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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended
    
    December 31, 2010
  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
    
    to
 Commission file number
    
    0-11535
 (Exact name of registrant as specified in its charter)
 New Jersey
    
    22-2434751State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization
    
    Identification No.)
  (Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
    
    (973) 624-0865
  Title of each class
    
    Name of each exchange on which registered
  
   
   o x
  o x
  x o
 o o
 o
  o o x o
  o x




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##### 



PagePART IItem 1.
    
    Business
    
    
    1Item 1a
    
    Risk Factors
    
    
    6Item 2.
    
    Properties
    
    
    8Item 3.
    
    Legal Proceedings
    
    
    8Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    8PART IIItem 5.
    
    Market for the Registrants Common Equity and Related Stockholder Matters
    
    
    8Item 6.
    
    Selected Financial Data
    
    
    10Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 7a.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    24Item 8.
    
    Financial Statements and Supplementary Data
    
    
    25Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    49Item 9a.
    
    Controls and Procedures
    
    
    49Item 9b.
    
    Other Information
    
    
    49PART IIIItem 10.
    
    Directors and Executive Officers of Registrant
    
    
    49Item 11.
    
    Executive Compensation
    
    
    52Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    60Item 13.
    
    Certain Relationships and Related Transactions
    
    
    61Item 14.
    
    Principal Accountant Fees and Services
    
    
    61PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    62Signatures
    
    
    63EX-31EX-32EX-99
  II




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Part I
 
 Item 1. Business
 Description of business
         Competition
   Employees
  Supervision and regulation
  Governmental policies and legislation
     1




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Bank holding company regulations
   de novo de novo de novo
 de novo de novo
   Regulation of bank subsidiary
    2




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Consent Order
       3




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.
 Agreement with Federal Reserve Bank of New York
 4




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Community reinvestment
  Government policies
     FDIC insurance
   Basel III
     5




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Item 1a. Risk factors
   Illiquidity in the Corporations stock
   Concentration of deposit accounts
  Negative impact of a prolonged economic downturn
    Allowance for loan losses may be insufficient
   6




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Declines in value may adversely impact the investment portfolio
  Higher FDIC deposit insurance premiums and assessments may adversely affect the Corporations
financial condition or results of operations
  Liquidity risk
      The cash dividend on the Corporations common or preferred stock may be reduced or eliminated.
   Changes in accounting policies or accounting standards
   7




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Severe weather, acts of terrorism or other external events could significantly impact the business
of the Bank
  Changes in interest rates
   Competition
  The Bank is subject to a Consent Order and the Corporation is subject to the FRBNY Agreement
 . If
 The deteriorating financial results and the restrictive requirements of the Consent Order with the
OCC discussed above raise substantial doubt about the Corporations and the Banks ability to
continue as a going concern.
 
 Item 2.   Properties
    
 Item 3.   Legal proceedings
  
 Item 4.   Submission of matters to a vote of security holders
  
 Part II
 
 Item 5.   Market for the registrants common equity and related stockholders matters
     Form 10-K
 The annual report filed with the Securities and Exchange Commission on Form 10-K is available
without charge upon written request to City National Bancshares Corporation, Edward R. Wright,
Senior Vice President and Chief Financial Officer, 900 Broad Street, Newark, New Jersey, 07102.
 Transfer Agent
 8




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Registrar
and Transfer Company
    
    Cranford, NJ 0701610 Commerce Drive
 9




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Item 6.   Selected Financial Data
  Five-Year Summary
 Dollars in thousands, except per share data
    
    2010
    
    2009
    
    2008
    
    2007
    
    2006Year-end Balance Sheet dataTotal assets
    
    
    $387,267
    
    
    
    $466,339
    
    
    $
    494,539
    
    
    $
    449,748
    
    
    $
    395,217Gross loans
    
    
    244,955
    
    
    
    276,242
    
    
    
    271,906
    
    
    
    232,824
    
    
    
    199,284Allowance for loan losses
    
    
    10,626
    
    
    
    8,650
    
    
    
    3,800
    
    
    
    3,000
    
    
    
    2,400Investment securities
    
    
    105,420
    
    
    
    162,401
    
    
    
    178,061
    
    
    
    157,556
    
    
    
    169,598Total deposits
    
    
    338,551
    
    
    
    380,276
    
    
    
    407,117
    
    
    
    394,856
    
    
    
    342,416Short-term portion of long-term debt
    
    
    -
    
    
    
    5,000
    
    
    
    5,000
    
    
    
    -
    
    
    
    -Long-term debt
    
    
    19,200
    
    
    
    44,000
    
    
    
    46,600
    
    
    
    19,800
    
    
    
    19,606Stockholders equity
    
    
    22,896
    
    
    
    31,013
    
    
    
    28,092
    
    
    
    28,872
    
    
    
    27,762Income Statement dataInterest income
    
    
    20,234
    
    
    
    24,174
    
    
    
    25,902
    
    
    
    25,978
    
    
    
    21,649Interest expense
    
    
    7,407
    
    
    
    9,495
    
    
    
    11,309
    
    
    
    14,233
    
    
    
    10,848Net interest income
    
    
    12,827
    
    
    
    14,679
    
    
    
    14,593
    
    
    
    11,745
    
    
    
    10,801Provision for loan losses
    
    
    9,487
    
    
    
    8,105
    
    
    
    1,586
    
    
    
    772
    
    
    
    279Net interest
income after provision for loan losses
    
    
    3,340
    
    
    
    6,574
    
    
    
    13,007
    
    
    
    10,973
    
    
    
    10,522Other operating income
    
    
    5,617
    
    
    
    3,124
    
    
    
    279
    
    
    
    2,694
    
    
    
    2,724Net impairment losses on securities
    
    
    -
    
    
    
    ( 2,333
    )
    
    
    ( 2,688
    )
    
    
    -
    
    
    
    -Other operating expenses
    
    
    16,055
    
    
    
    13,381
    
    
    
    12,278
    
    
    
    11,428
    
    
    
    10,035(Loss) income before income tax expense
    
    
    ( 7,097
    )
    
    
    ( 6,016
    )
    
    
    1,008
    
    
    
    2,239
    
    
    
    3,211Income tax (benefit) expense
    
    
    360
    
    
    
    1,806
    
    
    (
    50
    )
    
    
    372
    
    
    
    743Net (loss) income
    
    
    $( 7,457
    )
    
    
    $( 7,822
    )
    
    $
    1,058
    
    
    $
    1,867
    
    
    $
    2,468Per common share dataNet (loss) income per basic share
    
    
    $ (60.54)
    
    
    
    $ (68.36)
    
    
    $
    1.87
    
    
    $
    8.28
    
    
    $
    13.04Net (loss) income per diluted share
    
    
    (60.54)
    
    
    
    (68.36)
    
    
    
    1.87
    
    
    
    8.09
    
    
    
    12.54Book value
    
    
    19.96
    
    
    
    85.50
    
    
    
    130.10
    
    
    
    141.04
    
    
    
    129.88Dividends declared
    
    
    -
    
    
    
    2.00
    
    
    
    3.60
    
    
    
    3.50
    
    
    
    3.25Basic
average number of common shares outstanding
    
    
    131,290
    
    
    
    131,300
    
    
    
    131,688
    
    
    
    132,306
    
    
    
    133,246Diluted
average number of common shares outstanding
    
    
    131,290
    
    
    
    131,300
    
    
    
    131,688
    
    
    
    148,623
    
    
    
    143,924Number of common shares outstanding at year-end
    
    
    131,290
    
    
    
    131,290
    
    
    
    131,330
    
    
    
    131,987
    
    
    
    132,926Financial ratiosReturn on average assets
    
    
    (1.63)%
    
    
    
    (1.53)%
    
    
    
    .23%
    
    
    
    .44%
    
    
    
    .65%Return on average common equity
    
    
    (69.84)%
    
    
    
    (36.55)
    
    
    
    1.38
    
    
    
    6.35
    
    
    
    10.90Stockholders equity as a percentage of total assets
    
    
    5.91
    
    
    
    6.65
    
    
    
    5.68
    
    
    
    6.42
    
    
    
    6.96Common dividend payout ratio
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    42.22
    
    
    
    25.92
 10




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Cautionary statement concerning forward-looking statements
  Critical accounting policies and use of estimates
    Allowance for loan losses, impaired loans, TDRs and OREO
    Real estate acquired as a result of foreclosure or by deed in lieu of foreclosure is classified as
other real estate owned. When the Bank acquires other real estate owned, it obtains a current
appraisal to substantiate the net carrying value of the asset. The asset is recorded at the lower
of cost or estimated fair value, establishing a new cost basis. Holding costs and declines in
estimated fair value result in charges to expense after acquisition.
   11




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Investment security valuations and impairments
    Income taxes
    Executive summary
      12




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Cash and due from banks
  Federal funds sold
  Interest-bearing deposits with banks
  Investments
           Investment Securities Available for Sale
    
    
    Maturing After One
    
    
    Maturing After FiveMaturing Within
    
    
    Year But Within
    
    
    Years But Within
    
    
    Maturing AfterOne Year
    
    
    Five Years
    
    
    Ten Years
    
    
    Ten Years
    
    
    Total
    
    
    TotalDollars in thousands
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldU.S. Treasury securities and
obligations of U.S.
government agencies
    
    $
    -
    
    
    
    -
    %
    
    $
    71
    
    
    
    1.85
    %
    
    $
    93
    
    
    
    1.77
    %
    
    $
    3,225
    
    
    
    3.81
    %
    
    $
    3,389
    
    
    
    3.71
    %Obligations of U.S. govern-
ment sponsored
entities
    
    
    118
    
    
    
    7.47
    
    
    
    1,069
    
    
    
    3.83
    
    
    
    5,831
    
    
    
    3.65
    
    
    
    8,429
    
    
    
    2.74
    
    
    
    15,447
    
    
    
    3.51Obligations of state and
political and subdivisions
    
    
    -
    
    
    
    -
    
    
    
    1,879
    
    
    
    5.55
    
    
    
    3,986
    
    
    
    5.65
    
    
    
    3,739
    
    
    
    7.09
    
    
    
    9,604
    
    
    
    6.19Mortgage-backed securities
    
    
    49
    
    
    
    3.60
    
    
    
    627
    
    
    
    4.29
    
    
    
    502
    
    
    
    4.02
    
    
    
    64,859
    
    
    
    4.24
    
    
    
    66,037
    
    
    
    4.23Other debt securities
    
    
    -
    
    
    
    -
    
    
    
    1,000
    
    
    
    4.00
    
    
    
    -
    
    
    
    -
    
    
    
    7,358
    
    
    
    2.78
    
    
    
    8,358
    
    
    
    2.93Total amortized cost
    
    $
    167
    
    
    
    6.33
    %
    
    $
    4,646
    
    
    
    4.59
    %
    
    $
    10,412
    
    
    
    4.42
    %
    
    $
    87,610
    
    
    
    4.08
    %
    
    $
    102,835
    
    
    
    4.14
    %
    13




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2010
    
    
    2009
    
    
    2008Investment Securities Available for Sale
    
    Amortized
    
    Market
    
    Amortized
    
    Market
    
    Amortized
    
    MarketIn thousands
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
     
    ValueU.S. Treasury securities and obligations
of U.S. government agencies
    
    
    $    3,389
    
    
    
    $    3,429
    
    
    
    $  12,518
    
    
    
    $  12,700
    
    
    
    $    4,009
    
    
    
    $    3,957Obligations of U.S. government sponsored entities
    
    
    15,447
    
    
    
    15,280
    
    
    
    17,289
    
    
    
    17,324
    
    
    
    19,157
    
    
    
    19,012Obligations of state and political subdivisions
    
    
    9,604
    
    
    
    9,513
    
    
    
    546
    
    
    
    553
    
    
    
    548
    
    
    
    552Mortgage-backed securities
    
    
    66,037
    
    
    
    67,905
    
    
    
    74,417
    
    
    
    77,138
    
    
    
    88,356
    
    
    
    90,630Other debt securities
    
    
    8,358
    
    
    
    6,556
    
    
    
    12,269
    
    
    
    10,268
    
    
    
    11,645
    
    
    
    7,798Equity securities:Marketable securities
    
    
    748
    
    
    
    727
    
    
    
    713
    
    
    
    695
    
    
    
    678
    
    
    
    638Nonmarketable securities
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    115Federal Reserve Bank and Federal Home Loan Bank stock
    
    
    1,895
    
    
    
    1,895
    
    
    
    3,213
    
    
    
    3,213
    
    
    
    2,889
    
    
    
    2,889Total
    
    
    $105,593
    
    
    
    $105,420
    
    
    
    $121,080
    
    
    
    $122,006
    
    
    
    $127,397
    
    
    
    $125,5912010
    
    
    2009
    
    
    2008Investment Securities Held to Maturity
    
    Amortized
    
    Market
    
    Amortized
    
    Market
    
    Amortized
    
    MarketIn thousands
    
    Cost
    
    Value
    
    Value
    
    Value
    
    Cost
    
    ValueU.S. Treasury securities and obligations
of U.S. government agencies
    
    
    $            -
    
    
    
    $            -
    
    
    
    $     1,585
    
    
    
    $     1,647
    
    
    
    $            -
    
    
    
    $          -Obligations of U.S. government sponsored entities
    
    
    -
    
    
    
    -
    
    
    
    2,459
    
    
    
    2,405
    
    
    
    8,500
    
    
    
    8,520Mortgage-backed securities
    
    
    -
    
    
    
    -
    
    
    
    7,877
    
    
    
    8,186
    
    
    
    12,089
    
    
    
    12,358Obligations of state and political subdivisions
    
    
    -
    
    
    
    -
    
    
    
    27,979
    
    
    
    29,042
    
    
    
    31,629
    
    
    
    32,222Other debt securities
    
    
    -
    
    
    
    -
    
    
    
    495
    
    
    
    502
    
    
    
    1,496
    
    
    
    1,437Total
    
    
    $            -
    
    
    
    $            -
    
    
    
    $   40,395
    
    
    
    $   41,782
    
    
    
    $   53,714
    
    
    
    $54,537
   14




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Consolidated Average Balance Sheet with Related Interest and Rates
 2010
    
    
    2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageTax equivalent basis; dollars in thousands
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateAssetsInterest earning assets:Federal funds sold and securities purchased
under agreements to resell
    
    $
    29,493
    
    
    $
    42
    
    
    
    .14
    %
    
    $
    34,625
    
    
    $
    54
    
    
    
    .16
    %
    
    $
    10,647
    
    
    $
    217
    
    
    
    2.04
    %Interest-bearing deposits with banks1
    
    
    1,539
    
    
    
    29
    
    
    
    1.88
    
    
    
    1,494
    
    
    
    50
    
    
    
    3.33
    
    
    
    1,008
    
    
    
    24
    
    
    
    2.41Investment
securities2:Taxable
    
    
    122,985
    
    
    
    5,269
    
    
    
    4.28
    
    
    
    139,984
    
    
    
    6,668
    
    
    
    4.76
    
    
    
    145,963
    
    
    
    7,404
    
    
    
    5.07Tax-exempt
    
    
    18,824
    
    
    
    1,130
    
    
    
    6.01
    
    
    
    31,457
    
    
    
    1,903
    
    
    
    6.05
    
    
    
    32,123
    
    
    
    1,955
    
    
    
    6.08Total investment securities
    
    
    141,809
    
    
    
    6,399
    
    
    
    4.51
    
    
    
    171,441
    
    
    
    8,571
    
    
    
    5.00
    
    
    
    178,086
    
    
    
    9,359
    
    
    
    5.25Loans 3, 4,6Commercial
    
    
    49,180
    
    
    
    2,607
    
    
    
    5.30
    
    
    
    53,198
    
    
    
    3,094
    
    
    
    5.82
    
    
    
    44,929
    
    
    
    2,832
    
    
    
    6.28Real estate
    
    
    211,123
    
    
    
    11,457
    
    
    
    5.42
    
    
    
    223,992
    
    
    
    12,960
    
    
    
    5.79
    
    
    
    206,289
    
    
    
    14,026
    
    
    
    6.80Installment
    
    
    1,425
    
    
    
    84
    
    
    
    5.90
    
    
    
    1,463
    
    
    
    92
    
    
    
    6.29
    
    
    
    1,434
    
    
    
    109
    
    
    
    7.57Total loans
    
    
    261,728
    
    
    
    14,148
    
    
    
    5.41
    
    
    
    278,653
    
    
    
