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| 8-K - FORM 8-K - CNB CORP /MI/ | d345564d8k.htm |
Exhibit 99
Quarterly Shareholder Brochure of CNB Corporation
May 7, 2012
Dear Shareholders,
For the first quarter 2012 CNB Corporation’s earnings were $365,000, compared to $184,000 for the first quarter 2011. The increase in income is a result of the strategy to eliminate problem assets during 2011. The challenges faced over the past 12 months had a negative impact on 2011 results; however the end result of this past year clearly demonstrated management’s commitment to make the tough decisions related to recognizing and addressing problem assets. In addition to the increase in income for the first quarter, classified assets, including “bank owned real estate,” have been reduced substantially as of the date of this letter. Management has a prudent strategy to deliver long term value for the shareholders. The increase in income and reduction in classified assets are an indication the strategy employed by management is having the anticipated effect; laying the groundwork to maintain profitability in 2012. Highlights of the Company’s financial performance for the first three months of 2012 follow:
| • | Assets totaled $252.1 million as of March 31, 2012, a 1.6% reduction from March 31, 2011. Assets continue to decline as a result of minimal loan demand. |
| • | Outstanding loans were $119.7 million as of March 31, 2012, compared to $126.1 million for the same period in 2011; a reduction of 5.1%. |
| • | Allowance for loan losses increased from $1.8 million as of March 31, 2011 to $3.8 million as of March 31, 2012. The current level of reserve is believed to be adequate to meet future potential loan losses. |
| • | Deposits reduced marginally from $231.0 million as of March 31, 2011 to $229.6 million as of March 31, 2012 a reduction of 0.6%. |
| • | Core earnings reflect a gain on sale of “bank owned real estate” of $400,000, a gain on the sale of securities totaling $253,000, as well as a provision for loan losses of $710,000. Both interest on deposits and non-interest expenses declined as well. The net effect was an increase in Return on Average Assets of 0.59% for the three months ended March 31, 2012; compared to 0.29% for the same period in 2011. |
We are pleased the results of management’s efforts to respond to the economic downturn are beginning to translate into improvements in financial performance. Moving forward management will remain diligent in monitoring and addressing issues in the loan portfolio in order to maintain the positive momentum. On another positive note, the potential for a recovery from the recent sale of the hospital is a possibility, and if more information is available an update will be provided at the Annual Shareholders meeting on May 15, 2012. I look forward to seeing you there.
| Sincerely, |
| Susan A. Eno |
| President and CEO |
Consolidated Balance Sheets
(UNAUDITED)
in thousands of dollars
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| ASSETS |
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| Cash and due from banks |
$ | 5,755 | $ | 2,901 | ||||
| Interest-bearing deposits with other financial institutions |
18,186 | 14,899 | ||||||
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| Total cash and cash equivalents |
23,941 | 17,800 | ||||||
| Time deposits with other financial institutions |
14,054 | 9,791 | ||||||
| Securities available for sale |
74,076 | 75,392 | ||||||
| Securities held to maturity (market value of $4,995 in 2012 and $8,546 in 2011) |
4,578 | 8,177 | ||||||
| Other securities |
997 | 999 | ||||||
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| Total investment securities |
79,651 | 84,568 | ||||||
| Loans |
119,699 | 126,132 | ||||||
| Less allowance for loan losses |
(3,804 | ) | (1,845 | ) | ||||
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| Loans, Net |
115,895 | 124,287 | ||||||
| Premises and equipment, net |
5,160 | 5,398 | ||||||
| Other assets |
13,425 | 14,437 | ||||||
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| Total assets |
$ | 252,126 | $ | 256,281 | ||||
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| LIABILITIES |
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| Deposits |
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| Noninterest-bearing demand |
$ | 54,056 | $ | 38,553 | ||||
| Interest-bearing deposits |
175,572 | 192,475 | ||||||
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| Total deposits |
229,628 | 231,028 | ||||||
| Other liabilities |
4,414 | 4,300 | ||||||
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| Total liabilities |
234,042 | 235,328 | ||||||
| SHAREHOLDERS’ EQUITY |
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| Common Stock |
3,030 | 3,030 | ||||||
| Surplus |
19,499 | 19,499 | ||||||
| Retained Earnings and Accumulated other Comprehensive Income/(Loss) |
(4,445 | ) | (1,576 | ) | ||||
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| Total shareholders’ equity |
18,084 | 20,953 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 252,126 | $ | 256,281 | ||||
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Consolidated Statement of Income
(Unaudited)
in thousands of dollars
Three months ended March 31,
| 2012 | 2011 | 2010 | ||||||||||
| INTEREST INCOME |
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| Interest and fees on loans |
$ | 1,855 | $ | 1,938 | $ | 2,234 | ||||||
| Interest on securities: |
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| Taxable |
196 | 281 | 215 | |||||||||
| Tax exempt |
86 | 129 | 145 | |||||||||
| Other interest income |
55 | 57 | 59 | |||||||||
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| Total interest income |
2,192 | 2,405 | 2,653 | |||||||||
| INTEREST EXPENSE ON DEPOSITS |
284 | 406 | 587 | |||||||||
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| NET INTEREST INCOME |
1,908 | 1,999 | 2,066 | |||||||||
| Provision for loan losses |
710 | 300 | 225 | |||||||||
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| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
1,198 | 1,699 | 1,841 | |||||||||
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| NONINTEREST INCOME |
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| Service charges and fees |
232 | 237 | 246 | |||||||||
| Net realized gains from sale of loans |
160 | 27 | 30 | |||||||||
| Loan servicing fees, net of amortization |
2 | 23 | 20 | |||||||||
| Gain on the sale of other real estate owned |
400 | — | — | |||||||||
| Gain on sale of securities |
253 | — | — | |||||||||
| Other income |
101 | 127 | 82 | |||||||||
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| Total noninterest income |
1,148 | 414 | 378 | |||||||||
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| NONINTEREST EXPENSES |
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| Salaries and benefits |
1,017 | 962 | 984 | |||||||||
| Occupancy |
230 | 264 | 256 | |||||||||
| FDIC insurance premiums |
87 | 139 | 128 | |||||||||
| ORE losses and carrying costs |
31 | 40 | 114 | |||||||||
| Other expenses |
493 | 511 | 486 | |||||||||
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| Total noninterest expenses |
1,858 | 1,916 | 1,968 | |||||||||
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| INCOME BEFORE INCOME TAXES |
488 | 197 | 251 | |||||||||
| Income tax expense |
123 | 13 | 26 | |||||||||
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| NET INCOME |
$ | 365 | $ | 184 | $ | 225 | ||||||
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| BASIC NET INCOME PER SHARE |
$ | 0.30 | $ | 0.15 | $ | 0.19 | ||||||
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