10-Q 1 k99302e10vq.txt QUARTERLY REPORT FOR PERIOD ENDED SEPTEMBER 30, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 Commission file # 0-28388 CNB CORPORATION (Exact name of registrant as specified in its charter) Michigan 38-2662386 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) 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) 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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of November 3, 2005 there were 1,236,566 shares of the issuer's common stock outstanding. CNB CORPORATION Index PART I - FINANCIAL INFORMATION Item 1 - Financial Statements (Condensed): Consolidated Balance Sheets - September 30, 2005 and December 31, 2004............................ 3 Consolidated Statements of Income - Three and Nine Months Ended September 30, 2005 and 2004....... 4 Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2005 and 2004............. 5 Notes to Consolidated Financial Statements........................................................ 6 - 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations......... 8 - 11 Item 3 - Quantitative and Qualitative Disclosures About Market Risk.................................... 11 Item 4 - Controls and Procedures....................................................................... 12 PART II - OTHER INFORMATION Item 1 - Legal Proceedings............................................................................. 12 Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds................................... 12 Item 3 - Defaults Upon Senior Securities............................................................... 13 Item 4 - Submission of Matters to a Vote of Security Holders........................................... 13 Item 5 - Other Information............................................................................. 13 Item 6 - Exhibits and Reports on Form 8-K.............................................................. 13 Signatures............................................................................................. 14 - 17 Exhibit Index.......................................................................................... 18
2 PART I - FINANCIAL INFORMATION ITEM 1-FINANCIAL STATEMENTS (CONDENSED) CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data)
September 30, December 31, 2005 2004 (Unaudited) ASSETS Cash and due from banks $ 6,762 $ 5,795 Interest-bearing deposits with other financial institutions 2,013 2,000 Federal funds sold 4,963 4,900 ----------------- ------------------ Total cash and cash equivalents 13,738 12,695 Securities available for sale 76,425 78,280 Securities held to maturity (market value of $4,297 in 2005 and $4,663 in 2004) 4,257 4,621 Other securities 3,758 6,050 Loans, held for sale 185 - Loans, net of allowance for loan losses of $1,440 in 2005 and $1,350 in 2004 150,715 143,258 Premises and equipment, net 5,018 4,600 Other assets 6,393 4,590 ----------------- ------------------ Total assets $ 260,489 $ 254,094 ================= ================== LIABILITIES Deposits Noninterest-bearing $ 44,061 $ 37,289 Interest-bearing 187,144 188,122 ----------------- ------------------ Total deposits 231,205 225,411 Other liabilities 4,296 4,527 ----------------- ------------------ Total liabilities 235,501 229,938 SHAREHOLDERS' EQUITY Common stock - $2.50 par value; 2,000,000 shares authorized; and 1,236,566 and 1,237,994 shares issued and outstanding in 2005 and 2004 3,092 3,095 Additional paid-in capital 20,402 20,475 Retained earnings 2,032 1,010 Accumulated other comprehensive income, net of tax (538) (424) ----------------- ------------------ Total shareholders' equity 24,988 24,156 ----------------- ------------------ Total liabilities and shareholders' equity $ 260,489 $ 254,094 ================= ==================
See accompanying notes to consolidated financial statements. 3 CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data)
Three months ended Nine months ended September 30, September 30, 2005 2004 2005 2004 (Unaudited) INTEREST INCOME Loans, including fees $2,653 $2,406 $7,677 $7,236 Securities Taxable 528 507 1,574 1,416 Tax exempt 136 173 440 528 Interest on federal funds sold 82 52 189 102 ------ ------ ------ ------ Total interest income 3,399 3,138 9,880 9,282 INTEREST EXPENSE ON DEPOSITS 836 683 2,215 2,153 ------ ------ ------ ------ NET INTEREST INCOME 2,563 2,455 7,665 7,129 Provision for loan losses 30 - 90 - ------ ------ ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,533 2,455 7,575 7,129 ------ ------ ------ ------ NONINTEREST INCOME Service charges and fees 253 265 710 737 Net realized gains from sales of loans 71 61 183 248 Loan servicing fees, net of amortization 37 26 94 92 Other income 40 40 443 156 ------ ------ ------ ------ Total noninterest income 401 392 1,430 1,233 NONINTEREST EXPENSES Salaries and benefits 861 837 2,475 2,580 Deferred compensation 110 81 576 239 Pension 54 84 210 252 Hospitalization 