    16,146
    
    
    
    5.79
    
    
    
    252,652
    
    
    
    16,967
    
    
    
    6.71Total interest earning assets
    
    
    434,569
    
    
    
    20,618
    
    
    
    4.74
    
    
    
    486,213
    
    
    
    24,821
    
    
    
    5.10
    
    
    
    442,393
    
    
    
    26,567
    
    
    
    6.00Noninterest earning assets:Cash and due from banks
    
    
    8,129
    
    
    
    
    
    
    
    
    
    
    
    8,147
    
    
    
    
    
    
    
    
    
    
    
    8,605Net unrealized gain (loss) on investment
securities available for sale
    
    
    2,864
    
    
    
    
    
    
    
    
    
    
    
    (1,681
    )
    
    
    
    
    
    
    
    
    
    
    (2,850
    )Allowance for loan losses
    
    
    (8,607)
    
    
    
    
    
    
    
    
    
    
    
    (4,717
    )
    
    
    
    
    
    
    
    
    
    
    (3,231
    )Other assets
    
    
    20,628
    
    
    
    
    
    
    
    
    
    
    
    21,700
    
    
    
    
    
    
    
    
    
    
    
    16,708Total noninterest earning assets
    
    
    23,014
    
    
    
    
    
    
    
    
    
    
    
    23,449
    
    
    
    
    
    
    
    
    
    
    
    19,232Total assets
    
    $
    457,584
    
    
    
    
    
    
    
    
    
    
    $
    509,662
    
    
    
    
    
    
    
    
    
    
    $
    461,625Liabilities and stockholders equityInterest bearing liabilities:Demand deposits
    
    
    $60,546
    
    
    $
    286
    
    
    
    .47
    
    
    
    $53,321
    
    
    $
    393
    
    
    
    .74
    
    
    
    $46,320
    
    
    $
    456
    
    
    
    .99Money market deposits
    
    
    65,639
    
    
    
    584
    
    
    
    .89
    
    
    
    107,336
    
    
    
    1,092
    
    
    
    1.02
    
    
    
    98,804
    
    
    
    2,107
    
    
    
    2.13Savings deposits
    
    
    24,166
    
    
    
    124
    
    
    
    .51
    
    
    
    24,859
    
    
    
    128
    
    
    
    .52
    
    
    
    26,608
    
    
    
    138
    
    
    
    .52Time deposits
    
    
    187,450
    
    
    
    4,721
    
    
    
    2.52
    
    
    
    197,211
    
    
    
    6,057
    
    
    
    3.07
    
    
    
    177,503
    
    
    
    7,005
    
    
    
    3.95Total interest bearing deposits
    
    
    337,801
    
    
    
    5,715
    
    
    
    1.69
    
    
    
    382,727
    
    
    
    7,670
    
    
    
    2.00
    
    
    
    349,235
    
    
    
    9,706
    
    
    
    2.78Short-term borrowings
    
    
    89
    
    
    
    1
    
    
    
    .52
    
    
    
    606
    
    
    
    3
    
    
    
    .50
    
    
    
    2,751
    
    
    
    59
    
    
    
    2.17Long-term debt
    
    
    46,901
    
    
    
    1,691
    
    
    
    3.61
    
    
    
    50,074
    
    
    
    1,822
    
    
    
    3.64
    
    
    
    38,299
    
    
    
    1,544
    
    
    
    4.03Total interest bearing liabilities
    
    
    384,791
    
    
    
    7,407
    
    
    
    1.93
    
    
    
    433,407
    
    
    
    9,495
    
    
    
    2.19
    
    
    
    390,285
    
    
    
    11,309
    
    
    
    2.90Noninterest bearing liabilities:Demand deposits
    
    
    35,033
    
    
    
    
    
    
    
    
    
    
    
    34,509
    
    
    
    
    
    
    
    
    
    
    
    38,149Other liabilities
    
    
    6,382
    
    
    
    
    
    
    
    
    
    
    
    6,898
    
    
    
    
    
    
    
    
    
    
    
    5,082Total noninterest bearing liabilities
    
    
    41,415
    
    
    
    
    
    
    
    
    
    
    
    41,407
    
    
    
    
    
    
    
    
    
    
    
    43,231Stockholders equity
    
    
    31,378
    
    
    
    
    
    
    
    
    
    
    
    34,848
    
    
    
    
    
    
    
    
    
    
    
    28,109Total liabilities and stockholders equity
    
    $
    457,584
    
    
    
    
    
    
    
    
    
    
    $
    509,662
    
    
    
    
    
    
    
    
    
    
    $
    461,625Net interest income (tax equivalent basis)
    
    
    
    
    
    
    13,211
    
    
    
    2.81
    
    
    
    
    
    
    
    15,326
    
    
    
    2.91
    
    
    
    
    
    
    
    15,258
    
    
    
    3.10Tax
equivalent basis adjustment 5
    
    
    
    
    
    
    (384
    )
    
    
    
    
    
    
    
    
    
    
    (647
    )
    
    
    
    
    
    
    
    
    
    
    (665
    )Net interest income7
    
    
    
    
    
    $
    12,827
    
    
    
    
    
    
    
    
    
    
    $
    14,679
    
    
    
    
    
    
    
    
    
    
    $
    14,593Average rate paid to fund interest earning
Assets
    
    
    
    
    
    
    
    
    
    
    1.70
    
    
    
    
    
    
    
    
    
    
    
    1.95
    
    
    
    
    
    
    
    
    
    
    
    2.56Net interest income as a percentage of
interest earning assets (tax equivalent
basis)
    
    
    
    
    
    
    
    
    
    
    3.04
    %
    
    
    
    
    
    
    
    
    
    
    3.15
    %
    
    
    
    
    
    
    
    
    
    
    3.44
    %
 1
    
    Includes $24,000 in 2010, $42,000 in 2009 and $- in 2008, representing income received under
the U.S. Treasury Departments Bank Enterprise Award certificate of deposit program.2
    
    Includes investment securities available for sale and held to maturity.3
    
    Includes nonperforming loans.4
    
    Includes loan fees of $ $213,000 $421,000 and $413,000 in 2010, 2009 and 2008 respectively.5
    
    The tax equivalent adjustment was computed assuming a 34% statutory federal income tax rate in
2010, 2009 and 2008.6
    
    Includes $321,000 in 2010, $387,000 in 2009 and $421,000 in 2008 representing income received
under the U.S. Treasury Departments Bank Enterprise Award loan program.7
    
    The total yield enhancements on the interest bearing deposits with banks and loans increased
net interest income by eight basis points in 2010 and nine basis points in 2009 and 2008,
respectively.  15




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##### Table of Contents



2010 Net Interest Income Increase
    
    
    2009 Net Interest Income Increase(Decrease) from 2009 due to:
    
    
    (Decrease) from 2008 due to:In thousands
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalInterest incomeLoans:Commercial
    
    $
    (   233
    )
    
    $
    (   254
    )
    
    $
    (487
    )
    
    $
    519
    
    
    $
    (   257
    )
    
    $
    262Real estate
    
    
    (   745
    )
    
    
    (   758
    )
    
    
    (1,503
    )
    
    
    1,204
    
    
    
    (2,270
    )
    
    
    (1,066
    )Installment
    
    
    (2
    )
    
    
    (      6
    )
    
    
    (      8
    )
    
    
    (1
    )
    
    
    (     16
    )
    
    
    (     17
    )Total loans
    
    
    (   980
    )
    
    
    (1,018
    )
    
    
    (1,998
    )
    
    
    1,722
    
    
    
    (2,543
    )
    
    
    (   821
    )Taxable investment securities
    
    
    (   809
    )
    
    
    (   590
    )
    
    
    (1,399
    )
    
    
    (   303
    )
    
    
    (   433
    )
    
    
    (   736
    )Tax-exempt investment securities
    
    
    (   764
    )
    
    
    (       9
    )
    
    
    (   773
    )
    
    
    (     40
    )
    
    
    (     12
    )
    
    
    (     52
    )Federal funds sold and securities
purchased under agreements to resell
    
    
    (       8
    )
    
    
    (       4
    )
    
    
    (     12
    )
    
    
    489
    
    
    
    (   652
    )
    
    
    (   163
    )Interest-bearing deposits with banks
    
    
    2
    
    
    
    (     23
    )
    
    
    (     21
    )
    
    
    12
    
    
    
    14
    
    
    
    26Total interest income
    
    
    (2,559
    )
    
    
    (1,644
    )
    
    
    (4,203
    )
    
    
    1,880
    
    
    
    (3,626
    )
    
    
    (1,746
    )Interest expenseDemand deposits
    
    
    (     53
    )
    
    
    160
    
    
    
    107
    
    
    
    (     69
    )
    
    
    132
    
    
    
    63Savings deposits
    
    
    4
    
    
    
    -
    
    
    
    4
    
    
    
    9
    
    
    
    1
    
    
    
    10Money market deposits
    
    
    425
    
    
    
    83
    
    
    
    508
    
    
    
    (   182
    )
    
    
    1,197
    
    
    
    1,015Time deposits
    
    
    300
    
    
    
    1,036
    
    
    
    1,336
    
    
    
    (   778
    )
    
    
    1,726
    
    
    
    948Short-term borrowings
    
    
    2
    
    
    
    -
    
    
    
    2
    
    
    
    46
    
    
    
    10
    
    
    
    56Long-term debt
    
    
    115
    
    
    
    16
    
    
    
    131
    
    
    
    (   475
    )
    
    
    197
    
    
    
    (278
    )Total interest expense
    
    
    793
    
    
    
    1,295
    
    
    
    2,088
    
    
    
    (1,449
    )
    
    
    3,263
    
    
    
    1,814Net interest income
    
    $
    (1,766
    )
    
    $
    (349
    )
    
    
    $(2,115
    )
    
    $
    431
    
    
    $
    (   363
    )
    
    $
    68
 Loans
  62.8 25.6 d ,
    Maturities and interest sensitivities of loans
  Due fromOne YearDue in One
    
    
    Through
    
    
    Due AfterIn thousands
    
    Year or Less
    
    
    Five Years
    
    
    Five Years
    
    
    TotalCommercial
    
    $
    8,399
    
    
    $
    18,703
    
    
    $
    11,053
    
    
    $
    38,155Real estate:Construction
    
    
    27,195
    
    
    
    508
    
    
    
    -
    
    
    
    27,703Mortgage
    
    
    14,190
    
    
    
    22,874
    
    
    
    141,315
    
    
    
    178,379Installment
    
    
    382
    
    
    
    272
    
    
    
    64
    
    
    
    718Total
    
    $
    50,166
    
    
    $
    42,357
    
    
    $
    152,432
    
    
    $
    244,955Loans at fixed
interest rates
    
    
    $  8,463
    
    
    $
    30,623
    
    
    $
    24,364
    
    
    $
    63,450Loans at variable
interest rates
    
    
    41,703
    
    
    
    11,734
    
    
    
    128,068
    
    
    
    181,505Total
    
    $
    50,166
    
    
    $
    42,357
    
    
    $
    152,432
    
    
    $
    244,955
 ..
 16




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##### Table of Contents



In thousands
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Commercial
    
    $
    38,225
    
    
    $
    53,820
    
    
    $
    44,366
    
    
    $
    44,504
    
    
    $
    32,572Real estate
    
    
    206,072
    
    
    
    221,601
    
    
    
    226,546
    
    
    
    187,447
    
    
    
    165,828Installment
    
    
    718
    
    
    
    926
    
    
    
    1,153
    
    
    
    1,061
    
    
    
    1,176Total loans
    
    
    245,015
    
    
    
    276,347
    
    
    
    272,065
    
    
    
    233,012
    
    
    
    199,576Less: Unearned income
    
    
    60
    
    
    
    105
    
    
    
    159
    
    
    
    188
    
    
    
    292Loans
    
    $
    244,955
    
    
    $
    276,242
    
    
    $
    271,906
    
    
    $
    232,824
    
    
    $
    199,284
 Summary of loan loss experience
  Dollars in thousands
    
    2010
    
    2009
    
    2008
    
    2007
    
    2006Balance, January 1
    
    
    $8,650
    
    
    
    $3,800
    
    
    
    $3,000
    
    
    
    $2,400
    
    
    
    $2,165Charge-offs:Commercial loans
    
    
    2,676
    
    
    
    1,703
    
    
    
    651
    
    
    
    118
    
    
    
    108Real estate loans
    
    
    4,836
    
    
    
    1,537
    
    
    
    118
    
    
    
    22
    
    
    
    2Installment loans
    
    
    48
    
    
    
    30
    
    
    
    23
    
    
    
    66
    
    
    
    39Total
    
    
    7,560
    
    
    
    3,270
    
    
    
    792
    
    
    
    206
    
    
    
    149Recoveries:Commercial loans
    
    
    46
    
    
    
    -
    
    
    
    5
    
    
    
    2
    
    
    
    87Real estate loans
    
    
    -
    
    
    
    15
    
    
    
    -
    
    
    
    2
    
    
    
    -Installment loans
    
    
    3
    
    
    
    -
    
    
    
    1
    
    
    
    30
    
    
    
    18Total
    
    
    49
    
    
    
    15
    
    
    
    6
    
    
    
    34
    
    
    
    105Net (charge-offs) recoveries
    
    
    (7,511
    )
    
    
    (3,255
    )
    
    
    (786
    )
    
    
    (172
    )
    
    
    (44
    )Provision for loan
losses charged to operations
    
    
    9,487
    
    
    
    8,105
    
    
    
    1,586
    
    
    
    772
    
    
    
    279Balance, December 31
    
    
    $10,626
    
    
    
    $8,650
    
    
    
    $3,800
    
    
    
    $3,000
    
    
    
    $2,400Net charge-offs as a
percentage of average loans
    
    
    2.87
    %
    
    
    1.17
    %
    
    
    .31
    %
    
    
    .08
    %
    
    
    .03
    %Allowance for loan losses as a
percentage of loans
    
    
    4.34
    
    
    
    3.13
    
    
    
    1.40
    
    
    
    1.29
    
    
    
    1.20Allowance for loan losses as a
percentage of nonperforming loans
    
    
    27.77
    
    
    
    48.35
    
    
    
    44.13
    
    
    
    37.67
    
    
    
    40.45
        17




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##### Table of Contents



Allocation of the allowance for loan losses
  2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Percentage
    
    
    
    
    
    Percentage
    
    
    
    
    
    Percentage
    
    
    
    
    
    Percentage
    
    
    
    
    
    Percentageof Loan
    
    
    
    
    
    of Loan
    
    
    
    
    
    of Loan
    
    
    
    
    
    of Loan
    
    
    
    
    
    of LoanCategory
    
    
    
    
    
    Category
    
    
    
    
    
    Category
    
    
    
    
    
    Category
    
    
    
    
    
    Categoryto Gross
    
    
    
    
    
    to Gross
    
    
    
    
    
    to Gross
    
    
    
    
    
    to Gross
    
    
    
    
    
    to GrossDollars in thousands
    
    Amount
    
    
    Loans
    
    Amount
    
    
    Loans
    
    Amount
    
    
    Loans
    
    Amount
    
    
    Loans
    
    Amount
    
    
    LoansCommercial
    
    $
    2,769
    
    
    
    15.70
    %
    
    $
    1,352
    
    
    
    15.60
    %
    
    $
    1,102
    
    
    
    15.22
    %
    
    
    $1,098
    
    
    
    19.11
    %
    
    $
    730
    
    
    
    16.32
    %Real estate
    
    
    7,297
    
    
    
    84.01
    
    
    
    7,095
    
    
    
    84.11
    
    
    
    2,306
    
    
    
    84.00
    
    
    
    1,709
    
    
    
    80.43
    
    
    
    1,427
    
    
    
    83.09Installment
    
    
    57
    
    
    
    .29
    
    
    
    19
    
    
    
    .29
    
    
    
    6
    
    
    
    .78
    
    
    
    91
    
    
    
    .46
    
    
    
    21
    
    
    
    .49Unallocated
    
    
    503
    
    
    
    -
    
    
    
    184
    
    
    
    -
    
    
    
    386
    
    
    
    -
    
    
    
    102
    
    
    
    -
    
    
    
    222
    
    
    
    -Total
    
    $
    10,626
    
    
    
    100.00
    %
    
    $
    8,650
    
    
    
    100.00
    %
    
    $
    3,800
    
    
    
    100.00
    %
    
    
    $3,000
    
    
    
    100.00
    %
    
    $
    2,400
    
    
    
