8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

February 24, 2011
Date of Report (Date of earliest event reported)

CNB CORPORATION

(Exact name of registrant as specified in its charter)

Michigan
(State or other jurisdiction of
incorporation or organization) 033-00737
(Commission
file number) 38-2662386
(I.R.S. Employer
Identification No.)

303 North Main Street, Cheboygan MI 49721
(Address of principal executive offices, including Zip Code)

(231) 627-7111
(Registrant’s telephone number, including area code)

NO CHANGE
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99

ITEM 8.01. Other Events

On February 24, 2011, CNB Corporation (“Corporation”) issued a quarterly shareholder brochure in which it reviewed earnings for the year to date period ending December 31, 2010.

A copy of the information contained in the Corporation’s brochure is attached hereto as Exhibit 99 and is hereby incorporated by reference into this Form 8-K, and made a part hereof.

ITEM 9.01. Financial Statements and Exhibits

(c) Exhibits

Exhibit 99 Quarterly brochure of CNB Corporation dated February 24, 2011

SIGNATURES

     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 hereunto duly authorized.

CNB Corporation
(Registrant)
 

/s/ Susan A. Eno  

Susan A. Eno 

President and Chief Executive Officer 

Dated: February 24, 2011

Exhibit Index

Exhibit
No.	Description
Exhibit 99	Quarterly brochure of CNB Corporation dated February 24, 2011

EX-99

Exhibit 99
Quarterly Shareholder Brochure of CNB Corporation

February 24, 2011
Dear Shareholder,

The following are highlights of the bank’s financial performance for 2010.

• Assets grew by 2.4%, from $249.5 million at December 31, 2009, to $255.4 million at December 31, 2010. The growth was a direct result of deposits that increased by 2.5% to $230.2 million at December 31, 2010.

• Loans declined by $19.5 million, or 12.9%, in 2010 while short term investments and bonds grew by $24.9 million. The decline in loans was the result of loan pay downs, foreclosures and charge-offs. In addition, many mortgage customers took advantage of the lower mortgage rates to refinance longer term mortgages, which the bank then sells on the secondary market. As reported in the past, new loan opportunities have been very limited and it is anticipated this will continue through 2011.

• Nonperforming assets continued to be a major focus in 2010. Resolution of the nonperforming assets will continue to keep our attention into 2011. Nonperforming assets consist of nonaccrual loans, loans over 90 days delinquent, foreclosed properties and other repossessed assets. Nonperforming assets, at $9.5 million, were 3.7% of total assets at year end 2010. A decrease of approximately $1.6 million from the $11.1 million at December 31, 2009.

• The allocation for loan loss during 2010 was $1.1 million, compared to $1.7 million in 2009 and $1.8 million in 2008. Provision expenses in 2011 are expected to continue at much lower levels as it is believed the current level of reserve is adequate to meet anticipated future loan losses.

• The net interest margin for 2010 declined to 3.56%, compared to 3.69% for 2009. The decline resulted from lower yields on new loans and securities, as well as the high level of nonperforming assets. Continued pressure on the net interest margin is anticipated during 2011 as higher-yielding loans liquidate and are replaced with lower-yielding agency and treasury securities.

• Core earnings for 2010, excluding life insurance proceeds of $189,000, were $624,000 compared to core earnings of $316,000 for 2009 when adjusted to exclude a $1.8 million gain on the sale of securities.

• Shareholder equity at year-end 2010 was $20.8 million, compared to $20.3 million at year-end 2009.

Economists continue to predict a slow recovery; interest rates will remain flat as will loan growth. As an organization our outlook for 2011 continues to be conservatively positive; improving asset quality and strengthening capital will continue to be the focus. I am well aware that many shareholders are wondering when dividend payments will resume and I want to assure you this is a priority. Payment of a dividend will continue to be assessed on a quarterly basis and as soon as capital is sufficient and earnings are stable our intention is to resume payment of a dividend.

Sincerely,
Susan A. Eno
President & CEO

Consolidated Balance Sheets
(UNAUDITED)

in thousands of dollars

	December 31,
	2010			2009
ASSETS
Cash and due from banks	$	3,648		$	4,055
Interest-bearing deposits with other financial institutions		18,905			13,192
Total cash and cash equivalents		22,553			17,247
Time deposits with other financial institutions		9,626			8,669
Securities available for sale		66,588			45,473
Securities held to maturity (market value of $8,907 in 2010 and $10,837 in 2009)		8,442			10,302
Other securities		999			1,008
Total investment securities		76,029			56,783
Loans		131,516			151,034
Less allowance for loan losses		(1,712	)		(2,863	)
Loans, Net		129,804			148,171
Premises and equipment, net		5,499			5,921
Other assets		11,910			12,711
Total assets	$	255,421		$	249,502
LIABILITIES
Deposits
Noninterest-bearing demand	$	42,106		$	40,016
Interest-bearing deposits		188,060			184,542
Total deposits		230,166			224,558
Other liabilities		4,422			4,624
Total liabilities		234,588			229,182
SHAREHOLDERS’ EQUITY
Common Stock		3,030			3,034
Surplus		19,498			19,509
Retained Earnings and Accumulated other Comprehensive Loss		(1,695	)		(2,223	)
Total shareholders’ equity		20,833			20,320
Total liabilities and shareholders’ equity	$	255,421		$	249,502

Consolidated Statement of Income
(Unaudited)

in thousands of dollars
Twelve months ended December 31,

INTEREST INCOME	2010			2009			2008
Interest and fees on loans	$	8,630		$	10,097		$	11,653
Interest on securities:
Taxable		939			1,295			1,718
Tax exempt		524			541			553
Other interest income		244			235			433
Total interest income		10,337			12,168			14,357
INTEREST EXPENSE ON DEPOSITS		2,092			3,500			4,871
NET INTEREST INCOME		8,245			8,668			9,486
Provision for loan losses		1,125			1,725			1,831
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		7,120			6,943			7,655
NON-INTEREST INCOME
Service charges and fees		1,067			1,118			1,200
Net realized gains from sale of loans		411			429			128
Loan servicing fees, net of amortization		32			(31	)		117
Gain on the sale of othr real estate owned		12			3			304
Other income		395			353			283
Total noninterest income		1,917			1,872			2,032
NONINTEREST EXPENSE
Salaries and benefits		3,981			4,130			4,398
Deferred compensation		241			321			344
Occupancy		976			1,053			1,098
Securities impairment write-down		0			(1,762	)		7,107
FDIC insurance premiums		540			623			149
ORE losses and carrying costs		897			739			605
Other expenses		1,597			1,832			1,729
Total noninterest expense		8,232			6,936			15,430
INCOME BEFORE INCOME TAXES		805			1,879			(5,743	)
Income tax expense		(8	)		(236	)		(518	)
NET INCOME	$	813		$	2,115			($5,225	)
BASIC NET INCOME PER SHARE	$	0.67		$	1.74			($4.31	)