137 129 400 356 Occupancy 234 203 653 598 Supplies 33 40 125 120 Legal and Professional 117 54 349 211 Other expenses 287 266 805 749 ------ ------ ------ ------ Total noninterest expense 1,833 1,694 5,593 5,105 ------ ------ ------ ------ INCOME BEFORE INCOME TAXES 1,101 1,153 3,412 3,257 Income tax expense 332 334 906 933 ------ ------ ------ ------ NET INCOME $ 769 $ 819 $2,506 $2,324 ====== ====== ====== ====== TOTAL COMPREHENSIVE INCOME $ 726 $1,259 $2,392 $1,968 ====== ====== ====== ====== Return on average assets (annualized) 1.16% 1.23% 1.29% 1.20% Return on average equity (annualized) 12.36% 13.16% 13.52% 12.26% Basic earnings per share $ 0.62 $ 0.66 $ 2.03 $ 1.87 Diluted earnings per share $ 0.62 $ 0.66 $ 2.02 $ 1.86 Dividends declared per share $ 0.40 $ 0.40 $ 1.20 $ 1.20
See accompanying notes to consolidated financial statements. 4 CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands).
Nine months ended September 30, 2005 2004 (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 2,506 $ 2,324 Adjustments to reconcile net income to net cash from operating activities Depreciation and amortization 379 860 Provision for loan losses 90 - Loans originated for sale (8,781) (13,261) Proceeds from sales of loans originated for sale 8,688 13,432 Gain on sales of loans (183) (248) Increase in other assets (1,653) (238) Increase in other liabilities 727 343 -------- -------- Total adjustments (733) 888 -------- -------- Net cash provided by operating activities 1,773 3,212 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturities of securities available for sale 15,884 24,244 Purchase of securities available for sale (14,458) (32,568) Proceeds from maturities of securities held to maturity 1,814 1,771 Purchase of securities held to maturity (1,450) (1,785) Proceeds from maturities of other securities 2,350 370 Purchase of other securities (58) (329) Net change in portfolio loans (7,547) (265) Premises and equipment expenditures (767) (875) -------- -------- Net cash used in investing activities (4,232) (9,437) CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 5,794 6,668 Dividends paid (2,216) (2,180) Net proceeds from exercise of stock options 21 47 Purchases of common stock (97) (503) -------- -------- Net cash provided by financing activities 3,502 4,032 -------- -------- Net change in cash and cash equivalents 1,043 (2,193) Cash and cash equivalents at beginning of year 12,695 17,065 -------- -------- Cash and cash equivalents at end of period $ 13,738 $ 14,872 ======== ======== Cash paid during the period for: Interest $ 2,177 $ 2,160 Income taxes $ 1,017 $ 920
See accompanying notes to consolidated financial statements. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1-Basis of Presentation The consolidated financial statements include the accounts of CNB Corporation ("Company") and its wholly owned subsidiary, Citizens National Bank of Cheboygan ("Bank") and the Bank's wholly owned subsidiary CNB Mortgage Corporation. All significant intercompany accounts and transactions are eliminated in the consolidation process. The statements have been prepared by management without an audit by independent certified public accountants. However, these statements reflect all adjustments (consisting of normal recurring accruals) and disclosures which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented and should be read in conjunction with the notes to the consolidated financial statements included in the CNB Corporation's Form 10-K for the year ended December 31, 2004. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Because the results of operations are so closely related to and responsive to changes in economic conditions, the results for any interim period are not necessarily indicative of the results that can be expected for the entire year. Stock Compensation: The following proforma information presents net income and basic and diluted earnings per share had the fair value method been used to measure compensation for stock options granted. The exercise price of options granted is equivalent to the market price of the underlying stock at the stock grant date; therefore no compensation expense has been recorded for stock options granted. FAS123R will be effective in 2006 and requires companies to record compensation for stock options provided to employees in return for employee service. The cost is measured at the fair value of the options when granted, and this cost is expensed over the employee's service period, which is normally the vesting period of the options. This will apply to awards granted or modified after adoption. Compensation cost will also be recorded for prior option grants that vest after the date of adoption. The effect on results of operations will depend on the level of future option grants and the calculation of the fair value of the options granted at such future date, as well as the vesting periods provided, and so cannot currently be predicted.