    100.00
    %
   Nonperforming assets
  In thousands
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Loans past due 90 days or more and
still accruing:Commercial
    
    $
    1,415
    
    
    $
    555
    
    
    $
    -
    
    
    $
    43
    
    
    $
    -Real estate
    
    
    928
    
    
    
    1,012
    
    
    
    376
    
    
    
    377
    
    
    
    1,254Installment
    
    
    -
    
    
    
    -
    
    
    
    8
    
    
    
    18
    
    
    
    5Loans past due 90 days or more and
still accruing
    
    
    2,343
    
    
    
    1,567
    
    
    
    384
    
    
    
    438
    
    
    
    1,259Nonaccrual loans:Commercial
    
    
    1,436
    
    
    
    1,237
    
    
    
    1,864
    
    
    
    1,996
    
    
    
    797Real estate
    
    
    34,480
    
    
    
    15,080
    
    
    
    6,356
    
    
    
    5,485
    
    
    
    3,899Installment
    
    
    -
    
    
    
    6
    
    
    
    7
    
    
    
    45
    
    
    
    38Total nonaccrual loans
    
    
    35,916
    
    
    
    16,323
    
    
    
    8,227
    
    
    
    7,526
    
    
    
    4,734Total nonperforming loans
    
    
    38,259
    
    
    
    17,890
    
    
    
    8,611
    
    
    
    7,964
    
    
    
    5,993Other real estate owned
    
    
    1,997
    
    
    
    2,352
    
    
    
    1,547
    
    
    
    -
    
    
    
    -Total
    
    $
    40,256
    
    
    $
    20,242
    
    
    $
    10,158
    
    
    $
    7,964
    
    
    $
    5,993
  $62.8 million $243,000 at
 31 30.2 31,
 $4.6
 18




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##### Table of Contents



$2.9
  Other assets
  Other real estate owned
  Deposits
     We closed two branches during 2010 resulting in a minimal deposit loss as the deposits
were rolled into other existing branches.
     Short-term borrowings
  Long-term debt
  Results of operations  2010 compared with 2009
        19




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##### Table of Contents



Liquidity
       20




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##### Table of Contents



Contractual obligations
   Commitments, contingent liabilities, and off-balance sheet arrangements
  One toOne Year
    
    Three
    
    Three toIn thousands
    
    or Less
    
    Years
    
    Five Years
    
    TotalCommitments to
extend credit:Commercial loans
and lines of credit
    
    $
    3,986
    
    
    $
    -
    
    
    $
    -
    
    
    $
    3,986Commercial mortgages
    
    
    22,577
    
    
    
    -
    
    
    
    -
    
    
    
    22,577Credit cards
    
    
    -
    
    
    
    -
    
    
    
    1,026
    
    
    
    1,026Residential
mortgages
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Home equity
and other revolving lines of credit
    
    
    509
    
    
    
    -
    
    
    
    -
    
    
    
    509Standby letters of
credit
    
    
    34
    
    
    
    -
    
    
    
    -
    
    
    
    34
  Effects of inflation
    Interest rate sensitivity
      21




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##### Table of Contents



Interest Sensitivity Gap Analysis
 December 31, 2010One Year
    
    One Year
    
    Three Years
    
    More thanto
    
    toIn thousands
    
    Or Less
    
    Three Years
    
    Five Years
    
    Five Years
    
    TotalInterest earning assets:Federal funds sold and securities
purchased under agreements
to resell
    
    $
    13,550
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    13,550Interest-bearing deposits with
banks
    
    
    2,689
    
    
    
    600
    
    
    
    -
    
    
    
    
    
    
    
    3,289Investment securities
    
    
    24,641
    
    
    
    19,353
    
    
    
    14,721
    
    
    
    46,705
    
    
    
    105,420Loans
    
    
    111,943
    
    
    
    74,845
    
    
    
    35,696
    
    
    
    22,471
    
    
    
    244,955152,823
    
    
    
    94,798
    
    
    
    50,417
    
    
    
    69,176
    
    
    
    367,214Interest bearing liabilities:Deposits:Savings
    
    
    130,663
    
    
    
    -
    
    
    
    -
    
    
    
    
    
    
    
    130,663Time
    
    
    102,387
    
    
    
    41,576
    
    
    
    26,331
    
    
    
    2,462
    
    
    
    172,756Short-term borrowings
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Long-term debt
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    19,200
    
    
    
    19,200233,050
    
    
    
    41,576
    
    
    
    26,331
    
    
    
    21,662
    
    
    
    322,619Interest sensitivity gap:Period gap
    
    $
    (  80,227)
    
    
    
    $53,222
    
    
    $
    24,086
    
    
    $
    47,514
    
    
    $
    44,595Cumulative gap
    
    
    (  80,227)
    
    
    
    (27,005
    )
    
    
    ( 2,919
    )
    
    
    44,595
    
    
    
    -
 This means that the Corporation has a positive gap position, which
theoretically will cause its assets to reprice faster than its liabilities. Additionally, interest
sensitive assets and liabilities reprice at different speeds than yield curve changes. Based on
the above model, which reflects a static interest rate environment and does not take into
consideration that repricing may occur at different speeds,
     Capital
  22




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##### Table of Contents



Consolidated
    
    Bank OnlyDecember 31,
    
    December 31,Dollars in thousands
    
    2010
    
    2009
    
    2010
    
    2009Total stockholders equity
    
    $
    22,896
    
    
    $
    31,013
    
    
    $
    31,798
    
    
    $
    35,539Net unrealized loss (gain)
on investment securities
available for sale
    
    
    126
    
    
    
    ( 533)
    
    
    
    126
    
    
    
    ( 533
    )Net unrealized loss on
equity securities available
for sale
    
    
    (   13)
    
    
    
    (   11)
    
    
    
    (  13)
    
    
    
    (  11
    )Disallowed intangibles
    
    
    ( 136)
    
    
    
    ( 744)
    
    
    
    (136)
    
    
    
    (744
    )Disallowed deferred tax
assets
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Qualifying trust preferred
securities
    
    
    4,000
    
    
    
    4,000
    
    
    
    -
    
    
    
    -Tier 1 capital
    
    
    26,873
    
    
    
    33,725
    
    
    
    31,775
    
    
    
    34,251Qualifying long-term debt
    
    
    5,200
    
    
    
    5,200
    
    
    
    -
    
    
    
    5,000Allowance for loan
losses
    
    
    3,555
    
    
    
    4,013
    
    
    
    3,552
    
    
    
    4,011Other
    
    
    80
    
    
    
    80
    
    
    
    80
    
    
    
    80Tier 2 capital
    
    
    8,835
    
    
    
    9,293
    
    
    
    3,632
    
    
    
    9,091Total capital
    
    $
    35,708
    
    
    $
    43,018
    
    
    $
    35,407
    
    
    $
    43,342Risk-weighted assets
    
    $
    283,701
    
    
    $
    322,838
    
    
    $
    283,487
    
    
    $
    322,606Average total assets
    
    
    426,797
    
    
    
    484,362
    
    
    
    426,569
    
    
    
    484,107Risk-based capital ratios:Tier 1 capital to risk-adjusted assets
Actual
    
    
    9.47%
    
    
    
    10.45%
    
    
    
    11.21%
    
    
    
    10.62%Minimum considered to
be well-capitalized
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00Minimum considered to
be well-capitalized
under OCC
requirements
    
    
    N/A
    
    
    
    N/A
    
    
    
    10.00
    
    
    
    10.00Total capital to risk-adjusted assets
Actual
    
    
    12.59
    
    
    
    13.32
    
    
    
    12.49
    
    
    
    13.43Minimum considered to
be well-capitalized
    
    
    10.00
    
    
    
    10.00
    
    
    
    10.00
    
    
    
    10.00Minimum considered to
be well-capitalized
under OCC
requirements
    
    
    N/A
    
    
    
    N/A
    
    
    
    12.00
    
    
    
    12.00Leverage ratioActual
    
    
    6.30
    
    
    
    6.96
    
    
    
    7.45
    
    
    
    7.08Minimum considered to
be well-capitalized
    
    
    5.00
    
    
    
    5.00
    
    
    
    5.00
    
    
    
    5.00Minimum considered to
be well-capitalized
under OCC
requirements
    
    
    N/A
    
    
    
    N/A
    
    
    
    8.00
    
    
    
    8.00
    Results
of operations  2009 compared with 2008
           23




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##### Table of Contents



Item 7a.   Quantitative and Qualitative Disclosure about Market Risk
  24




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##### Table of Contents



CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
 
  Consolidated Balance Sheets
 December 31,Dollars in thousands, except per share data
    
    2010
    
    
    2009AssetsCash and due from banks (Note 3)
    
    $
    7,228
    
    
    $
    6,808Federal funds sold (Note 4)
    
    
    13,550
    
    
    
    5,500Interest-bearing deposits with banks
    
    
    3,289
    
    
    
    609Investment securities available for sale (Note 5)
    
    
    105,420
    
    
    
    122,006Investment securities held to maturity (Market value of
$41,782 at December 31, 2009) (Note 6)
    
    
    -
    
    
    
    40,395Loans held for sale
    
    
    -
    
    
    
    190Loans (Note 7)
    
    
    244,955
    
    
    
    276,242Less: Allowance for loan losses (Note 8)
    
    
    10,626
    
    
    
    8,650Net loans
    
    
    234,329
    
    
    
    267,592-
    
    
    
    -Premises and equipment (Note 9)
    
    
    2,974
    
    
    
    2,949Accrued interest receivable
    
    
    1,933
    
    
    
    2,546Bank-owned life insurance
    
    
    5,730
    
    
    
    5,537Other real estate owned
    
    
    1,997
    
    
    
    2,352Other assets (Notes 14 and 15)
    
    
    10,817
    
    
    
    9,855Total assets
    
    $
    387,267
    
    
    $
    466,339Liabilities and Stockholders EquityDeposits: (Notes 5, 6, and 10)Demand
    
    
    35,132
    
    
    $
    29,304Savings
    
    
    130,663
    
    
    
    149,853Time
    
    
    172,756
    
    
    
    201,119Total deposits
    
    
    338,551
    
    
    
    380,276Accrued expenses and other liabilities
    
    
    6,620
    
    
    
    5,950Short-term portion of long-term debt (Note 12)
    
    
    5,000
    
    
    
    5,000Short-term borrowings (Note 11)
    
    
    -
    
    
    
    100Long-term debt (Note 12)
    
    
    14,200
    
    
    
    44,000Total liabilities
    
    
    364,371
    
    
    
    435,326Commitments and contingencies (Note 22)Stockholders equity (Notes 16, 17 and 25):Preferred stock, no par value: Authorized 100,000 shares (Note 16);Series A , issued and outstanding 8 shares in 2010 and 2009
    
    
    200
    
    
    
    200Series C , issued and outstanding 108 shares in 2010 and 2009
    
    
    27
    
    
    
    27Series D , issued and outstanding 3,280 shares in 2010 and 2009
    
    
    820
    
    
    
    820Preferred stock, no par value, perpetual noncumulative: Authorized 200 shares;Series E, issued and outstanding 49 shares in 2010 and 2009
    
    
    2,450
    
    
    
    2,450Preferred stock, no par value, perpetual noncumulative: Authorized 7,000
shares;Series F, issued and outstanding 7,000 shares in 2010 and 2009
    
    
    6,790
    
    
    
    6,790Preferred stock, no par value, perpetual noncumulative: Authorized 9,439
shares;Series G, issued and outstanding 9,439 shares in 2010 and 2009
    
    
    9,990
    
    
    
    9,499Common stock, par value $10: Authorized 400,000 shares;134,530 shares issued in 2010 and 2009131,290 shares outstanding in 2010 and 2009
    
    
    1,345
    
    
    
    1,345Surplus
    
    
    1,115
    
    
    
    1,115Retained earnings
    
    
    514
    
    
    
    8,462Accumulated other comprehensive (loss ) income
    
    
    (127
    )
    
    
    533Treasury stock, at cost - 3,240 common shares in 2010 and 2009
    
    
    (228
    )
    
    
    (228
    )Total stockholders equity
    
    
    22,896
    
    
    
    31,013Total liabilities and stockholders equity
    
    
    387,267
    
    
    $
    466,339
  25




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##### Table of Contents



CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
 Consolidated Statements of Operations
 Year Ended December 31,Dollars in thousands, except per share data
    
    2010
    
    
    2009
    
    
    2008Interest incomeInterest and fees on loans
    
    
    14,148
    
    
    $
    16,146
    
    
    $
    16,967Interest on Federal funds sold
    
    
    42
    
    
    
    54
    
    
    
    217Interest on deposits with banks
    
    
    29
    
    
    
    50
    
    
    
    24Interest and dividends on investment securities:Taxable
    
    
    5,269
    
    
    
    6,668
    
    
    
    7,404Tax-exempt
    
    
    746
    
    
    
    1,256
    
    
    
    1,290Total interest income
    
    
    20,234
    
    
    
    24,174
    
    
    
    25,902Interest expenseInterest on deposits (Note 10)
    
    
    5,715
    
    
    
    7,670
    
    
    
    9,706Interest on short-term borrowings
    
    
    1
    
    
    
    3
    
    
    
    59Interest on long-term debt
    
    
    1,691
    
    
    
    1,822
    
    
    
    1,544Total interest expense
    
    
    7,407
    
    
    
    9,495
    
    
    
    11,309Net interest income
    
    
    12,827
    
    
    
    14,679
    
    
    
    14,593Provision for loan losses (Note 8)
    
    
    9,487
    
    
    
    8,105
    
    
    
    1,586Net interest income after provision
for loan losses
    
    
    3,340
    
    
    
    6,574
    
    
    
    13,007Other operating incomeService charges on deposit accounts
    
    
    1,319
    
    
    
    1,476
    
    
    
    1,443ATM fees
    
    
    360
    
    
    
    482
    
    
    
    428Award income
    
    
    1,100
    
    
    
    71
    
    
    
    18Earnings from cash surrender value of bank-owned life insurance
    
    
    257
    
    
    
    252
    
    
    
    248Other income (Note 13)
    
    
    501
    
    
    
    832
    
    
    
    874Net gains (losses) on securities transactions (Notes 5 and 6)
    
    
    2,080
    
    
    
    11
    
    
    
    (44
    )Other than temporary impairment losses on securities
    
    
    -
    
    
    
    (19
    )
    
    
    (3,478
    )Portion of loss recognized in other comprehensive income, before tax
    
    
    -
    
    
    
    (2,314
    )
    
    
    790Net impairment losses on securities recognized in earnings
    
    
    -
    
    
    
    (2,333
    )
    
    
    (2,688
    )Total other operating income
    
    
    5,617
    
    
    
    791
    
    
    
    279Other operating expensesSalaries and other employee benefits (Note 15)
    
    
    5,822
    
    
    
    5,800
    
    
    
    6,205Occupancy expense (Note 9)
    
    
    1,641
    
    
    
    1,326
    
    
    
    1,304Equipment expense (Note 9)
    
    
    557
    
    
    
    648
    
    
    
    651Professional fees
    
    
    837
    
    
    
    432
    
    
    
    342Management consulting fees
    
    
    1,369
    
    
    
    683
    
    
    
    212Marketing expense
    
    
    325
    
    
    
    361
    
    
    
    471FDIC insurance expense
    
    
    1,095
    
    
    
    1,082
    
    
    
    429Data processing expense
    
    
    352
    
    
    
    361
    
    
    
    471Other real estate owned expense
    
    
    146
    
    
    
    558
    
    
    
    -Amortization of intangible assets
    
    
    566
    
    
    
    194
    
    
    
    213Federal Home Loan Bank advance prepayment penalty
    
    
    694
    
    
    
    -
    
    
    
    -Other expenses (Note 13)
    
    
    2,650
    
    
    
    1,936
    
    
    
    1,980Total other operating expenses
    
    
    16,054
    
    
    
    13,381
    
    
    
    12,278(Loss) income before income taxes
    
    
    (7,097
    )
    
    
    (6,016
    )
    
    
    1,008Income tax expense (benefit) (Note 14)
    
    
    360
    
    
    
    1,806
    
    
    
    (50
    )Net (loss) income
    
    $
    (7,457
    )
    
    $
    (7,822
    )
    
    $
    1,058Net (loss) income per common share (Note 18)Basic
    
    $
    (60.54
    )
    
    $
    (68.36
    )
    
    $
    1.87Diluted
    
    
    (60.54
    )
    
