EX-99 2 k25605exv99.txt QUARTERLY BROCHURE OF CNB CORPORATION DATED APRIL 10, 2008 Exhibit 99 Quarterly Shareholder Brochure of CNB Corporation April 10, 2008 Dear Shareholders: CNB Corporation's net income for the first quarter of 2008 was $665,000 or $ 0.55 basic earnings per share compared to $630,000 or $0.51 basic earnings per share for the same period last year, an increase of 5.7 %. Assets of the Corporation at the end of the first quarter were $262.6 million compared with $260.5 million last year, an increase of 0.8%. Deposits at the end of the first quarter increased 1.1% to $232.7 million, compared with $230.2 million the same time last year. Loans as of March 31, 2008 were $176.2 million, compared to $168.4 million at March 31, 2007, an increase of 4.6%. Despite the increases over last year, the loan portfolio has been impacted by Michigan's economic downturn. Loan losses for the first quarter 2008 were $317,400 which is the highest level we have experienced in several years. The losses are primarily in the commercial loan portfolio, although some residential mortgage customers are struggling as well. Such losses are not unique to Citizens National Bank or to northern Michigan; banks state-wide are experiencing increases in charge-offs, non-accrual loans and other real estate owned, while declines in collateral values across the market exacerbates the situation further. Management is taking an aggressive approach in working through these problem credits but anticipates there may be further losses in the next quarter. In response, the provision to the loan loss reserve has been increased to ensure an adequate reserve for anticipated future losses. Fortunately, as previously reported to our shareholders, we have no exposure to the sub-prime mortgage lending market. At its March 27, 2008 meeting the Board of Directors of CNB Corporation declared a $0.42 per share dividend payable to shareholders of record on that date. The dividend paid last year was also $0.42. Although shareholder's equity remained unchanged at $25.2 million, book value increased to $20.79 at March 31, 2008 compared to $20.33 at March 31, 2007. The increased book value in 2008 is due to fewer shares outstanding as a result of the 2007 stock repurchase program. We expect that 2008 will continue to be a challenge for the entire financial services industry, but believe by identifying and addressing problem credits early-on and in a forthright manner, we will meet and overcome the challenges ahead. I hope to see you at the annual meeting on May 20th. Sincerely, Susan A. Eno President and CEO Consolidated Balance Sheets (UNAUDITED) in thousands of dollars
March 31, ---------------------- 2008 2007 --------- --------- ASSETS Cash and due from banks $ 5,660 $ 4,981 Interest-bearing deposits with other financial institutions 5,020 10,163 Federal funds sold 19,635 11,362 --------- --------- Total cash and cash equivalents 30,315 26,506 Securities available for sale 33,680 46,687 Securities held to maturity (market value of $8,630 in 2008 and $4,575 in 2007) 8,463 4,532 Other securities 1,008 1,008 --------- --------- Total investment securities 43,151 52,227 Loans 176,198 168,426 Less allowance for loan losses (1,495) (1,551) --------- --------- Loans, Net 174,703 166,875 Premises and equipment, net 6,233 6,570 Other assets 8,246 8,270 --------- --------- Total assets $ 262,648 $ 260,448 ========= ========= LIABILITIES Deposits Noninterest-bearing demand $ 34,828 $ 37,031 Interest-bearing deposits 197,904 193,151 --------- --------- Total deposits 232,732 230,182 Other liabilities 4,684 5,061 --------- --------- Total liabilities 237,416 235,243 SHAREHOLDERS' EQUITY Common Stock 3,034 3,099 Surplus 19,510 20,482 Retained Earnings and Accumulated other Comprehensive Income/(Loss) 2,688 1,624 --------- --------- Total shareholders' equity 25,232 25,205 --------- --------- Total liabilities and shareholders' equity $ 262,648 $ 260,448 ========= =========
Consolidated Statement of Income (Unaudited) in thousands of dollars Three months ended March 31,
2008 2007 2006 ------ ------ ------ INTEREST INCOME Interest and fees on loans $3,122 $3,132 $2,822 Interest on securities: Taxable 497 427 456 Tax exempt 132 127 127 Other interest income 137 243 102 ------ ------ ------ Total interest income 3,888 3,929 3,507 INTEREST EXPENSE ON DEPOSITS 1,345 1,468 995 ------ ------ ------ NET INTEREST INCOME 2,543 2,461 2,512 Provision for loan losses 131 69 30 ------ ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,412 2,392 2,482 ------ ------ ------ NONINTEREST INCOME Service charges and fees 279 273 225 Net realized gains from sale of loans 37 31 50 Loan servicing fees, net of amortization 23 18 29 Other income 61 58 40 ------ ------ ------ Total noninterest income 400 380 344 ------ ------ ------ NONINTEREST EXPENSES Salaries and benefits 1,149 1,063 1,085 Occupancy 292 311 269 Supplies 41 52 34 Other expenses 461 463 502 ------ ------ ------ Total noninterest expenses 1,943 1,889 1,890 ------ ------ ------ INCOME BEFORE INCOME TAXES 869 883 936 Income tax expense 204 253 242 ------ ------ ------ NET INCOME $ 665 $ 630 $ 694 ====== ====== ====== BASIC NET INCOME PER SHARE $ 0.55 $ 0.51 $ 0.56 ====== ====== ======