For the Three Months Ended For the Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ------------ -------------- ------------- --------------- Net income as reported $ 769 $ 819 $ 2,506 $ 2,324 Deduct: Stock based compensation expense determined under fair value method - (11) - (33) ------------ ------------- ------------- -------------- Proforma net income $ 769 $ 808 $ 2,506 $ 2,291 ============ ============= ============= ============== Basic earnings per share as reported $ 0.62 $ 0.66 $ 2.03 $ 1.87 Proforma basic earnings per share 0.62 0.65 2.03 1.84 Diluted earnings per share as reported 0.62 0.66 2.02 1.86 Proforma diluted earnings per share 0.62 0.65 2.02 1.84
There were no stock options granted during the three or nine months ended September 30, 2005 and 2004. 6 In future years, as additional options are granted, the effect on net income and earnings per share may increase. Stock options are used to reward certain officers and provide them with an additional equity interest. Options are issued for 10 year periods and have varying vesting schedules. Information about options available for grant and options granted follows:
Weighted Average Available Options Exercise For Grant Outstanding Price Balance at January 1, 2005 9,952 27,839 $ 46.92 Options exercised (510) 42.71 Options forfeited (525) 48.57 ----- ------ Balance at September 30, 2005 9,952 26,804 $ 46.98 ===== ======
At September 30, 2005 options outstanding had a weighted average remaining life of approximately 4.7 years. There were 26,804 options exercisable at September 30, 2005 with a weighted-average exercise price of $46.98. There have been no significant changes in the Company's critical accounting policies since December 31, 2004. Note 2-Earnings Per Share Basic earnings per share are calculated solely on weighted-average common shares outstanding. Diluted earnings per share will reflect the potential dilution of stock options and other common stock equivalents. For the three and nine month periods ending September 30, 2005 the weighted average shares outstanding in calculating basic earnings per share were 1,237,305 and 1,236,562 while the weighted average number of shares for diluted earnings per share were 1,240,083 and 1,239,223. As of September 30, 2005 there were 8,340 shares not considered in the earnings per share calculation because they were antidilutive. For the three and nine month periods ending September 30, 2004 the weighted average shares outstanding in calculating basic earnings per share were 1,238,362 and 1,242,799 while the weighted average number of shares for diluted earnings per share were 1,240,866 and 1,246,969. 7 ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion provides information about the consolidated financial condition and results of operations of CNB Corporation ("Company") and its wholly owned subsidiary, Citizens National Bank of Cheboygan ("Bank") and the Bank's wholly owned subsidiary CNB Mortgage Corporation for the three and nine month periods ending September 30, 2005. FINANCIAL CONDITION The Company's balances of cash and cash equivalents increased $1 million or 8.2%. During the nine month period ending September 30, 2005, $1.8 million in cash was provided by operating activities. Investing activities utilized $4.2 million during the nine months ended September 30, 2005, primarily due to origination of loans and financing activities provided $3.5 million. SECURITIES The securities portfolio decreased $4.5 million since December 31, 2004. The available for sale portfolio increased to 90.5% of the investment portfolio up from 88.0% at year-end. The fair values and related unrealized gains and losses for securities available for sale were as follows, in thousands of dollars:
Gross Gross Fair Unrealized Unrealized Value Gains Losses ------- ---------- ---------- Available for Sale SEPTEMBER 30, 2005 U.S. Government agency $54,281 $ 0 $ (603) Mortgage-backed 8,931 0 (64) State and municipal 13,213 126 (23) ------- ------- ------- $76,425 $ 126 $ (690) ======= ======= ======= DECEMBER 31, 2004 U.S. Government agency $56,786 $ 20 $ (431) Mortgage-backed 3,149 8 - State and municipal 18,345 255 (17) ------- ------- ------- $78,280 $ 283 $ (448) ======= ======= =======
The carrying amount, unrecognized gains and losses, and fair value of securities held to maturity were as follows, in thousand of dollars:
Gross Gross Carrying Unrecognized Unrecognized Fair Amount Gains Losses Value -------- ------------ ------------ ----- Held to Maturity SEPTEMBER 30, 2005 State and municipal $4,257 $ 56 $ (16) $4,297 ====== ====== ====== ====== DECEMBER 31, 2004 State and municipal $4,621 $ 55 $ (13) $4,663 ====== ====== ====== ======
8 The carrying amount and fair value of securities by contractual maturity at September 30, 2005 are shown below, in thousands of dollars.