    
    (68.36
    )
    
    
    1.87Basic average common shares outstanding
    
    
    131,290
    
    
    
    131,300
    
    
    
    131,688Diluted average common shares outstanding
    
    
    131,290
    
    
    
    131,300
    
    
    
    131,688Cash dividends declared per common share
    
    $
    -
    
    
    $
    2.00
    
    
    $
    3.60
  26




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CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
 Consolidated Statements of Changes
in Stockholders Equity
 AccumulatedOtherCommon
    
    
    
    
    
    
    Preferred
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryDollars in thousands
    
    Stock
    
    
    Surplus
    
    
    Stock
    
    
    Earnings
    
    
    (Loss) Income
    
    
    Stock
    
    
    TotalBalance, January 1, 2008
    
    $
    1,345
    
    
    $
    1,115
    
    
    $
    10,287
    
    
    $
    16,922
    
    
    $
    (623
    )
    
    $
    (174
    )
    
    $
    28,872Net income
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,058
    
    
    
    -
    
    
    
    -
    
    
    
    1,058Other comprehensive incomeUnrealized holding losses on securities
arising during the period (net of tax of $922))
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (2,304
    )
    
    
    -
    
    
    
    (2,304
    )Reclassification adjustment for gains (losses)
included in net income (net of tax of $(929))
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,803
    
    
    
    -
    
    
    
    1,803Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    557Proceeds from issuance of preferred stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Purchase of treasury stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (51
    )
    
    
    (51
    )Dividends paid on common stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (474
    )
    
    
    -
    
    
    
    -
    
    
    
    (474
    )Dividends paid on preferred stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (812
    )
    
    
    -
    
    
    
    -
    
    
    
    (812
    )Balance, December 31, 2008
    
    
    1,345
    
    
    
    1,115
    
    
    
    10,287
    
    
    
    16,694
    
    
    
    (1,124
    )
    
    
    (225
    )
    
    
    28,092Net loss
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (7,822
    )
    
    
    -
    
    
    
    -
    
    
    
    (7,822
    )Other comprehensive lossUnrealized holding gains on securities
arising during the period (net of tax of $(2,574))
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    4,997
    
    
    
    -
    
    
    
    4,997Reclassification adjustment for losses
included in net income (net of tax of $485)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (2,333
    )
    
    
    -
    
    
    
    (2,333
    )Total other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,158
    )Transition adjustment for adoption of FASB ASC
320-10-65-1
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    1,007
    
    
    
    (1,007
    )
    
    

    -
    
    
    
    -Proceeds from issuance of preferred stock
    
    
    -
    
    
    
    -
    
    
    
    9,439
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    9,439Purchase of treasury stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (3
    )
    
    
    (3
    )Dividends paid on common stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,094
    )
    
    
    -
    
    
    
    -
    
    
    
    (1,094
    )Dividends paid on preferred stock
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (263
    )
    
    
    -
    
    
    
    -
    
    
    
    (263
    )Dividends accrued on preferred stock
    
    
    -
    
    
    
    -
    
    
    
    60
    
    
    
    (60
    )
    
    
    -
    
    
    
    -
    
    
    
    -Balance, December 31, 2009
    
    $
    1,345
    
    
    $
    1,115
    
    
    $
    19,786
    
    
    $
    8,462
    
    
    $
    533
    
    
    $
    (228
    )
    
    $
    31,013Net loss
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (7,457
    )
    
    
    -
    
    
    
    -
    
    
    
    (7,457
    )Other comprehensive lossUnrealized holding losses on securities
arising during the period (net of tax of $82)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (177
    )
    
    
    -
    
    
    
    (177
    )Transfer of held to maturity securities to
available for sale at market value (net of
tax of $459)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    890
    
    
    
    -
    
    
    
    890Reclassification adjustment for gains
included in net income (net of tax of $707)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    (1,373
    )
    
    
    -
    
    
    
    (1,373
    )Total other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,117
    )Dividends accrued on preferred stock
    
    
    -
    
    
    
    -
    
    
    
    491
    
    
    
    (491
    )
    
    
    -
    
    
    
    -
    
    
    
    -Balance, December 31, 2010
    
    $
    1,345
    
    
    $
    1,115
    
    
    $
    20,277
    
    
    $
    514
    
    
    $
    (127
    )
    
    $
    (228
    )
    
    $
    22,896
  27




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##### Table of Contents



CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
 Consolidated Statements of Cash Flows
 Year Ended December 31,In thousands
    
    2010
    
    
    2009
    
    
    2008Operating activitiesNet (loss) income
    
    $
    (7,457
    )
    
    $
    (7,822
    )
    
    $
    1,058Adjustments to reconcile net (loss) income to net cash from operating activities:Depreciation and amortization
    
    
    404
    
    
    
    432
    
    
    
    495Provision for loan losses
    
    
    9,487
    
    
    
    8,105
    
    
    
    1,586Premium amortization (discount accretion) of investment securities
    
    
    211
    
    
    
    17
    
    
    
    (65
    )Amortization of intangible assets
    
    
    566
    
    
    
    194
    
    
    
    213Net (gains) losses on sales and early redemptions of investment securities
    
    
    (2,080
    )
    
    
    (12
    )
    
    
    44Net impairment losses on investment securities
    
    
    -
    
    
    
    2,333
    
    
    
    2,688Net losses (gains) on sales of loans held for sale
    
    
    (6
    )
    
    
    10
    
    
    
    (18
    )Net losses and writedowns of other real estate owned
    
    
    43
    
    
    
    427
    
    
    
    -Loans originated for sale
    
    
    -
    
    
    
    (312
    )
    
    
    (1,001
    )Proceeds from sales and principal payments from loans held for sale
    
    
    196
    
    
    
    273
    
    
    
    978Decrease (increase) in accrued interest receivable
    
    
    613
    
    
    
    250
    
    
    
    (124
    )Deferred taxes
    
    
    845
    
    
    
    2,372
    
    
    
    (814
    )Net increase in bank-owned life insurance
    
    
    (193
    )
    
    
    (192
    )
    
    
    (197
    )Increase in other assets
    
    
    (1,935
    )
    
    
    (6,103
    )
    
    
    (625
    )Increase in accrued expenses and other liabilities
    
    
    670
    
    
    
    70
    
    
    
    777Net cash provided by operating activities
    
    
    1,364
    
    
    
    42
    
    
    
    4,995Investing activitiesDecrease (increase) in loans, net
    
    
    23,532
    
    
    
    (8,993
    )
    
    
    (41,415
    )(Increase) decrease in interest bearing deposits with banks
    
    
    (2,680
    )
    
    
    117
    
    
    
    (448
    )Proceeds from maturities of investment securities available for
sale, including principal repayments and early redemptions
    
    
    42,300
    
    
    
    27,100
    
    
    
    21,774Proceeds from maturities of investment securities held to
maturity, including principal repayments and early redemptions
    
    
    1,247
    
    
    
    15,574
    
    
    
    10,964Proceeds from sales of investment securities available for sale
    
    
    70,718
    
    
    
    189
    
    
    
    5,179Purchases of investment securities available for sale
    
    
    (56,513
    )
    
    
    (22,096
    )
    
    
    (50,849
    )Purchases of investment securities held to maturity
    
    
    -
    
    
    
    (2,462
    )
    
    
    (12,274
    )Purchases of bank-owned life insurance, net
    
    
    -
    
    
    
    -
    
    
    
    (220
    )Proceeds from sales of other real estate owned
    
    
    556
    
    
    
    275
    
    
    
    -Purchases of premises and equipment
    
    
    (429
    )
    
    
    (139
    )
    
    
    (136
    )Net cash provided by (used in) investing activities
    
    
    78,731
    
    
    
    9,565
    
    
    
    (67,425
    )Financing activities(Decrease) increase in deposits
    
    
    (41,725
    )
    
    
    (26,841
    )
    
    
    12,261(Decrease) increase in short-term borrowings
    
    
    (100
    )
    
    
    (1,750
    )
    
    
    700(Decrease) increase in long-term debt
    
    
    (29,800
    )
    
    
    (2,600
    )
    
    
    31,800Proceeds from issuance of preferred stock
    
    
    -
    
    
    
    9,439
    
    
    
    -Purchases of treasury stock
    
    
    -
    
    
    
    (3
    )
    
    
    (51
    )Dividends paid on preferred stock
    
    
    -
    
    
    
    (1,094
    )
    
    
    (812
    )Dividends paid on common stock
    
    
    -
    
    
    
    (263
    )
    
    
    (474
    )Net cash (used in) provided by financing activities
    
    
    (71,625
    )
    
    
    (23,112
    )
    
    
    43,424Net increase (decrease) in cash and cash equivalents
    
    
    8,470
    
    
    
    (13,505
    )
    
    
    (19,006
    )Cash and cash equivalents at beginning of year
    
    
    12,308
    
    
    
    25,813
    
    
    
    44,819Cash and cash equivalents at end of year
    
    $
    20,778
    
    
    $
    12,308
    
    
    $
    25,813Cash paid during the yearInterest
    
    $
    7,432
    
    
    $
    9,864
    
    
    $
    11,728Income taxes
    
    
    59
    
    
    
    1,279
    
    
    
    1,582Non-cash transactionsTransfer of investments from held to maturity to available for sale
    
    
    39,144
    
    
    
    183
    
    
    
    1,500Transfer of loans to other real estate owned
    
    
    244
    
    
    
    1,508
    
    
    
    1,547Transfer of loans held for sale to loans
    
    
    -
    
    
    
    106
    
    
    
    -
  28




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##### Table of Contents



Note 1   Summary of significant accounting policies
 Additionally, significant judgment is required to determine the future realization of
deferred tax assets and whether a valuation allowance may be required.
 Business
   Principles of consolidation
  Cash and cash equivalents
  Investment securities held to maturity and investment securities available for sale
      The Bank transferred its entire HTM portfolio to AFS in March 2010. This transfer was made in
conjunction with a deleveraging program to reduce total asset levels and improve capital ratios.
As a result, purchases of securities may not be classified as HTM for the next two years.
 29




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##### Table of Contents



Loans held for sale
 Loans
    Allowance for loan losses
        Bank premises and equipment
 Other assets
 Other real estate owned
 30




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##### Table of Contents



Core deposit premiums  accelerated amortization
 Long-term debt
  Income taxes
   Net income per common share
 Comprehensive income
 Recent accounting pronouncements
     31




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##### Table of Contents



Reclassifications
 Note 2.   Going Concern/Regulatory Compliance
     
 
 
 
 
 
 
 32




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##### Table of Contents




 
 
 
 
 
 
 
 
 
 
 
      33




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##### Table of Contents



Note 3   Cash and due from banks
  Note 4   Federal funds sold
  Note 5   Investment securities available for sale
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2010 In thousands
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury securities
and obligations of U.S.
government agencies
    
    $
    3,389
    
    
    $
    64
    
    
    $
    24
    
    
    $
    3,429Obligations of U.S.
government sponsored
entities
    
    
    15,447
    
    
    
    100
    
    
    
    267
    
    
    
    15,280Obligations of state and
political subdivisions
    
    
    9,604
    
    
    
    194
    
    
    
    285
    
    
    
    9,513Mortgage-backed
securities
    
    
    66,037
    
    
    
    1,892
    
    
    
    24
    
    
    
    67,905Other debt securities
    
    
    8,358
    
    
    
    37
    
    
    
    1,839
    
    
    
    6,556Equity securities:Marketable securities
    
    
    748
    
    
    
    -
    
    
    
    21
    
    
    
    727Nonmarketable
securities
    
    
    115
    
    
    
    -
    
    
    
    -
    
    
    
    115Federal Reserve Bank
and Federal Home
Loan Bank stock
    
    
    1,895
    
    
    
    -
    
    
    
    -
    
    
    
    1,895Total
    
    $
    105,593
    
    
    $
    2,287
    
    
    $
    2,460
    
    
    $
    105,420
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair2009 In thousands
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury securities
and obligations of U.S.
government agencies
    
    $
    12,518
    
    
    $
    231
    
    
    $
    49
    
    
    $
    12,700Obligations of U.S.
government sponsored
entities
    
    
    17,289
    
    
    
    222
    
    
    
    187
    
    
    
    17,324Obligations of state and
political subdivisions
    
    
    546
    
    
    
    7
    
    
    
    -
    
    
    
    553Mortgage-backed
securities
    
    
    74,417
    
    
    
    2,797
    
    
    
    76
    
    
    
    77,138Other debt securities
    
    
    12,269
    
    
    
    266
    
    
    
    2,267
    
    
    
    10,268Equity securities:Marketable securities
    
    
    713
    
    
    
    -
    
    
    
    18
    
    
    
    695Nonmarketable
securities
    
    
    115
    
    
    
    -
    
    
    
    -
    
    
    
    115Federal Reserve Bank
and Federal Home
Loan Bank stock
    
    
    3,213
    
    
    
    -
    
    
    
    -
    
    
    
    3,213Total
    
    $
    121,080
    
    
    $
    3,523
    
    
    $
    2,597
    
    
    $
    122,006
  34




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##### Table of Contents



Amortized
    
    FairIn thousands
    
    Cost
    
    ValueDue within one year:Obligations of U.S. government sponsored 
entities
    
    $
    118
    
    
    $
    119Mortgage-backed securities
    
    
    49
    
    
    
    50Due after one year but within five years:U.S. Treasury securities and obligations 
of U.S. government agencies
    
    
    71
    
    
    
    71Obligations of U.S. government sponsored 
entities
    
    
    1,069
    
    
    
    1,083Obligations of state and 
political subdivisions
    
    
    1,879
    
    
    
    1,992Mortgage-backed securities
    
    
    627
    
    
    
    657Other debt securities
    
    
    1,000
    
    
    
    929Due after five years but within ten years:U.S. Treasury securities and obligations 
of U.S. government agencies
    
    
    93
    
    
    
    92Obligations of U.S. 
government sponsored
entities
    
    
    5,831
    
    
    
    5,736Obligations of state and 
political subdivisions
    
    
    3,986
    
    
    
    3,970Mortgage-backed securities
    
    
    502
    
    
    
    520Due after ten years:U.S. Treasury securities and obligations 
of U.S. government agencies
    
    
    3,225
    
    
    
    3,266Obligations of U.S. government sponsored 
entities
    
    
    8,429
    
    
    
    8,342Obligations of state and 
political subdivisions
    
    
    3,739
    
    
    
    3,551Mortgage-backed securities
    
    
    64,859
    
    
    
    66,678Other debt securities
    
    
    7,358
    
    
    
    5,627Total debt securities
    
    
    102,835
    
    
    
    102,683Equity securities
    
    
    2,758
    
    
    
    2,737Total
    
    $
    105,593
    
    
    $
    105,420
   In thousands
    
    2010
    
    2009
    
    2008Taxable
    
    $
    5,112
    
    
    $
    5,732
    
    
    $
    6,001Tax-exempt
    
    
    470
    
    
    
    68
    
    
    
    20Total
    
    $
    5,582
    
    
    $
    5,800
    
    
    $
    6,021
   Less than 12 Months
    
    12 Months or More
    
    TotalGross Unrealized
    
    
    
    
    
    Gross Unrealized
    
    
    
    
    
    Gross Unrealized2010 In thousands
    
    Fair Value
    
    
    Losses
    
    Fair Value
    
    
    Losses
    
    Fair Value
    
    
    LossesU.S. Treasury securities and
obligations 
of U.S. government agencies
    
    $
    1,054
    
    
    $
    23
    
    
    $
    162
    
    
    $
    1
    
    
    $
    1,216
    
    
    $
    24Obligations of U.S. Government 
sponsored entities
    
    
    6,733
    
    
    
    254
    
    
    
    2,080
    
    
    
    13
    
    
    
    8,813
    
    
    
    267Mortgaged-backed securities
    
    
    6,219
    
    
    
    24
    
    
    
    -
    
    
    
    -
    
    
    
    6,219
    
    
    
    24Obligations of state and political 
subdivisions
    
    
    5,147
    
    
    
    285
    
    
    
    -
    
    
    
    -
    
    
    
    5,147
    
    
    
    285Other debt securities
    
    
    -
    
    
    
    -
    
    
    
    5,050
    
    
    
    1,839
    
    
    
    5,050
    
    
    
    1,839Equity securities
    
    
    -
    
    
    
    -
    
    
    
    727
    
    
    
    21
    
    
    
    727
    
    
    
