for the periods ended September 30, 1996
and 1995.
TABLE 10: TOTAL DEPOSITS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
September 30,
1996 1995
--------- ---------
<S> <C> <C>
Non-interest bearing
Demand checking $ 29,777 $ 18,511
Interest bearing
NOW checking 33,496 24,565
Money market checking 28,703 12,979
Savings deposits 14,952 12,469
Time deposits 111,307 85,430
--------- ---------
Total deposits $ 218,235 $ 153,954
========= =========
</TABLE>
Note Payable
CNB borrowed $2.7 million in connection with the acquisition of Riherd Bank
Holding Company. Total notes outstanding on September 30, 1996 were $3.0
million, compared to $1.3 million in 1995. During the past year, the Company
has continued to voluntarily accelerate principal payments on its notes payable.
Interest Rate Sensitivity / Liquidity
Net interest income, the Company's primary source of revenue, is affected by
changes in interest rates as well as levels and mix of earning assets and
interest-bearing liabilities. The impact on net interest income as a result of
changes in interest rate and balance sheet mix constitutes the Company's
interest rate sensitivity. The interest rate sensitivity position at the end of
the third quarter of 1996 is presented in Table 11 - Rate Sensitivity Analysis.
The difference between rate-sensitive assets and rate-sensitive liabilities, or
the interest rate sensitivity gap, is shown at the bottom of the table.
The Company would benefit from increasing market rates when it is asset
sensitive and would benefit from decreasing market rates when it is liability
sensitive. At September 30, 1996, the Company had a liability sensitive gap
(more liabilities than assets subject to repricing within the stated timeframe)
of $18.9 million within a one-year period. This suggests that if interest
18
<PAGE>
rates should decline over this period, the net interest margin should improve,
and if interest rates should increase, the net interest margin should decline.
Since all interest rates and yields do not adjust at the same velocity, the gap
is only a general indicator of rate sensitivity.
TABLE 11: RATE SENSITIVITY ANALYSIS
SEPTEMBER 30, 1996
(Unaudited, dollar amounts in thousands)
<TABLE>
<CAPTION>
0-3 4-6 7-12 1-5 Over 5
Months Months Months Years Years Total
-------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS
Federal funds sold $ 12,015 - - - - $ 12,015
Securities held to maturity 859 - - 10,465 - 11,324
Securities available for sale (1,2) 5,650 7,685 5,209 30,079 8,329 56,952
Loans (3) 50,100 10,299 20,661 42,583 13,664 137,307
-------- ------- ------- ------- ------- --------
Total earning assets $ 68,624 $ 17,984 $ 25,870 $ 83,127 $ 21,993 $217,598
INTEREST BEARING LIABILITIES
NOW and money market accounts(4) $ 32,919 - - - $ 29,280 $ 62,199
Savings(4) 4,486 - - - 10,466 14,952
Time deposits 27,405 29,205 34,168 20,319 210 111,307
Notes payable and debentures 2,950 274 - - - 3,224
-------- -------- -------- -------- -------- --------
Total interest bearing liabilities $ 67,760 $ 29,479 $ 34,168 $ 20,319 $ 39,956 $191,682
Interest rate sensitivity gap $ 864 $(11,495) $ (8,298) $ 62,808 $(17,963) $ 25,916
Cumulative rate sensitivity gap $ 864 $(10,631) $(18,929) $ 43,879 $ 25,916 $ 25,916
Interest rate sensitivity gap ratio 1.01 0.61 0.76 4.09 0.55 1.14
Cumulative rate sensitivity gap ratio 1.01 0.89 0.86 1.29 1.14 1.14
Ratio of cumulative gap to
Total earning assets:
September 30, 1996 0.40 (4.89) (8.70) 20.17 11.91
September 30, 1995 (0.17) (7.00) (9.96) 19.08 12.48
</TABLE>
- - ------------------------------
(1) Includes interest bearing deposits of $410,000.