Available for sale Held to Maturity Fair Carrying Fair Value Amount Value ------------------ -------- ------- Due in one year or less $31,082 $ 253 $ 254 Due from one to five years 43,344 2,233 2,259 Due from five to ten years 1,150 593 606 Due after ten years 849 1,178 1,178 ------- ------- ------- $76,425 $ 4,257 $ 4,297 ======= ======= =======
LOANS Net loans at September 30, 2005 increased $7.5 million from December 31, 2004. The table below shows total loans outstanding by type, in thousands of dollars, at September 30, 2005 and December 31, 2004 and their percentages of the total loan portfolio. All loans are domestic. A quarterly review of loan concentrations at September 30, 2005 indicates the pattern of loans in the portfolio has not changed significantly. There is no individual industry with more than a 10% concentration. However, all tourism related businesses, when combined, total 13.9% of total loans.
September 30, 2005 December 31, 2004 Balance % of total Balance % of total ------------ ---------- ---------- ---------- Portfolio loans: Residential real estate $ 81,423 53.51% $ 83,364 57.64% Consumer 9,478 6.23% 8,699 6.02% Commercial real estate 51,497 33.84% 43,336 29.97% Commercial 9,765 6.42% 9,220 6.38% ----------- ------ ---------- ------ 152,163 100.00% 144,619 100.00% ====== ====== Deferred loan origination fees, net (8) (11) Allowance for loan losses (1,440) (1,350) ----------- ---------- Loans, net $ 150,715 $ 143,258 =========== ==========
ALLOWANCE AND PROVISION FOR LOAN LOSSES An analysis of the allowance for loan losses, in thousands of dollars, for the nine months ended September 30, follows:
2005 2004 -------- -------- Beginning balance $ 1,350 $ 1,575 Provision for loan losses 90 - Charge-offs (12) (221) Recoveries 12 8 ------- ------- Ending balance $ 1,440 $ 1,362 ======= =======
The Company had one impaired loan during 2004 with an average balance of approximately $100,000. The balance of this loan was zero at December 31, 2004. The Company had no impaired loans during the first nine months of 2005. 9 Since December 31, 2004, net loans have increased $7.5 million and the loan portfolio has undergone a shift in its composition over the past nine months. Since December 31, 2004 commercial mortgages have increased $8.2 million while consumer mortgages have decreased $1.9 million. This is primarily due to a slow down in residential refinancing and a stronger emphasis on commercial lending. There has been no change in the bank's lending policies. The lending staff continues to be well-trained and experienced. The trend and volume of past due loans continues to be well-controlled and in line with peer averages. In response to the change in portfolio composition and loan growth management recorded a provision of $90,000 in the first nine months of 2005 compared to $0 for 2004. CREDIT QUALITY The Company maintains a high level of asset quality as a result of actively managing delinquencies, nonperforming assets and potential loan problems. The Company performs an ongoing review of all large credits to watch for any deterioration in quality. Nonperforming loans are comprised of: (1) loans accounted for on a nonaccrual basis; (2) loans contractually past due 90 days or more as to interest or principal payments (but not included in nonaccrual loans in (1) above); and (3) other loans whose terms have been renegotiated to provide a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower (exclusive of loans in (1) or (2) above). The aggregate amount of nonperforming loans is shown in the table below.