    21Total
    
    $
    19,153
    
    
    $
    586
    
    
    $
    8,019
    
    
    $
    1,874
    
    
    $
    27,172
    
    
    $
    2,460Less than 12 Months
    
    12 Months or More
    
    TotalGross Unrealized
    
    
    
    
    
    Gross Unrealized
    
    
    
    Gross Unrealized2009 In thousands
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesU.S. Treasury securities and 
obligations
of U.S. government agencies
    
    $
    2,050
    
    
    $
    14
    
    
    $
    2,598
    
    
    $
    35
    
    
    $
    4,648
    
    
    $
    49Obligations of U.S. Government 
sponsored entities
    
    
    2,822
    
    
    
    143
    
    
    
    2,323
    
    
    
    44
    
    
    
    5,145
    
    
    
    187Mortgaged-backed securities
    
    
    4,947
    
    
    
    73
    
    
    
    248
    
    
    
    3
    
    
    
    5,195
    
    
    
    76Other debt securities
    
    
    43
    
    
    
    1
    
    
    
    4,352
    
    
    
    2,266
    
    
    
    4,395
    
    
    
    2,267Equity securities
    
    
    -
    
    
    
    -
    
    
    
    713
    
    
    
    18
    
    
    
    713
    
    
    
    18Total
    
    $
    9,862
    
    
    $
    231
    
    
    $
    10,234
    
    
    $
    2,366
    
    
    $
    20,096
    
    
    $
    2,597
   35




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##### Table of Contents



For the NineFor the Year
    
    MonthsEnded
    
    BeginningDecember 31,
    
    April 1,In thousands
    
    2010
    
    2009Beginning balance
    
    $
    2,489
    
    
    $
    288Add:Initial creditImpairments
    
    
    -
    
    
    
    944Additional credit impairments
    
    
    -
    
    
    
    1,257Deduct:Dispositions
    
    
    (2,489
    )
    
    
    -Balance, December 31
    
    $
    -
    
    
    $
    2,489
 $
 All values are as of December 31, 2010 and are expected to continue performing.
      Note 6 Investment securities held to maturity
   36




---



##### Table of Contents



Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairIn thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Treasury securities
and obligations
of U.S. government
agencies
    
    $
    1,585
    
    
    $
    62
    
    
    $
    -
    
    
    $
    1,647Obligations of U.S.
government
sponsored entities
    
    
    2,459
    
    
    
    19
    
    
    
    73
    
    
    
    2,405Obligations of state and
political subdivisions
    
    
    27,979
    
    
    
    1,135
    
    
    
    72
    
    
    
    29,042Mortgage-backed
securities
    
    
    7,877
    
    
    
    309
    
    
    
    -
    
    
    
    8,186Other debt securities
    
    
    495
    
    
    
    7
    
    
    
    -
    
    
    
    502Total
    
    $
    40,395
    
    
    $
    1,532
    
    
    $
    145
    
    
    $
    41,782
  In thousands
    
    2010
    
    
    2009
    
    
    2008Taxable
    
    $
    157
    
    
    $
    936
    
    
    $
    1,403Tax-exempt
    
    
    276
    
    
    
    1,188
    
    
    
    1,270Total
    
    $
    433
    
    
    $
    2,124
    
    
    $
    2,673
   Less than 12 Months
    
    12 Months or More
    
    TotalGross Unrealized
    
    
    
    Gross Unrealized
    
    
    
    Gross Unrealized2009 In thousands
    
    Fair Value
    
    
    Losses
    
    Fair Value
    
    
    Losses
    
    Fair Value
    
    
    LossesObligations of state and political
subdivisions
    
    $
    2,268
    
    
    $
    22
    
    
    $
    672
    
    
    $
    50
    
    
    $
    2,940
    
    
    $
    72Obligations of U.S.
government
sponsored entities
    
    
    1,351
    
    
    
    73
    
    
    
    -
    
    
    
    -
    
    
    
    1,351
    
    
    
    73Total
    
    $
    3,619
    
    
    $
    95
    
    
    $
    672
    
    
    $
    50
    
    
    $
    4,291
    
    
    $
    145
 Note 7 Loans
  In thousands
    
    2010
    
    2009Commercial
    
    $
    38,225
    
    
    $
    53,820Real estate
    
    
    206,072
    
    
    
    221,601Installment
    
    
    718
    
    
    
    926Total loans
    
    
    245,015
    
    
    
    276,347Less: Unearned income
    
    
    60
    
    
    
    105Loans
    
    $
    244,955
    
    
    $
    276,242
  Pass 
 Special Mention 
 Substandard 
 Doubtful 
 Loss 
  37




---



##### Table of Contents



SpecialIn thousands
    
    Pass
    
    
    Mention
    
    Substandard
    
    Doubtful
    
    Loss
    
    TotalCommercial loans
    
    $
    35,776
    
    
    $
    916
    
    
    $
    1,384
    
    
    $
    149
    
    
    $
    -
    
    
    $
    38,225Real estate loansChurch
    
    
    38,785
    
    
    
    8,893
    
    
    
    15,106
    
    
    
    -
    
    
    
    -
    
    
    
    62,784Construction - other than 
third-party originated
    
    
    1,879
    
    
    
    598
    
    
    
    10,593
    
    
    
    579
    
    
    
    -
    
    
    
    13,649Construction
 third-partyoriginated
    
    
    -
    
    
    
    -
    
    
    
    9,514
    
    
    
    4,017
    
    
    
    -
    
    
    
    13,531Multifamily11,742
    
    
    
    1,578
    
    
    
    1,240
    
    
    
    273
    
    
    
    -
    
    
    
    14,833Other
    
    
    46,544
    
    
    
    5,064
    
    
    
    20,973
    
    
    
    1,202
    
    
    
    -
    
    
    
    73,783Residential
    
    
    24,286
    
    
    
    -
    
    
    
    2,714
    
    
    
    492
    
    
    
    -
    
    
    
    27,492Installment
    
    
    696
    
    
    
    16
    
    
    
    1
    
    
    
    5
    
    
    
    -
    
    
    
    718$
    159,708
    
    
    $
    17,065
    
    
    $
    61,525
    
    
    $
    6,717
    
    
    $
    -
    
    
    $
    245,015
  In thousands
    
    0-30 Days
    
    30-60 Days
    
    60-90 Days
    
    More than 90 Days
    
    Total Past Due
    
    Current
    
    TotalCommercial loans
    
    $
    3,251
    
    
    $
    1,336
    
    
    $
    1,449
    
    
    $
    2,308
    
    
    $
    8,344
    
    
    $
    29,881
    
    
    $
    38,225Real estate loansChurch
    
    
    339
    
    
    
    13,096
    
    
    
    7,630
    
    
    
    4,909
    
    
    
    25,974
    
    
    
    36,810
    
    
    
    62,784Construction - other than
third-party originated
    
    
    4,025
    
    
    
    -
    
    
    
    -
    
    
    
    8,057
    
    
    
    12,082
    
    
    
    1,567
    
    
    
    13,649Construction  third-party 
originated
    
    
    454
    
    
    
    1,531
    
    
    
    530
    
    
    
    9,253
    
    
    
    11,768
    
    
    
    1,763
    
    
    
    13,531Mulifamily
    
    
    -
    
    
    
    2,608
    
    
    
    1,248
    
    
    
    273
    
    
    
    4,129
    
    
    
    10,704
    
    
    
    14,833Other
    
    
    2,837
    
    
    
    2,109
    
    
    
    4,861
    
    
    
    6,375
    
    
    
    16,182
    
    
    
    57,601
    
    
    
    73,783Residential
    
    
    564
    
    
    
    809
    
    
    
    118
    
    
    
    2,333
    
    
    
    3,824
    
    
    
    23,668
    
    
    
    27,492Installment
    
    
    31
    
    
    
    17
    
    
    
    -
    
    
    
    6
    
    
    
    54
    
    
    
    664
    
    
    
    718$
    11,501
    
    
    $
    21,506
    
    
    $
    15,836
    
    
    $
    33,514
    
    
    $
    82,357
    
    
    $
    162,658
    
    
    $
    245,015
  UnpaidRecorded
    
    Principal
    
    RelatedIn thousands
    
    Investment
    
    Balance
    
    AllowanceCommercial loans
    
    $
    10
    
    
    $
    10
    
    
    $
    -Real estate loansChurch
    
    
    5,460
    
    
    
    5,624
    
    
    
    -Construction - other than
third-party originated
    
    
    6,689
    
    
    
    7,067
    
    
    
    242Construction
 third-party
originated
    
    
    13,078
    
    
    
    16,315
    
    
    
    1,123Multifamily
    
    
    273
    
    
    
    824
    
    
    
    -Other
    
    
    7,024
    
    
    
    7,798
    
    
    
    102Residential
    
    
    2,227
    
    
    
    2,394
    
    
    
    35Installment
    
    
    -
    
    
    
    -
    
    
    
    -$
    34,761
    
    
    $
    40,032
    
    
    $
    1,502
   In thousands
    
    2010
    
    2009Nonaccrual loans
    
    $
    35,916
    
    
    $
    16,323Loans with interest or principal 90
days or more past due and still accruing
    
    
    2,343
    
    
    
    1,567Total nonperforming loans
    
    $
    38,259
    
    
    $
    17,890
  In thousands
    
    2010
    
    2009
    
    2008Interest income foregone
    
    $
    (1,723
    )
    
    $
    (785
    )
    
    $
    (692
    )Interest income received
    
    
    119
    
    
    
    188
    
    
    
    467$
    (1,604
    )
    
    $
    (597
    )
    
    $
    (225
    )
    38




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##### Table of Contents



$2.9 5.2 million and $760,000 The decline in TDRs resulted from
charge-offs.
 Note 8 Allowance for loan losses
     include managements evaluation of the regional economy, loan portfolio volumes, the composition
and concentrations of credit, credit quality and delinquency trends. These reserves reflect
managements attempt to ensure that the overall allowance reflects a margin for judgmental factors
and the uncertainty that is inherent in estimates of probable credit losses.
   In thousands
    
    2010
    
    
    2009
    
    
    2008Balance, January 1
    
    $
    8,650
    
    
    $
    3,800
    
    
    $
    3,000Provision for loan
losses
    
    
    9,487
    
    
    
    8,105
    
    
    
    1,586Recoveries of loans previously
charged off
    
    
    49
    
    
    
    15
    
    
    
    618,186
    
    
    
    11,920
    
    
    
    4,592Less: Charge-offs
    
    
    7,560
    
    
    
    3,270
    
    
    
    792Balance, December 31
    
    $
    10,626
    
    
    $
    8,650
    
    
    $
    3,800
 The following tables present the allowance for loan losses by portfolio segment along with the
related recorded investment in loans based on impairment method as of December 31, 2010.
 Individually
    
    
    Collectively
    
    
    TotalIn thousands
    
    Evaluated
    
    
    Evaluated
    
    
    AllowanceCommercial loans
    
    $
    -
    
    
    
    $ 2,770
    
    
    
    $ 2,770Real estate loansChurch
    
    
    -
    
    
    
    1,559
    
    
    
    1,559Construction - other than
third-party originated
    
    
    242
    
    
    
    220
    
    
    
    462Construction  third-party
Originated
    
    
    1,123
    
    
    
    452
    
    
    
    1,575Multifamily
    
    
    -
    
    
    
    633
    
    
    
    633Other
    
    
    102
    
    
    
    2,231
    
    
    
    2,333Residential
    
    
    35
    
    
    
    701
    
    
    
    736Installment
    
    
    -
    
    
    
    55
    
    
    
    55Unallocated
    
    
    -
    
    
    
    503
    
    
    
    503$ 1,502
    
    
    
    $ 9,124
    
    
    
    $10,626TotalIndividually
    
    
    Collectively
    
    
    RecordedIn thousands
    
    Evaluated
    
    
    Evaluated
    
    
    InvestmentCommercial loans
    
    
    $10
    
    
    
    $ 38,215
    
    
    
    $ 38,225Real estate loansChurch
    
    
    5,460
    
    
    
    57,324
    
    
    
    62,784Construction - other than
third-party originated
    
    
    6,689
    
    
    
    6,960
    
    
    
    13,649Construction  third-party
originated
    
    
    13,078
    
    
    
    453
    
    
    
    13,531Multifamily
    
    
    273
    
    
    
    14,560
    
    
    
    14,833Other
    
    
    7,024
    
    
    
    66,759
    
    
    
    73,783Residential
    
    
    2,227
    
    
    
    25,265
    
    
    
    27,492Installment
    
    
    -
    
    
    
    718
    
    
    
    718$ 34,761
    
    
    
    $ 210,254
    
    
    
    $245,015
 Note 9 Premises and equipment
  39




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##### Table of Contents



In thousands
    
    2010
    
    
    2009Land
    
    $
    329
    
    
    $
    329Premises
    
    
    1,520
    
    
    
    1,520Furniture and equipment
    
    
    4,436
    
    
    
    4,326Leasehold improvements
    
    
    3,563
    
    
    
    3,368Total cost
    
    
    9,848
    
    
    
    9,543Less: Accumulated depreciation and amortization
    
    
    6,874
    
    
    
    6,594Total premises and equipment
    
    $
    2,974
    
    
    $
    2,949
  Note 10 Deposits
  In thousands
    
    2010
    
    
    2009Noninterest bearing demand
    
    $
    35,132
    
    
    $
    29,304Interest bearing:Demand
    
    
    45,707
    
    
    
    51,839Savings
    
    
    23,009
    
    
    
    24,728Money market
    
    
    61,947
    
    
    
    73,286Time
    
    
    172,756
    
    
    
    201,119Total interest bearing deposits
    
    
    303,419
    
    
    
    350,972Total deposits
    
    $
    338,551
    
    
    $
    380,276
  In thousands
    
    2010
    
    
    2009Three months or less
    
    $
    41,276
    
    
    $
    53,599Over three months but within six months
    
    
    18,580
    
    
    
    32,947Over six months but within twelve months
    
    
    13,937
    
    
    
    16,209Over twelve months
    
    
    38,067
    
    
    
    30,649Total deposits
    
    $
    111,860
    
    
    $
    133,404
  Note 11 Short-term borrowings
  AverageInterest
    
    
    
    
    
    
    Average
    
    
    MaximumRate on
    
    
    Average
    
    
    Interest
    
    
    BalanceDecem-
    
    
    Decem-
    
    
    Balance
    
    
    Rate
    
    
    at anyber 31
    
    
    ber 31
    
    
    During
    
    
    During
    
    
    Month-Dollars in thousands
    
    Balance
    
    
    Balance
    
    
    the Year
    
    
    the Year
    
    
    End2010Federal funds
purchased
    
    $
    -
    
    
    
    -
    %
    
    $
    33
    
    
    
    .89
    %
    
    $
    -Securities sold under
repurchase
agreements
    
    
    -
    
    
    
    -
    
    
    
    56
    
    
    
    .31
    
    
    
    1,718Total
    
    $
    -
    
    
    
    -
    %
    
    $
    89
    
    
    
    .52
    %
    
    $
    5,4382009Federal funds
purchased
    
    $
    -
    
    
    
    -
    %
    
    $
    518
    
    
    
    .56
    %
    
    $
    3,720Securities sold under
repurchase
agreements
    
    
    100
    
    
    
    .30
    
    
    
    55
    
    
    
    .27
    
    
    
    2,200Demand note issued
to the U.S. Treasury
    
    
    -
    
    
    
    -
    
    
    
    33
    
    
    
    .05
    
    
    
    3Total
    
    $
    100
    
    
    
    .30
    %
    
    $
    606
    
    
    
    .51
    %
    
    $
    5,923
   Note 12  Long-term debt
  In thousands
    
    2010
    
    
    2009FHLB convertible advances due from
March 4, 2010 through August 6, 2018
    
    $
    10,000
    
    
    $
    39,7006.00% capital note, due December 28, 2010
    
    
    -
    
    
    
    1008.00% capital note, due May 6, 2017
    
    
    200
    
    
    
    2005.00% senior note, due February 21, 2022
    
    
    5,000
    
    
    
    5,000Subordinated debt
    
    
    4,000
    
    
    
    4,000Total
    
    
    19,200
    
    
    
    49,000Less: Short-term portion of long-term debt
    
    
    5,000
    
    
    
    5,000Total
    
    $
    14,200
    
    
    $
    44,000
  totaling
    Formal Agreement However, as a result of the Consent Order
entered into on December 22, 2010 and the failure to achieve certain capital ratios
 40