(2) Includes equity in Federal Home Loan Bank of $586,000 and Federal Reserve
Bank of $351,000. Securities are shown at their amortized cost,
excluding market value adjustment for unrealized losses of $263,000.
(3) Total loans including unearned discount of $214,000.
(4) Certain deposit accounts are included in the After Five Years category.
If they had been included in the Within Three Months category, the ratio
of cumulative gap to total earning assets would have been (26.96) for the
category at September 30, 1996.
The Bank's interest rate sensitivity, gap and liquidity positions are formally
reviewed quarterly by management to determine whether or not changes in policies
and procedures are necessary to achieve financial goals. Included in the review
is an internal analysis of the possible impact on net interest income due to
market rate changes of plus and minus 1%. In the rate sensitivity analysis,
current average rates within the repricing periods of affected balance sheet
categories are adjusted to an historical percentage of market change according
to each rate shock scenario. The adjusted rates are then substituted in
interest computations and compared to actual results. These efforts will
continue to provide the tools necessary in the Company's attempt to maximize its
primary earnings factor: net interest income.
Liquidity represents the ability to provide steady sources of funds for loan
commitments and investment activities, as well as to provide sufficient funds
to cover deposit withdrawals and payment of debt and operating obligations.
These funds can be obtained by converting assets to cash or by attracting new
deposits. Average liquid assets (cash and amounts due from banks, interest
bearing deposits in other banks, federal funds sold and securities available for
sale) totaled $56.1 million and represented 33.4% of average total deposits
during the first nine months of 1996, compared to $31.6 million and 20.5% for
1995. At the end of 1995 banks were granted an opportunity to restructure their
securities portfolios according to availability for sale. The Bank, thereby,
19
<PAGE>
reclassified $30.1 million of its securities held to maturity as those available
for sale, in effect increasing its liquidity position in anticipation of the
need for future loan demand. Average loans were 65.1% and 59.2% of average
deposits for the nine month period ended September 30, 1996 and 1995,
respectively. As noted in Table 3 - Loan Portfolio Composition, approximately
$117.9 million, or 86.0%, of the loan portfolio consisted of commercial loans,
real estate residential loans and real estate construction loans and
approximately 13.1% of the total loan portfolio matures within one year, see
Table 4 - Maturity Schedule of Selected Loans.
Core deposits, which represent all deposits other than time deposits in excess
of $100,000, were 89.8% of total deposits at the end of the first nine months of
1996 and 91.3% for the comparable period in 1995. The Bank closely monitors
its reliance on time deposits in excess of $100,000, which are generally
considered less stable and less reliable than core deposits. Table 12, below,
sets forth the amounts of time deposits with balances of $100,000 or more that
mature within indicated periods. The Bank does not nor has it ever solicited
brokered deposits.
Table 12: Maturity of Time Deposits $100,000 or More
September 30, 1996
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Amount
-------
<S> <C>
Three months or less $ 5,296
Three though six months 4,719
Six through twelve months 8,055
Over twelve months 4,295
-------
Total $22,365
=======
</TABLE>
CAPITAL RESOURCES
At September 30, 1996, shareholders' equity totaled $18.8 million. The Company
issued 298,172 shares of common stock in connection with the Riherd Bank Holding
Company merger which increased the shares of common stock from 1,639,733 to
1,937,905 issued and outstanding.
CNB paid a dividend of $.06 per share for the third quarter, which is up 20%
from the $.05 paid last quarter. Dividends for the nine months ended September
30, 1996 totaled $.16 per share, compared to $.13 per share during the same
period in 1995. The dividend payout ratio for the year to date is 17.2%,
compared to 16.4% for 1995.
The Company is subject to risk-based capital guidelines that measure capital
relative to risk-weighted assets and off-balance sheet financial instruments.