September 30, December 31, 2005 2004 (dollars in thousands) Nonaccrual $ - $ - Loans past due 90 days or more 69 674 Troubled debt restructurings - - ------- ------- Total nonperforming loans $ 69 $ 674 ======= ======= Percent of total loans 0.05% 0.47%
DEPOSITS Deposits at September 30, 2005 increased $5.8 million since December 31, 2004. Interest-bearing deposits decreased $978,000 or less than 1% for the nine months ended September 30, 2005, while noninterest -bearing deposits increased $6.8 million or 18.2%. This growth can be attributed to seasonal activity. LIQUIDITY AND FUNDS MANAGEMENT As of September 30, 2005, the Company had $5.0 million in federal funds sold, $76.4 million in securities available for sale and $253,000 in held to maturity securities maturing within one year. These sources of liquidity are supplemented by new deposits and loan payments received by customers. These short-term assets represent 35.3% of total deposits as of September 30, 2005. Total equity of the Company at September 30, 2005 was $25.0 million compared to $24.2 million at December 31, 2004. RESULTS OF OPERATIONS CNB Corporation's 2005 net income for the first nine months was $2.5 million, an increase of $182,000 compared to 2004 results. This growth and change in composition can be attributed to an increase in net interest income resulting from the higher rate environment compared to 2004. Earnings also include $300,000 due to life insurance proceeds received due to death of a director. The proceeds were offset by additional expense of $315,000 to recognize the amount payable to the director upon death under the deferred compensation plan. Basic earnings per share were $2.03 and diluted earnings per share were $2.02 for 2005 10 compared to basic earnings per share of $1.87 and diluted earnings per share of $1.86 for 2004. The return on assets was 1.29% for the first nine months of the year versus 1.20% for the same period in 2004. The return on equity was 13.52% compared to 12.26% for the same period last year. Net income for the three months ending September 30, 2005 was $769,000 compared to $819,000 for 2004. This was a decrease of $50,000 or 6.1%. Basic and diluted earnings per share were $0.62 compared to $0.66 for 2004. The return on average assets was 1.16% compared to 1.23% for 2004. The return on average equity was 12.36% compared to 13.16% for 2004. These decreases were primarily due to the higher interest rates being paid on deposits in the third quarter 2005 as compared to the same period in 2004. For the first nine months of 2005, net interest income was $7.7 million representing an increase of 7.5% from the same period in 2004. This increase can be attributed to an increase in interest income compared to the first nine months of 2004. The fully taxable equivalent net interest margin increased to 4.31% for the nine month period ending September 30, 2005 compared to 4.03% for the same period ending September 30, 2004. This change can be attributable to an increase in overall interest rates from 2005 to 2004. Net interest income for the three months ending September 30, 2005 was $2.6 million compared to $2.5 million for the same period in 2004 representing an increase of 4.4%. This increase is for the same reason as noted above. In response to the change in the loan portfolio composition and loan growth management recorded a provision expense of $90,000 in the first nine months in 2005 compared to $0 for the same period in 2004. The provision expense for the three months ending September 30, 2005 was $30,000 and no provision expense was recorded during the third quarter of 2004. Noninterest income for the nine months ending September 30, 2005 was $1.4 million, an increase of $197,000 or 16.0% from the same period last year. The majority of this increase can be attributed to income from the life insurance proceeds as mentioned above. The increase in noninterest income due to the life insurance proceeds was offset, in part by a decline in gains on sales of loans due to the lesser amount of loans that were sold to the secondary market year-to-date 2005 as compared to the same period in 2004. For the three months ended September 30, 2005 noninterest income increase to $401,000 as compared to $392,000 for the same period in 2004. This increase can be attributed to increased gains on the sale of loans and increase servicing fee income, but was offset by decreased service charge fee income. Noninterest expense for the first nine months of 2005 was $5.6 million compared to $5.1 million for the same period in 2004. This increase can largely be attributed to the increase in deferred compensation expense as noted above. Legal and professional fees increase $138,000 for the nine months ending September 30, 2005. Some of this increase can be attributed to increased fees from outside auditors due to additional audit requirements under Sarbanes-Oxley. Increases in professional fees also include service costs for the addition of