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##### Table of Contents



required by the
OCC, the Corporation was once again in default under this loan and is attempting to obtain a waiver
from the lender. As a result of the default, the loan has been reclassified to short-term portion
of long-term debt on the accompanying Consolidated Balance Sheets.
  If the interest is deferred for more than twenty quarters, then
there is an event of default. In that event, and if the trustee, or more than 25% of the holders
of the outstanding debt securities, declare the entire principal balance and outstanding interest
to be immediately due and payable, then such amounts are to be paid to the trustee, along with
amounts for trustee and other advisor expenses
    In thousands
    
    Amount2011
    
    $
    5,0002012
    
    
    -2013
    
    
    -2014
    
    
    -2015
    
    
    -Thereafter
    
    
    14,200Total
    
    $
    19,200
 Note 13 Other operating income and expenses
  In thousands
    
    2010
    
    
    2009
    
    
    2008Other incomeUndistributed gain from
unconsolidated investee
    
    $
    130
    
    
    $
    202
    
    
    $
    185Miscellaneous other income
    
    
    371
    
    
    
    630
    
    
    
    689Total other income
    
    $
    501
    
    
    $
    832
    
    
    $
    874Other expensesAppraisal fees
    
    $
    191
    
    
    $
    35
    
    
    $
    4Directors fees
    
    
    172
    
    
    
    140
    
    
    
    113Correspondent bank fees
    
    
    142
    
    
    
    146
    
    
    
    121Forgery loss
    
    
    300
    
    
    
    -
    
    
    
    -Miscellaneous other expenses
    
    
    1,845
    
    
    
    1,615
    
    
    
    1,742Total other expenses
    
    $
    2,650
    
    
    $
    1,936
    
    
    $
    1,980
 Note 14 Income taxes
  In thousands
    
    2010
    
    
    2009
    
    
    2008Current expense (benefit)Federal
    
    $
    (681
    )
    
    $
    (595
    )
    
    $
    755State
    
    
    196
    
    
    
    29
    
    
    
    251
 (485
    )
    
    
    (566
    )
    
    
    1,006Deferred expense (benefit)Federal and state
    
    
    845
    
    
    
    2,372
    
    
    
    (1,056
    )Total income tax expense (benefit)
    
    $
    360
    
    
    $
    1,806
    
    
    
    $(50
    )
  In thousands
    
    2010
    
    
    2009
    
    
    2008Federal income tax at statutory rate
    
    $
    (2,413
    )
    
    $
    (2,046
    )
    
    $
    343Increase (decrease) in income tax
expense resulting from:State income tax (benefit) expense,
net of
federal benefit
    
    
    (362
    )
    
    
    517
    
    
    
    60Tax-exempt income
    
    
    (318
    )
    
    
    (450
    )
    
    
    (462
    )Carryback claims
    
    
    (328
    )
    
    
    -
    
    
    
    -Bank-owned life insurance
    
    
    (65
    )
    
    
    (65
    )
    
    
    (66
    )Increase in valuation allowance
    
    
    3,800
    
    
    
    3,505
    
    
    
    423Decrease in FIN 48
    
    
    -
    
    
    
    -
    
    
    
    (363
    )Other, net
    
    
    46
    
    
    
    345
    
    
    
    15Total income tax expense (benefit)
    
    $
    360
    
    
    $
    1,806
    
    
    $
    (50
    )
  In thousands
    
    2010
    
    
    2009Deferred tax assetsAllowance for loan losses
    
    $
    3,106
    
    
    $
    3,071NOL carryforward
    
    
    2,556
    
    
    
    -AMT tax credit carryforward
    
    
    565
    
    
    
    -Investment securities
    
    
    792
    
    
    
    982Premises and equipment
    
    
    385
    
    
    
    297Deposit intangible
    
    
    206
    
    
    
    207Deferred compensation
    
    
    1,075
    
    
    
    1,072Deferred income
    
    
    482
    
    
    
    46Nonaccrual loan interest
    
    
    238
    
    
    
    89Capital loss carryforward
    
    
    967
    
    
    
    -Other assets
    
    
    60
    
    
    
    154Total deferred tax asset
    
    
    10,432
    
    
    
    5,918Deferred tax liabilitiesUnrealized losses on investment
securities available for sale
    
    
    63
    
    
    
    393Investment in partnership
    
    
    1,128
    
    
    
    -Deferred income accretion
    
    
    426
    
    
    
    -Total deferred tax liabilities
    
    
    1,617
    
    
    
    393Deferred tax asset
    
    
    8,815
    
    
    
    5,525Valuation allowance
    
    
    8,815
    
    
    
    4,680Net deferred tax asset
    
    $
    -
    
    
    $
    845
 4
   In thousands
    
    2010
    
    
    2009Balance at January 1
    
    $
    -
    
    
    $
    112
 41




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##### Table of Contents



Additions based on tax positions related to
the current year
    
    
    44
    
    
    
    -Additions for tax positions of prior years
    
    
    -
    
    
    
    -Reductions for tax positions of prior years
    
    
    -
    
    
    
    (112)Balance at December 31
    
    $
    44
    
    
    $
    -
  Note 15 Benefit plans
           Note 16 Preferred stock
   Year
    
    
    Dividend
    
    
    Stated
    
    
    Number
    
    
    December 31,Issued
    
    
    Rate
    
    
    Value
    
    
    of Shares
    
    
    2010
    
    
    2009Series A
    
    
    1996
    
    
    
    6.00
    %
    
    $
    25,000
    
    
    
    8
    
    
    $
    200,000
    
    
    $
    200,000Series C
    
    
    1996
    
    
    
    8.00
    
    
    
    250
    
    
    
    108
    
    
    
    27,000
    
    
    
    27,000Series D
    
    
    1997
    
    
    
    6.50
    
    
    
    250
    
    
    
    3,280
    
    
    
    820,000
    
    
    
    820,000Series E
    
    
    2005
    
    
    
    6.00
    
    
    
    50,000
    
    
    
    28
    
    
    
    1,400,000
    
    
    
    1,400,000Series F
    
    
    2005
    
    
    
    8.53
    
    
    
    7,000,000
    
    
    
    7,000
    
    
    
    6,790,000
    
    
    
    6,790,000Series E
    
    
    2006
    
    
    
    6.00
    
    
    
    50,000
    
    
    
    21
    
    
    
    1,050,000
    
    
    
    1,050,000Series G
    
    
    2009
    
    
    
    5.00
    
    
    
    9,439,000
    
    
    
    9,439
    
    
    
    9,990,000
    
    
    
    9,499,000$
    20,277,000
    
    
    $
    19,786,000
       Note 17 Restrictions on subsidiary bank dividends
   42




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##### Table of Contents



Note 18 Net income per common share
  In thousands, except per share data
    
    2010
    
    
    2009
    
    
    2008Net (loss) income
    
    $
    ( 7,457
    )
    
    $
    (7,822
    )
    
    $
    1,058Dividends on preferred stock
    
    
    (    491
    )
    
    
    (1,154
    )
    
    
    (812
    )Net (loss)income applicable to basic
common shares
    
    
    ( 7,948
    )
    
    
    (8,976
    )
    
    
    246Dividends applicable to convertible
preferred stock
    
    
    147
    
    
    
    147
    
    
    
    147Net (loss) income applicable to
diluted common shares
    
    $
    ( 7,801
    )
    
    
    $(8,829
    )
    
    $
    393Number of average common sharesBasic
    
    
    131,290
    
    
    
    131,290
    
    
    
    131,688Diluted:Average common shares outstanding
    
    
    131,290
    
    
    
    131,290
    
    
    
    131,688Average potential dilutive common
shares
    
    
    16,317
    
    
    
    16,317
    
    
    
    16,317147,607
    
    
    
    147,607
    
    
    
    148,005Net income per common shareBasic
    
    
    $(60.54
    )
    
    
    $(68.36
    )
    
    
    $1.87Diluted
    
    
    (60.54
    )
    
    
    (68.36
    )
    
    
    1.87
 Note 19 Related party transactions
   Note 20 Fair value measurement of assets and liabilities
       (Dollars in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Investment securities
available for sale
    
    $
    105,420
    
    
    $
    3,429
    
    
    $
    102,492
    
    
    $
    499Loans held for sale
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Total assets
    
    $
    105,420
    
    
    $
    3,429
    
    
    $
    102,492
    
    
    $
    499Total liabilities
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -2009(Dollars in thousands)
    
    Total
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Investment securities
available for sale
    
    $
    122,006
    
    
    $
    12,700
    
    
    $
    108,804
    
    
    $
    502Loans held for sale
    
    
    190
    
    
    
    -
    
    
    
    -
    
    
    
    190Total assets
    
    $
    122,196
    
    
    $
    12,700
    
    
    $
    108,804
    
    
    $
    692Total liabilities
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    Note 21 Fair value of financial instruments
   43




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Cash, short-term investments and interest-bearing deposits with banks
  Investment securities
  Loans
  Loans held for sale
  Deposit liabilities
   Short-term borrowings
  Long-term debt
  Commitments to extend credit and letters of credit
   2010
    
    
    2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairIn thousands
    
    Value
    
    
    Value
    
    
    Value
    
    
    ValueFinancial assetsCash and other short-term Investments
    
    
    $20,778
    
    
    
    $20,778
    
    
    
    $12,308
    
    
    
    $12,308Interest-bearing deposits
with banks
    
    
    3,289
    
    
    
    3,289
    
    
    
    609
    
    
    
    607Investment securities AFS
    
    
    105,420
    
    
    
    105,420
    
    
    
    122,006
    
    
    
    122,006Investment securities HTM
    
    
    -
    
    
    
    -
    
    
    
    40,395
    
    
    
    41,782Loans
    
    
    244,955
    
    
    
    239,242
    
    
    
    276,242
    
    
    
    270,054Loans held for sale
    
    
    -
    
    
    
    -
    
    
    
    190
    
    
    
    190Financial liabilitiesDeposits
    
    
    338,551
    
    
    
    331,434
    
    
    
    380,276
    
    
    
    369,758Short-term borrowings
    
    
    -
    
    
    
    -
    
    
    
    100
    
    
    
    100Long-term debt
    
    
    19,200
    
    
    
    19,631
    
    
    
    49,000
    
    
    
    49,664
 Note 22   Commitments and contingencies
    Note 23   Financial instruments with off-balance sheet risk
    44




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##### Table of Contents



Note 24   Parent company information
  Condensed Balance Sheet
 December 31,In thousands
    
    2010
    
    2009AssetsCash and cash equivalents
    
    $
    33
    
    
    $
    -Investment in subsidiary
    
    
    32,180
    
    
    
    35,708Due from subsidiary
    
    
    826
    
    
    
    5,000Other assets
    
    
    5
    
    
    
    193Total assets
    
    $
    33,044
    
    
    $
    40,901Liabilities and stockholders equityOther liabilities
    
    $
    824
    
    
    $
    464Notes payable
    
    
    5,200
    
    
    
    5,300Subordinated debt
    
    
    4,124
    
    
    
    4,124Total liabilities
    
    
    10,148
    
    
    
    9,888Stockholders equity
    
    
    22,896
    
    
    
    31,013Total liabilities and stockholders equity
    
    $
    33,044
    
    
    $
    40,901
 Condensed Statement of Operations
 Year Ended December 31,In thousands
    
    2010
    
    2009
    
    2008IncomeInterest income
    
    $
    -
    
    
    $
    1
    
    
    $
    4Other operating income
    
    
    1,100
    
    
    
    78
    
    
    
    31Dividends from subsidiaries
    
    
    -
    
    
    
    687
    
    
    
    870Interest from subsidiaries
    
    
    288
    
    
    
    361
    
    
    
    579Total income
    
    
    1,388
    
    
    
    1,127
    
    
    
    1,484ExpensesInterest expense
    
    
    406
    
    
    
    439
    
    
    
    542Other operating expenses
    
    
    2
    
    
    
    3
    
    
    
    3Income tax expense
    
    
    358
    
    
    
    15
    
    
    
    21Total expenses
    
    
    766
    
    
    
    457
    
    
    
    566Income before equity in undis-
tributed (loss) income ofsubsidiaries
    
    
    622
    
    
    
    670
    
    
    
    918Equity in undistributed (loss) income 
of subsidiaries
    
    
    (8,079
    )
    
    
    (8,492
    )
    
    
    140Net (loss) income
    
    $
    (7,457
    )
    
    $
    (7,822
    )
    
    $
    1,058
 Condensed Statement of Cash Flows
 Year Ended December 31,In thousands
    
    2010
    
    2009
    
    2008Operating activitiesNet (loss) income
    
    $
    (7,457
    )
    
    $
    (7,822
    )
    
    $
    1,058Adjustments to reconcile net income 
to cash used in operating activities:Equity in undistributed loss (income) of
subsidiaries
    
    
    8,079
    
    
    
    8,492
    
    
    
    (140)Decrease (increase) in other assets
    
    
    188
    
    
    
    306
    
    
    
    (149)Increase (decrease) in other liabilities
    
    
    360
    
    
    
    (77
    )
    
    
    460Net cash provided by operating activities
    
    
    1,170
    
    
    
    899
    
    
    
    1,229Investing activitiesProceeds from sales and maturities of 
investment securities available for sale 
including principal payments
    
    
    -
    
    
    
    -
    
    
    
    543Purchases of investment securities 
available for sale
    
    
    -
    
    
    
    -
    
    
    
    (543)Increase in investment in 
subsidiaries
    
    
    (4,721
    )
    
    
    (8,925
    )
    
    
    (3,739)Decrease in loans to 
subsidiaries
    
    
    4,174
    
    
    
    75
    
    
    
    4,075Net cash provided by (used in) investing 
activities
    
    
    (547
    )
    
    
    (8,850
    )
    
    
    336Financing activitiesDecrease in subordinated debt
    
    
    -
    
    
    
    -
    
    
    
    -Decrease in notes payable
    
    
    (100
    )
    
    
    (100
    )
    
    
    (200)Proceeds from issuance of preferred stock
    
    
    -
    
    
    
    9,439
    
    
    
    -Purchases of treasury stock
    
    
    -
    
    
    
    (3
    )
    
    
    (51)Dividends paid
    
    
    (490
    )
    
    
    (1,417
    )
    
    
    (1,286)Net cash (used in) provided by financing
activities
    
    
    (590
    )
    
    
    7,919
    
    
    
    (1,537)Increase (decrease) in cash and 
cash equivalents
    
    
    33
    
    
    
    (32
    )
    
    
    28Cash and cash equivalents at
beginning of year
    
    
    -
    
    
    
    32
    
    
    
    4Cash and cash equivalents at
end of year
    
    $
    33
    
    
    $
    -
    
    
    $
    32
 Note 25   Regulatory capital requirements
     45




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##### Table of Contents



Note 2. is not considered
  In thousands
    

FDIC
RequirementsMinimum Capital For ClassificationBank Actual
    
    Adequacy
    
    Well-CapitalizedAmount Ratio
    
    Amount Ratio
    
    Amount RatioDecember 31, 2010Leverage (Tier 1) 
capital
    
    $
    31,775
    
    
    
    7.45
    %
    
    $
    17,061
    
    
    
    4.00
    %
    
    $
    21,326
    
    
    
    5.00
    %Risk-based capital:Tier 1
    
    
    31,775
    
    
    
    11.21
    
    
    
    11,339
    
    
    
    4.00
    
    
    
    17,009
    
    
    
    6.00Total
    
    
    35,407
    
    
    
    12.49
    
    
    
    22,679
    
    
    
    8.00
    
    
    
    28,349
    
    
    
    10.00December 31, 2009Leverage (Tier 1) 
capital
    
    $
    34,251
    
    
    
    7.08
    %
    
    $
    19,364
    
    
    
    4.00
    %
    
    $
    24,205
    
    
    
    5.00
    %Risk-based capital:Tier 1
    
    
    34,251
    
    
    
    10.62
    
    
    
    12,899
    
    
    
    4.00
    
    
    
    19,348
    
    
    
    6.00Total
    
    
    43,342
    
    
    
    13.43
    
    
    
    25,798
    
    
    
    8.00
    
    
    
    32,247
    
    
    
    10.00
   Note 26   Summary of quarterly financial information
 (unaudited)
    
    2010Dollars in thousands,
    
    First
    
    Second
    
    Third
    
    Fourthexcept per share data
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterInterest income
    
    
    $5,522
    
    
    
    $5,273
    
    
    
    $4,864
    
    
    