Capital guidelines issued by the Federal Reserve Board require bank holding
companies to have a minimum total risk-based capital of 8%, with Tier 1 capital
comprising at least half of the total capital. As shown in Table 13, CNB
continues to exceed the guidelines with a Tier 1 capital ratio of 12.8% and a
total capital ratio of 14.1%. An additional measure, the leverage ratio, is
used to measure the relationship of Tier 1 capital to average assets for the
most recent quarter. On September 30, 1996, the Company's ratio was 8.5%,
compared to the requirement of 4%.
TABLE 13: CAPITAL RATIOS
<TABLE>
<CAPTION>
September 30, Well Capitalized Regulatory
1996 1995 Requirements Minimums
----- ----- ------------ --------
<S> <C> <C> <C> <C>
Risk based capital ratios:
Tier 1 capital ratio 12.8% 13.8% 6.0% 4.0%
Total capital to
Risk-weighted assets 14.1% 15.1% 10.0% 8.0%
Tier 1 Leverage ratio 8.5% 7.8% 5.0% 4.0%
</TABLE>
20
<PAGE>
On September 18, 1996, the Board of Directors approved the redemption of its
Series A Variable Rate Mandatory Convertible Subordinated Debentures due
November 15, 2000. The total face amount of the issue being redeemed is
$274,250 which, according to the terms of the Debentures, will be called at a
three percent (3%) premium over the face amount. The planned date of redemption
is November 15, 1996. Although these Debentures had qualified as Tier 2 capital
under the risk-based capital guidelines, the impact of the redemption will not
have a significant impact on the risk-based capital ratios of the company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - There are no material pending legal
proceedings to which the Company or any of its subsidiaries is a
party or of which any of their property is the subject.
Item 2. Changes in Securities -
(a) Not applicable.
(b) Not applicable.
Item 3. Defaults Upon Senior Securities - Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders - Not
applicable.
Item 5. Other Information - Not applicable.
Item 6. Exhibits and Reports on Form 8-K -
(a) Exhibits
None
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the
registrant during the three month period ended September 30, 1996.
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, INC.
-----------------------------------
(Registrant)
By: /s/ K. C. Trowell
-------------------------------
K. C. Trowell
President, Principal Executive
Officer
/s/ Thomas M. Riherd, II
-------------------------------
Thomas M. Riherd, II
Chief Financial Officer
Date: November 13, 1996
21
<TABLE> <S> <C>
<S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 13,607
<INT-BEARING-DEPOSITS> 410
<FED-FUNDS-SOLD> 12,015
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 56,279
<INVESTMENTS-CARRYING> 11,324
<INVESTMENTS-MARKET> 10,865
<LOANS> 137,093
<ALLOWANCE> 1,419
<TOTAL-ASSETS> 242,226
<DEPOSITS> 218,235
<SHORT-TERM> 2
<LIABILITIES-OTHER> 2,001
<LONG-TERM> 2,950
0
0
<COMMON> 19
<OTHER-SE> 18,745
<TOTAL-LIABILITIES-AND-EQUITY> 242,226
<INTEREST-LOAN> 7,810
<INTEREST-INVEST> 2,279
<INTEREST-OTHER> 385
<INTEREST-TOTAL> 10,474
<INTEREST-DEPOSIT> 4,505
<INTEREST-EXPENSE> 4,576
<INTEREST-INCOME-NET> 5,898
<LOAN-LOSSES> 285
<SECURITIES-GAINS> (25)
<EXPENSE-OTHER> 4,484
<INCOME-PRETAX> 2,340
<INCOME-PRE-EXTRAORDINARY> 1,523
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,523
<EPS-PRIMARY> 0.91
<EPS-DILUTED> 0.91
<YIELD-ACTUAL> 4.60
<LOANS-NON> 112
<LOANS-PAST> 192
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 946
<CHARGE-OFFS> 204
<RECOVERIES> 21
<ALLOWANCE-CLOSE> 1,419
<ALLOWANCE-DOMESTIC> 1,360
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 59
</TABLE>