internet banking and other miscellaneous professional service fees. For the three months ended September 30, 2005, noninterest expense increased $139,000 to $1.8 million as compared to $1.7 million for the same period in 2004. The majority of this increase can be attributed to an increase in legal and professional fees for the same reasons as noted above. The provision for federal income tax was 26.6% of pretax income for the nine months ended September 30, 2005 as compared to 28.6% for the same period in 2004. The difference between the tax rates for the two periods is due to the unanticipated non-taxable income from insurance proceeds during 2005. The difference between the effective tax rate and the federal corporate tax rate of 34% is generally due to tax-exempt interest earned on investments and loans and other tax-related items. ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary source of market risk for the financial instruments held by the Company is interest rate risk. That is, the risk that a change in market rates will adversely affect the market value of the instruments. Generally, the longer the maturity, the higher the interest rate risk exposure. While maturity information does not necessarily present all aspects of exposure, it may provide an indication of where risks are prevalent. 11 All financial institutions assume interest rate risk as an integral part of normal operations. Managing and measuring interest rate risk is a dynamic, multi-faceted process that ranges from reducing the exposure of the Company's net interest margin to swings in interest rates, to assuring sufficient capital and liquidity to support future balance sheet growth. The Company manages interest rate risk through the Asset Liability Committee. The Asset Liability Committee is comprised of bank officers from various disciplines. The Committee reviews policies and establishes rates which lead to prudent investment of resources, the effective management of risks associated with changing interest rates, the maintenance of adequate liquidity, and the earning of an adequate return of shareholders' equity. Management believes that there has been no significant changes to the interest rate sensitivity since the presentation in the December 31, 2004 Management Discussion and Analysis appearing in the December 31, 2004 10K. ITEM 4-CONTROLS AND PROCEDURES The term "disclosure controls and procedures" is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"). These rules refer to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed summarized and reported within required time periods. Our Chief Executive Officer and Treasurer, who serves as the Company's CFO have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report (the "Evaluation Date"), and have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in providing them with material information relating to the Corporation which is required to be included in our periodic reports filed under the Exchange Act. PART II-OTHER INFORMATION ITEM 1-LEGAL PROCEEDINGS None ITEM 2- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ISSUER PURCHASES OF EQUITY SECURITIES PERIOD
Total Approximate number dollar value of shares of shares Total Average purchased that may number of price as part of publicly be purchased shares paid per announced under the plans purchased share plans or programs or programs July, 2005 671 $50.00 $5 August, 2005 None $5 September, 2005 None $5 Total $5
12 The Company adopted a Stock Redemption Program on November 14, 2002 with the provision that it would remain in effect for six months or until $1 million had been expended on the purchase of common stock, whichever shall occur first. The Company extended the program in May 2003 until November 2003. The Company reinstated the program on December 24, 2003 and it will remain in effect until the $1 million originally allocated for common stock purchases is met. As of September 30, 2005, the Company has $5 remaining to purchase stock under the program, but due to the average price per share the Company considers the program to have come to an end as of July 31, 2005. ITEM 3-DEFAULTS UPON SENIOR SECURITIES None ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5-OTHER INFORMATION None ITEM 6-EXHIBITS AND REPORTS OF FORM 8-K a.) Exhibits 31.1 Certification of Chief Executive Officer 31.2 Certification of Chief Financial Officer 32.1 Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 b.) Reports on Form 8-K None 13 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) Date: November 10, 2005 /s/ James C. Conboy, Jr. ------------------------------------------ James C. Conboy, Jr. President and Chief Executive Officer Date: November 10, 2005 /s/ Susan A. Eno ------------------------------------------ Susan A. Eno Executive Vice President 14 EXHIBIT INDEX
Number Exhibit 31.1 Certification of Chief Executive Officer 31.2 Certification of Chief Financial Officer 32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002