    $4,575Interest expense
    
    
    1,998
    
    
    
    1,895
    
    
    
    1,839
    
    
    
    1,675Net interest income
    
    
    3,524
    
    
    
    3,378
    
    
    
    3,025
    
    
    
    2,900Provision for loan losses
    
    
    1,381
    
    
    
    1,010
    
    
    
    2,825
    
    
    
    4,271Net gains on secu-
rities transactions
    
    
    1
    
    
    
    528
    
    
    
    137
    
    
    
    1,414Other operating income
    
    
    690
    
    
    
    1,644
    
    
    
    577
    
    
    
    626Other operating expenses
    
    
    3,523
    
    
    
    3,665
    
    
    
    4,184
    
    
    
    4,683Income (loss) before income 
tax expense
    
    
    (  689
    )
    
    
    875
    
    
    
    (3,270
    )
    
    
    (4,013
    )Income tax expense (benefit)
    
    
    15
    
    
    
    53
    
    
    
    74
    
    
    
    218Net income (loss)
    
    
    $(  704
    )
    
    
    $ 822
    
    
    
    $(3,344
    )
    
    
    $(4,231
    )Net income (loss) per share-
basic
    
    
    $(6.72
    )
    
    
    $  5.32
    
    
    
    $(26.43
    )
    
    
    $(33.17
    )Net income (loss) per share-
diluted
    
    
    $(6.72
    )
    
    
    $  5.32
    
    
    
    $(26.43
    )
    
    
    $(33.17
    )
 (unaudited)
    
    2009Dollars in thousands,
    First
    
    
    Second
    
    
    Third
    
    
    Fourthexcept per share data
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterInterest income
    
    $
    6,061
    
    
    $
    6,036
    
    
    $
    6,193
    
    
    $
    5,884Interest expense
    
    
    2,554
    
    
    
    2,407
    
    
    
    2,391
    
    
    
    2,143Net interest income
    
    
    3,507
    
    
    
    3,629
    
    
    
    3,802
    
    
    
    3,741Provision for loan losses
    
    
    501
    
    
    
    436
    
    
    
    1,674
    
    
    
    5,494Net gains (losses) on secu-
rities transactions
    
    
    -
    
    
    
    10
    
    
    
    2
    
    
    
    (      1
    )Net impairment losses on 
securities
    
    (
    132
    )
    
    
    (1,055
    )
    
    
    (1,107
    )
    
    
    (    39
    )Other operating income
    
    
    878
    
    
    
    808
    
    
    
    759
    
    
    
    668Other operating expenses
    
    
    3,092
    
    
    
    3,658
    
    
    
    3,500
    
    
    
    3,131Income (loss) before income 
tax expense
    
    
    660
    
    
    
    (   702
    )
    
    
    (1,718
    )
    
    
    (4,256
    )Income tax expense (benefit)
    
    
    162
    
    
    
    119
    
    
    
    (1,209
    )
    
    
    2,734Net income (loss)
    
    $
    498
    
    
    $
    (   821
    )
    
    $
    (   509
    )
    
    $
    (6,990
    )Net income (loss) per share-
basic
    
    $
    1.02
    
    
    $
    (  8.21
    )
    
    $
    (  6.36
    )
    
    $
    (55.75
    )Net income (loss) per share-
diluted
    
    $
    1.02
    
    
    $
    (  8.21
    )
    
    $
    (  6.36
    )
    
    $
    (55.75
    )
  Note 27.   Subsequent events
    46




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47




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
 48




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##### Table of Contents



Item 9.          Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A          Controls and Procedures
  (b
 (c)
    
    Managements Report on Internal Control Over Financial Reporting. Management is
responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f) under the Securities
Exchange Act of 1934. Under the supervision and with the participation of the principal
executive officer and the principal financial officer, management has conducted an
evaluation of the effectiveness of the Corporations control over financial reporting based
on the framework in Internal Control-Integrated Frameworkissued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation under
the framework, management has concluded that the internal control over financial reporting
was effective as of December 31, 2010.
 This annual report does not include an attestation report of the Corporations registered public
accounting firm regarding internal control over financial reporting. Managements report was
not subject to attestation by the Corporations registered public accounting firm pursuant to
temporary rules of the Securities Exchange Commission that permit the Corporation to provide
only managements report in this annual report.
 
 Item  9B.  Other Information
 
  Series
    
    Total Deferred through December 31,2010A
    
    
    
    
    
    $
    12,000C
    
    
    
    
    
    
    2,160D
    
    
    
    
    
    
    53,300E
    
    
    -

    
    
    
    147,000F
    
    
    
    
    
    
    597,275
 
 
 Part III
 
 Item 10.  Directors, Executive Officers and Corporate Governance
 Director
    
    Term
    
    Principal OccupationsName of Director
    
    Age
    
    Since
    
    EndsAlfonso L. Carney, Jr.
    
    62
    
    2010
    
    2011
    
    Board member, Port Authority of New York and New Jersey; Principal,
Rockwood Partners, LLC (providers of medical and legal consulting services)Barbara Bell Coleman
    
    60
    
    1995
    
    2013
    
    President, BBC Associates, L.L.C. (consulting services)Eugene Giscombe
    
    70
    
    1991
    
    2011
    
    President, Giscombe Realty, LLC (real estate brokerage, leasing and management firm); President, 103 East 125th
Street Corporation (real estate holding company)Preston D. Pinkett III
    
    48
    
    2010
    
    2011
    
    President and Chief Executive Officer,
City National Bank of New Jersey and City National Bancshares Corporation (effective March 1, 2011)
 49




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##### Table of Contents



Director
    
    Term
    

Principal OccupationsName of Director
    
    Age
    
    Since
    
    EndsLouis E. Prezeau
    
    68
    
    1989
    
    2011
    
    Retired President and Chief Executive Officer,
City National Bank of New Jersey and City National Bancshares CorporationLemar C. Whigham
    
    67
    
    1989
    
    2013
    
    President, L & W Enterprises (vending machine operations)H. ONeil Williams
    
    64
    
    2009
    
    2012
    
    Retired Managing Partner, Mitchell & Titus, LLP (CPA Firm)
 Alfonso L. Carney, Jr.
 Barbara Bell Coleman
 Eugene Giscombe th th
 Preston D. Pinkett, III
 Louis E. Prezeau
 Lemar C. Whigham
 H. ONeil Williams
 Executive Officers
  In OfficeName
    
    Age
    
    Since
    
    Office and Business ExperienceEdward R. Wright
    
    
    65
    
    
    
    1994
    
    
    Senior Vice President and
Chief Financial Officer, City
National Bancshares
Corporation and City National
Bank of New Jersey;
1978-1994, Executive Vice
President and Chief Financial
Officer, Rock Financial
CorporationRaul Oseguera
    
    
    45
    
    
    
    1990
    
    
    Senior Vice President, City
National Bank of New Jersey,
Vice President, City National
Bank of New JerseyPreston D. Pinkett, III
    
    
    48
    
    
    
    2011
    
    
    President and Chief Executive
Officer, City National
Bancshares Corporation and
 50




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##### Table of Contents



City National Bank of New
Jersey (effective March 1,
2011)
 Corporate Governance
 General
  Meetings of the Board of Directors and Committees
   Nominating Committee
   Audit and Examining Committee
 www.citynatbank.com
 Loan and Discount Committee
 Investment Committee
 Personnel/Director and Management Review Committee
 51




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##### Table of Contents



www.citynatbank.com
  Marketing Committee
 Compliance Committee
 Separation of Roles of Chairman and CEO
 Boards Role in Risk Assessment
 Code of Ethics and Conduct
 Section 16(A) Beneficial Ownership Reporting Compliance
 
 Item 11.  Executive Compensation
 Compensation Discussion and Analysis
 52




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##### Table of Contents



Salary
  Cash Bonus
  Non-performance Based Compensation Elements
  TARP/CPP Executive Compensation Compliance and Restrictions
  
    
    A provision to recover any bonus or incentive compensation paid to an SEO that was based
on financial statements deemed materially inaccurate;
    
    A prohibition on any golden parachute payments to our SEOs;
    
    A prohibition on receiving any tax gross-up from the Corporation or its subsidiaries;
    
    A limitation on the deductibility of compensation to $500,000 (instead of $1,000,000),
without exceptions for performance-based compensation; and
    
    A requirement to ensure that our incentive compensation programs are structured to
prevent SEOs from taking inappropriate risks that threaten the value of the institution.
    Compensation Consultant
   53




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##### Table of Contents



Prezeau Compensation
   Prezeau Employment AgreementMay 2006 to May 2009
  Ø
    
    10% of the amount of earnings, as defined, of the Corporation for each
year that exceed 10% but are less than 15% of the amount of our common
stockholders equity, plus;Ø
    
    20% of the amount of earnings, as defined, of the Corporation for such
year that exceeds 15% of the amount of our common stockholders equity.
      54




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##### Table of Contents



Prezeau Employment Agreement May 2010 to Present
     Prezeau Trust Agreement
  Pinkett Compensation and Employment Agreement
     Messrs. Weeks, Wright and Oseguera
  Supplemental Employee Retirement Plan
   55




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##### Table of Contents



Other Benefits and Perquisites
  Ø
    
    401(k) plan;Ø
    
    Medical and dental health insurance plans; andØ
    
    Life insurance plans.
 10-K
 56




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##### Table of Contents



Executive Compensation Tables
 Summary Compensation Table
  Change inPension Valueand Non-QualifiedDeferredName and
    
    
    
    
    
    
    
    
    
    
    
    Compensation
    
    
    All OtherPrincipal Position
    
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Earnings
    
    
    Compensation
    
    
    TotalLouis E. Prezeau 
President and
Chief Executive
Officer, City
National
Bancshares
Corporation and
City National
Bank of New
Jersey (retired
March 1, 2011)
    
    
    2008
2009
2010
    
    
    $268,000
$268,000
$268,000
    
    
    $52,500
$        0
$        0
    
    
    $122,577(6)
$44,247(6)
$83,205(6)
    
    
    $40,065   (2)
$42,404   (2)
$49,178   (2)
    
    
    $483,142
$354,651
$400,383Stanley M. Weeks 
Executive Vice
President and
Chief Credit
Officer, City
National Bank of
New Jersey
(terminated
November 30,
2010)
    
    
    2008
2009
2010
    
    
    $155,000
$155,000
$155,596
    
    
    $19,100
$         0
$         0
    
    
    $21,652(1)
$24,094(1)
$0(1)
    
    
    $8,674   (3)
$8,675   (3)
$19,500   (3)
    
    
    $204,426
$187,769
$175,096Edward R. Wright 
Senior Vice
President and
Chief Financial
Officer, City
National
Bancshares
Corporation and
City National
Bank of New
Jersey
    
    
    2008
2009
2010
    
    
    $131,500
$131,500
$131,500
    
    
    $15,630
$         0
$         0
    
    
    $56,912(1)
$68,928(1)
$36,772(1)
    
    
    $9,464   (4)
$9,944   (4)
$9,944   (4)
    
    
    $213,506
$210,37
$178,216Raul Oseguera 
Senior Vice
President, City
National of Bank
New Jersey
    
    
    2008
2009
2010
    
    
    $111,500
$111,500
$125,730
    
    
    $17,230
$         0
$         0
    
    
    $20,828(1)
$22,609(1)
$13,759(1)
    
    
    $6,875   (5)
$6,345   (5)
$6,772   (5)
    
    
    $156,433
$140,454
$146,261
 (1)
    
    Represents the change in the net present value of benefits during 2010 from the taking
into consideration each executives age, an interest rate discount factor and their remaining
time until retirement (Change in Pension Value) with respect to the SERP.(2)
    
    Includes payments made under our profit sharing plan of $7,777, $8,040, and $8,040 in 2008,
2009 and 2010, respectively. Also includes $11,088, $10,164 and $11,988 in 2008, 2009 and
2010 representing Mr. Prezeaus use of a Bank-leased automobile in such years. Includes
Director Fees paid in cash of $18,000, $24,200, and $29,150 in 2008, 2009 and 2010,
respectively. Also includes contributions to a trust created pursuant to a Trust Agreement
(see section below titled Prezeau Trust Agreement) of $3,200, $6,694 and $0 in 2008, 2009
and 2010, respectively, to reimburse the trust for payment of life insurance premiums on the
life of Mr. Prezeau.(3)
    
    Includes payments made under our profit sharing plan of $3,874, $3,875 and $3,577 in 2008,
2009 and 2010, respectively, and automobile allowance payments of $4,800, $4,800 and $4,000 in
2008, 2009 and 2010, respectively. The 2010 entry includes $11,923 in severance.(4)
    
    Includes payments made under our profit sharing plan of $3,464, $3,944, and $3,944 in 2008,
2009 and 2010, respectively, and automobile allowance payments of $6,000, $6,000 and $6,000,
in 2008, 2009 and 2010, respectively.(5)
    
    Includes payments made under our profit sharing plan of $3,875, $3,345, and $3,772 in 2008,
2009 and 2010, respectively, and automobile allowance payments of $3,000, $3,000 and $3,000,
in 2008, 2009 and 2010, respectively.(6)
    
    Includes Changes in Pension Value of $4,089, $1,716, and $9,991 in 2008, 2009 and 2010,
respectively, from the Directors Retirement Plan, Changes in Pension Value of $118,488,
$24,471 and $73,214 in 2008, 2009 and 2010, respectively, from the SERP and $18,080 of the
above market return from the trust created pursuant to the Trust Agreement in 2009. There was
no above market return for such trust in 2010. The above market return from the trust created
pursuant to the Trust Agreement is not reflected for year 2008.
 57




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##### Table of Contents



Pension Benefits Table
  Present Value ofPlan name
    
    
    Number of Years of
    
    
    Accumulated Benefits
    
    
    Payments DuringName
    
    
    
    
    
    
    
    Credited Service
    
    
    (Accrued 12-31-10)
    
    
    Last Fiscal YearLouis E. Prezeau(1)
    
    
    SERP
    
    
    
    21
    
    
    
    $
    1,465,000
    
    
    
    
    $0Louis E. Prezeau(2)
    
    
    Directors Retirement Plan
    
    
    
    21
    
    
    
    $
    64,102
    
    
    
    
    $0Stanley M. Weeks(3)
    
    
    
    ----
    
    
    
    
    ----
    
    
    
    
    ----
    
    
    
    
    $0Edward R. Wright (4)
    
    
    SERP
    
    
    
    16
    
    
    
    $
    413,229
    
    
    
    
    $0Raul Oseguera
    
    
    SERP
    
    
    
    20
    
    
    
    $
    93,914
    
    
    
    
    $0
 (1)
    
    Mr. Prezeau received a lump sum-payment of $1,465,000 on his retirement date of March 1,
2011. See Item 11 Executive Compensation--Supplemental Employee Retirement Plan.(2)
    
    Mr. Prezeau is currently eligible for normal retirement under the Directors Retirement Plan.
See Item 11 Executive CompensationDirector Compensation--Directors Retirement Plan.(3)
    
    Stanley Weeks employment terminated in November 2010 and as of the plan measurement date
used for financial statement reporting purposes he was not eligible for any benefits.(4)
    
    Mr. Wright is currently eligible for normal retirement under the SERP. See Item 11 Executive
Compensation--Supplemental Employee Retirement Plan.
 Payments upon Separation of Service and Change of Control
  SERP RetirementPayment
    
    
    Dismissal Without Cause
    
    
    Payments Upon aName
    
    
    assuming
    
    
    (No Change-in-Control)
    
    
    Change-in-Control(4)
    
    
    DeathTerminationat 12-31-10Louis E. Prezeau
    
    
    
    $1,539,048(1)
    
    
    
    $
    0
    
    
    
    $
    1,539,048
    
    
    
    $
    171,754Edward R. Wright
    
    
    
    $450,001(3)
    
    
    
    $
    0
    
    
    
    
    $450,001
    
    
    
    $
    450,001Raul Oseguera
    
    
    
    $0(2)
    
    
    
    $
    0
    
    
    
    
    $  84,457
    
    
    
    $
    84,457
 (1)
    
    Represents a lump sum payment as a result of normal retirement. Mr.
Prezeaus benefit includes a $74,093 lump sum payment from the Directors
Retirement Plan.(2)
    
    Not entitled to benefits because such benefits were not vested at December 31,
2010.(3)
    
    Mr. Wright has reached normal retirement age.(4)
    
    Payments do not give effect to TARPs elimination of change-in-control
payments. All executive officers have executed waivers disclaiming rights to
payments prohibited by TARP. All payments represent payments from the SERP.
In addition, Mr. Prezeaus payment includes $74,093 from the Directors
Retirement Plan.
 58




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##### Table of Contents



Non-Qualified Deferred Compensation Table
  Executive
    
    
    Registrant
    
    
    
    
    
    
    
    Aggregate
    
    
    Aggregatecontributions in
    
    
    contributions in
    
    
    Aggregate
    
    
    withdrawals/distributions
    
    
    balance at 20102010
    
    
    2010
    
    
    earnings in 2010
    
    
    in 2010
    
    
    year endName
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)sLouis E. Prezeau
    
    
    
    $0
    
    
    
    
    $0
    
    
    
    $
    6,889
    
    
    
    $
    50,000
    
    
    
    $
    236,213
 Director Compensation
  Directors Retirement Plan
      Director Compensation Table
  Change in Pension Value andFees Earned or
    
    
    Non-QualifiedPaid in Cash (1)

    
    
    Deferred Compensation Earnings
    
    
    All OtherName
    
    
    
    
    
    
    (2)
    
    
    Compensation
    
    
    TotalPreston D. Pinkett III (3)
    
    
    
    $3,000
    
    
    
    
    $0
    
    
    
    
    $0
    
    
    
    
    $3,000Alfonso L. Carney, Jr.(3)
    
    
    
    $900
    
    
    
    
    $0
    
    
    
    
    $0
    
    
    
    
    $900Barbara Bell Coleman
    
    
    
    $30,300
    
    
    
    
    $4,792
    
    
    
    
    $0
    
    
    
    
    $35,092Eugene Giscombe*
    
    
    
    33,350
    
    
    
    
    10,331
    
    
    
    
    $0
    
    
    
    
    $43,681Lemar C. Whigham
    
    
    
    29,150
    
    
    
    
    9,991
    
    
    
    
    $0
    
    
    
    
    $39,141H. ONeil Williams
    
    
    
    31,450
    
    
    
    
    $0
    
    
    
    
    $0
    
    
    
    
    $44,297
 *Chairman(1)
    
    Includes committee meeting fees, attendance fees and annual retainer fees.(2)
    
    Represents the change in the net present value of pension and director retirement plan
benefits during 2010 under the Directors Retirement Plan taking into account the age of each
director, a present value factor, an interest discount factor and time remaining
 59




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##### Table of Contents



until retirement. The pension and director retirement plans were terminated as of June 30,
2010 with the accrued benefits frozen at the levels at that date.(3)
    
    Messrs. Carney and Pinkett were not eligible to receive the $4,000 annual retainer since
their service on the Board commenced at the end of December 2010.
 Compensation Committee Report
    
 Compensation Committee Interlocks and Insider Participation
  
 Item 12.        Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Stock Ownership of Management and Principal Shareholders
  COMMON STOCKNumber ofSharesBeneficially
    
    
    Percent ofName of Beneficial Owner
    
    
    Owned
    
    
    ClassAlfonso L. Carney, Jr., Director
    
    
    
    30
    
    
    
    
    *Barbara Bell Coleman, Director
    
    
    
    1,177
    
    
    
    
    *Eugene Giscombe, Director 
c/o City National Bancshares Corporation 
900 Broad Street Newark, New Jersey 07102
    
    
    
    10,580
    (1)
    
    
    
    8.1
    %Preston D. Pinkett, III, President and CEO 
c/o City National Bancshares Corporation 
900 Broad Street Newark, New Jersey 07102
    
    
    
    363
    (2)
    
    
    
    *Louis E. Prezeau, Director, Retired President and CEO 
c/o City National Bancshares Corporation
    
    
    
    23,218
    (3)
    
    
    
    17.7
    %
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900 Broad Street Newark, New Jersey 07102Lemar C. Whigham, Director 
c/o City National Bancshares Corporation 
900 Broad Street Newark, New Jersey 07102
    
    
    
    9,624
    (4)
    
    
    
    7.3
    %H. ONeil Williams, Director
    
    
    
    773
    
    
    
    
    *Raul Oseguera, Senior Vice President
    
    
    
    750
    
    
    
    
    *Stanley M. Weeks, Former Executive Vice President
    
    
    
    408
    
    
    
    
    *Edward R. Wright, Senior Vice President and CFO
    
    
    
    5,000
    
    
    
    
    3.8
    %Directors and named executive officers as a group (10 persons)
    
    
    
    51,923
    (2)
    
    
    
    39.5
    %Carolyn M. Whigham, 5% stockholder 
580 Dr. Martin Luther King Jr. Blvd., Newark, NJ 07102
    
    
    
    8,495
    
    
    
    
    6.5
    %
 (1)
    
    Includes 780 shares held by his wife.(2)
    
    Includes 222 shares vesting within 60 days of April 1, 2011(3)
    
    Includes 2,375 shares held by his sons, 110 shares held by his daughter and 1,402
shares held by his wife.(4)
    
    Includes 1,064 shares held by his wife.*
    
    Less than 1%
 
 Item 13.      Certain Relationships and Related Transactions, and Director Independence
 Certain Relationship and Related Transactions
   Director Independence
  
 Item 14. Principal Accountant Fees and Services
    2010
    

    2009Audit fees
    
    $
    325,000
    
    
    $
    250,000Audit-Related Fees
    
    
    0
    
    
    
    0Tax fees
    
    
    38,000
    
    
    
    88,000All Other Fees
    
    
    0
    
    
    
    0$
    363,000
    
    
    $
    338,000
  
 Part IV
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Item 15.   Exhibits and Financial Statement Schedules
 (a)
  (2)
    
    Financial Statement Schedules: All schedules are omitted as the required information
is inapplicable or the information is presented in the financial statements or related
notes.
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CITY NATIONAL BANCSHARES CORPORATIONBy:
    
    /s/ Preston D. Pinkett III
    
    By:
    
    /s/ Edward R. WrightPreston D. Pinkett IIIPresident and Chief
    
    
    
    Edward R. WrightChief Financial OfficerExecutive Officer
    
    
    
    and Principal Accounting OfficerDate:
    
    May 27, 2011
    
    Date:
    
    May 27, 2011
  Signature
    
    Title
    
    Date/s/ Eugene Giscombe
    
    Director,
    
    May 27, 2011Eugene Giscombe
    
    Chairperson of the Board/s/ Preston D. Pinkett III
    
    Director,
    
    May 27, 2011Executive Officers/ Barbara Bell Coleman
    
    Director
    
    May 27, 2011Barbara Bell Coleman/s/ Lemar C. Whigham
    
    Director
    
    May 27, 2011Lemar C. Whigham/s/ H. ONeil Williams
    
    Director
    
    May 27, 2011H. ONeil Williams/s/ Alfonso Carney
    
    Director
    
    May 27, 2011Alfonso Carney/s/Louis E. Prezeau
    
    Director
    
    May 27, 2011Louis E. Prezeau
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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Exhibit(3)(a)
    
    The Corporations Restated Articles of Incorporation (incorporated herein by
reference to Exhibit (3)(d) of the Corporations Current Report on Form 8-K dated July
28, 1992).(3)(b)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series A (incorporated herein
by reference to Exhibit (3)(b) of the Corporations Annual Report on Form 10-K for the
year ended December 31, 1995).(3)(c)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series B (incorporated herein
by reference to Exhibit (3)(c) of the Corporations Annual Report on Form 10-K for the
year ended December 31, 1995).(3)(d)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series C (incorporated herein
by reference to Exhibit (3(i) to the Corporations Annual Report on Form 10-K for the
year ended December 31, 1996).(3)(e)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series D (incorporated herein
by reference to Exhibit (3)(i) filed with the Corporations Quarterly Report on Form
10-Q for the quarter ended June 30, 1997).(3)(f)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series E (incorporated herein
by reference to Exhibit (3)(i) filed with the Corporations Quarterly Report on Form
10-Q filed on March 4, 2005).(3)(g)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations MultiMode Series F Non-cumulative Redeemable Preferred Stock
(incorporated herein by reference to Exhibit (3)(f) to the Corporations Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005).(3)(h)
    
    Amendment to the Corporations Articles of Incorporation establishing the Fixed Rate
Cumulative Perpetual Preferred Stock, Series G (incorporated herein by reference to
Exhibit 3.1 to the Corporations Current Report on Form 8-K dated April 10, 2009).(3)(i)
    
    Amendment to the Corporations Articles of Incorporation reallocating unissued Series
B, Series C and Series E Preferred Stock to unallocated and unissued preferred stock
(incorporated herein by reference to Exhibit 3.2 to the Corporations Current Report on
Form 8-K dated April 10, 2009).(3)(j)
    
    The amendment to the By-Laws of the Corporation (incorporated herein by reference to
Exhibit (3)(b) of the Corporations Annual Report on Form 10-K for the year ended
December 31, 1991).(3)(k)
    
    The By-Laws of the Corporation (incorporated herein by reference to Exhibit (3)(b) of
the Corporations Annual Report on Form 10-K for the year ended December 31, 1988).(10)(a)
    
    The Employees Profit Sharing Plan of City National Bank of New Jersey (incorporated
herein by reference to Exhibit (10) of the Corporations Annual Report on Form 10-K for
the year ended December 31, 1988).(10)(b)
    
    The Employment Agreement among the Corporation, the Bank and Louis E. Prezeau dated
May 26, 2006 (incorporated herein by reference to Exhibit (10.1) to the Corporations
Current Report on Form 8-K dated December 4, 2006).
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##### Table of Contents



(10)(c)
    
    The Employment Agreement among the Corporation, the Bank and Louis E. Prezeau dated
May 10, 2010 (incorporated herein by reference to Exhibit (10.1) to the Corporations
Current Report on Form 8-K dated May 18, 2010).(10)(d)
    
    Amended and Restated Asset Purchase and Sale Agreement between the Bank and Carver
Federal Savings Bank dated as of February 27, 2001 (incorporated by reference to
Exhibit 10(d) to the Corporations Annual Report on Form 10-K for the year ended
December 31, 2000).(10)(e)
    
    Loan Agreement dated December 28, 2001 by and between the Corporation and National
Community Investment Fund (incorporated by reference to Exhibit 10(f) to the
Corporations Annual Report on Form 10-K for the year ended December 31, 2001).(10)(f)
    
    Pledge Agreement dated December 28, 2001 by and between the Corporation and National
Community Investment Fund (incorporated by reference to Exhibit (g) to the
Corporations Annual Report on Form 10-K for the year ended December 31, 2001).(10)(g)
    
    Asset Purchase and Sale Agreement between City National Bank of New Jersey and
Carver Federal Savings Bank dated as of January 26, 1998 (incorporated by reference to
Exhibit 10(h) to the Corporations Annual Report on Form 10-K for the year ended
December 31, 1998).(10)(h)
    
    Promissory Note dated May 6, 2002 payable to United Negro College Fund, Inc., in the
principal amount of $200,000 (incorporated by reference to Exhibit 10(i) to the
Corporations Quarterly Report on Form 10-Q for quarter ended March 31, 2002).(10)(i)
    
    Purchase and Assumption Agreement dated as of March 31, 2004, by and among The
Prudential Savings Bank, F.S.B., The Prudential Bank and Trust Company and City
National Bank of New Jersey (incorporated herein by reference to Exhibit 10(l) to the
Corporations Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).(10)(j)
    
    Guarantee Agreement dated March 17, 2004 from the Corporation in favor of U.S. Bank,
N.A., as trustee for holders of securities issued by City National Bank of New Jersey
Capital Statutory Trust II (incorporated herein by reference to Exhibit (10)(m) to the
Corporations Quarterly Report on Form 10-Q for the quarter ended March 31, 2004).(10)(k)
    
    Purchase Agreement dated September 27, 2005 by and between Sandler ONeil &
Partners, L.P., and the Corporation with respect to issue and sale of 7,000 shares of
the Corporations MultiMode Series F Non-cumulative Redeemable Preferred Stock
(incorporated herein by reference to Exhibit (10)(n) to the Corporations Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005).(10)(l)
    
    Credit Agreement dated February 21, 2007 by and between The Prudential Insurance
Company of America and the Corporation with respect to a $5,000,000 loan to the
Corporation (incorporated by reference to Exhibit 10.1 to the Corporations Current
Report on Form 8-K dated February 23, 2007).(10)(m)
    
    Branch Purchase and Assumption Agreement, dated as of November 1, 2006, by and
between City National Bank of New Jersey (CNB) and Sun National Bank (Sun), as
amended by Amendment to Branch Purchase and Assumption Agreement, dated as of March 8,
2007, by and between CNB and Sun (incorporated by reference to Exhibit 10.1 to the
Corporations Current Report on Form 8-K dated March 14, 2007).(10)(n)
    
    Letter Agreement, dated April 10, 2009, including the Securities Purchase Agreement
 Standard Terms incorporated by reference therein (collectively, the Purchase
Agreement), between the Corporation and the United States Department of the Treasury
(the Treasury Department) (incorporated herein by reference to Exhibit 10.1 to the
Corporations Current Report on Form 8-K dated April 10, 2009).
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##### Table of Contents



(10)(o)
    
    Side Letter Agreement, dated April 10, 2009, between the Corporation and the
Treasury Department pertaining to the American Recovery and Reinvestment Act of 2009
(incorporated herein by reference to Exhibit 10.2 to the Corporations Current Report
on Form 8-K dated April 10, 2009).(10)(p)
    
    Side Letter Agreement, dated April 10, 2009, between the Corporation and the
Treasury Department pertaining to the amendment of certain provisions of the Purchase
Agreement (incorporated herein by reference to Exhibit 10.3 to the Corporations
Current Report on Form 8-K dated April 10, 2009).(10)(q)
    
    Side Letter Agreement, dated April 10, 2009, between the Corporation and the
Treasury Department pertaining to the amendment of certain provisions of the Purchase
Agreement relating to CDFI Exemption (incorporated herein by reference to Exhibit 10.3
to the Corporations Current Report on Form 8-K dated April 10, 2009).(10)(r)
    
    Form of Waiver, executed by each of Louis E. Prezeau, Edward R. Wright, Stanley M.
Weeks and Raul L. Oseguera (incorporated herein by reference to Exhibit 10.3 to the
Corporations Current Report on Form 8-K dated April 10, 2009).(10)(s)
    
    Agreement, dated June 29, 2009, by and between the City National Bank of New Jersey
and the Comptroller of the Currency (incorporated herein by reference to Exhibit 10.1
to the Corporations Current Report on Form 8-K dated June 29, 2009).(10)(t)
    
    Form of Directors Retirement Agreement (the Directors Retirement Plan)
(incorporated by reference to Exhibit 10(h) to the Form 10-K for the year ended
December 31, 1998, filed on March 30, 1999).10(u)
    
    First Amendment to Credit Agreement, dated as of November 3, 2010, by and among the
Corporation, and The Prudential Insurance Company of America (incorporated by reference
to Exhibit 10.1 to the Corporations Current Report on Form 8-K dated November 3, 2010.10(v)
    
    Consent Order dated December 22, 2010 between the Bank and the OCC (incorporated by
reference to Exhibit 10.1 to the Corporations Form 8-K filed on December 29, 2010)10(w)
    
    Agreement dated December 14, 2010 between the Corporation and the Federal Reserve Bank
of New York (incorporated by reference to Exhibit 10.2 to the Corporations Form 8-K
filed on December 29, 2010)10(x)
    
    Employment Agreement, effective as of March 1, 2011, by and between the Bank and
Preston D. Pinkett III (incorporated by reference to Exhibit 10.1 to the Corporations
Form 8-K filed on March 9, 2011).10(y)
    
    TARP Waiver, executed by Preston D. Pinkett, III, effective as of March 1, 2011
(incorporated by reference to Exhibit 10.2 to the Corporations Form 8-K filed on March
9, 2011).(11)
    
    Statement regarding computation of per share earnings. The required information is
included in Note 18.(21)
    
    Subsidiaries of the registrant. The required information is included on page one.(31)
    
    Certifications of Principal Executive Officer and Principal Financial Officer (Section
302 of the Sarbanes-Oxley Act of 2002 (filed herewith)).(32)
    
    Certifications of Principal Executive Officer and Principal Financial Officer under 18
U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)).(99)
    
    Certifications of Principal Executive Officer and Principal Financial Officer (TARP
Certifications) Pursuant to Section 11(b)(4) of the Emergency Economic Stabilization
Act of 2008 (EESA) (filed herewith).
 66