##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 or
 o
    
    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
 City National Bancshares Corporation
  New Jersey 
State or other jurisdiction of 
incorporation or organization
    
    22-2434751
(I.R.S. Employer
Identification No.)
  (Address of principal executive offices)
    
    (Zip Code)
 (973) 624-0865
  Title of each class
    
    Name of each exchange on which registered
  
  
  o þ
 o þ
 þ o
 o
 o o
  Large accelerated filer
o
    
    Accelerated filer o
    
    Non-accelerated filer  
þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



PagePART IItem 1. Business
    
    
    1Item 1a Risk Factors
    
    
    3Item 2. Properties
    
    
    6Item 3. Legal Proceedings
    
    
    6Item 4. Submission of Matters to a Vote of Security Holders
    
    
    6PART IIItem 5. Market for the Registrants Common Equity and Related Stockholder Matters
    
    
    6Item 6. Selected Financial Data
    
    
    7Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 7a. Quantitative and Qualitative Disclosure about Market Risk
    
    
    20Item 8. Financial Statements and Supplementary Data
    
    
    22Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    41Item 9a. Controls and Procedures
    
    
    41Item 9b. Other Information
    
    
    41PART IIIItem 10. Directors and Executive Officers of Registrant
    
    
    41Item 11. Executive Compensation
    
    
    44Item 12. Security Ownership of Certain Beneficial Owners and Management
    
    
    50Item 13. Certain Relationships and Related Transactions
    
    
    51PART IVItem 14. Principal Accountant Fees and Services
    
    
    51Item 15. Exhibits, Financial Statement Schedules
    
    
    52Signatures
    
    
    53EX-31EX-32EX-99




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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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Community reinvestment
  Government policies
     FDIC insurance
   Financial regulatory reform proposals
  
 Item 1a. Risk factors
  3




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Illiquidity in the Corporations stock
   Concentration of deposit accounts
  Negative impact of a prolonged economic downturn
    Allowance for loan losses may be insufficient
    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
  4




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Liquidity risk
      The cash dividend on the Corporations common or preferred stock may be reduced or eliminated
     Market reform efforts may result in the Corporations business becoming subject to extensive
additional regulations
   Changes in accounting policies or accounting standards
   Severe weather, acts of terrorism or other external events could significantly impact the business
of the Bank
  Changes in interest rates
  5




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##### Table of Contents



Competition
  The Bank is subject to a Formal Agreement with the Comptroller of the Currency
   
 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
 
 6




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Item 6. Selected Financial Data
  Five-Year Summary
 Dollars in thousands, except per share data
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Year-end Balance Sheet dataTotal assets
    
    $
    466,339
    
    
    $
    494,539
    
    
    $
    449,748
    
    
    $
    395,217
    
    
    $
    363,541Gross loans
    
    
    276,242
    
    
    
    271,906
    
    
    
    232,824
    
    
    
    199,284
    
    
    
    179,093Allowance for loan losses
    
    
    8,650
    
    
    
    3,800
    
    
    
    3,000
    
    
    
    2,400
    
    
    
    2,165Investment securities
    
    
    162,401
    
    
    
    178,061
    
    
    
    157,556
    
    
    
    169,598
    
    
    
    149,144Total deposits
    
    
    380,276
    
    
    
    407,117
    
    
    
    394,856
    
    
    
    342,416
    
    
    
    312,429Short-term portion of long-term debt
    
    
    5,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    44,000
    
    
    
    46,600
    
    
    
    19,800
    
    
    
    19,606
    
    
    
    20,700Stockholders equity
    
    
    31,013
    
    
    
    28,092
    
    
    
    28,872
    
    
    
    27,762
    
    
    
    25,142Income Statement dataInterest income
    
    
    24,174
    
    
    
    25,902
    
    
    
    25,978
    
    
    
    21,649
    
    
    
    18,173Interest expense
    
    
    9,495
    
    
    
    11,309
    
    
    
    14,233
    
    
    
    10,848
    
    
    
    7,280Net interest income
    
    
    14,679
    
    
    
    14,593
    
    
    
    11,745
    
    
    
    10,801
    
    
    
    10,893Provision for loan losses
    
    
    8,105
    
    
    
    1,586
    
    
    
    772
    
    
    
    279
    
    
    
    115Net interest income after provision
for loan losses
    
    
    6,574
    
    
    
    13,007
    
    
    
    10,973
    
    
    
    10,522
    
    
    
    10,778Other operating income
    
    
    3,124
    
    
    
    279
    
    
    
    2,694
    
    
    
    2,724
    
    
    
    2,136Net impairment losses on securities
    
    
    (2,333
    )
    
    
    (2,688
    )
    
    
    
    
    
    
    
    
    
    
    Other operating expenses
    
    
    13,381
    
    
    
    12,278
    
    
    
    11,428
    
    
    
    10,035
    
    
    
    9,717(Loss) income before income tax expense
    
    
    (6,016
    )
    
    
    1,008
    
    
    
    2,239
    
    
    
    3,211
    
    
    
    3,197Income tax (benefit) expense
    
    
    1,806
    
    
    
    (50
    )
    
    
    372
    
    
    
    743
    
    
    
    862Net (loss) income
    
    $
    (7,822
    )
    
    $
    1,058
    
    
    $
    1,867
    
    
    $
    2,468
    
    
    $
    2,335Per common share dataNet (loss) income per basic share
    
    $
    (68.36
    )
    
    $
    1.87
    
    
    $
    8.28
    
    
    $
    13.04
    
    
    $
    16.20Net (loss) income per diluted share
    
    
    (68.36
    )
    
    
    1.87
    
    
    
    8.09
    
    
    
    12.54
    
    
    
    15.52Book value
    
    
    85.50
    
    
    
    130.10
    
    
    
    141.04
    
    
    
    129.88
    
    
    
    118.23Dividends declared
    
    
    2.00
    
    
    
    3.60
    
    
    
    3.50
    
    
    
    3.25
    
    
    
    3.00Basic average number of common shares
outstanding
    
    
    131,300
    
    
    
    131,688
    
    
    
    132,306
    
    
    
    133,246
    
    
    
    133,654Diluted average number of common shares
outstanding
    
    
    131,300
    
    
    
    131,688
    
    
    
    148,623
    
    
    
    143,924
    
    
    
    139,511Number of common shares outstanding at year-end
    
    
    131,290
    
    
    
    131,330
    
    
    
    131,987
    
    
    
    132,926
    
    
    
    133,650Financial ratiosReturn on average assets
    
    
    (1.53
    )%
    
    
    .23
    %
    
    
    .44
    %
    
    
    .65
    %
    
    
    .66
    %Return on average common equity
    
    
    (36.55
    )
    
    
    1.38
    
    
    
    6.35
    
    
    
    10.90
    
    
    
    13.83Stockholders equity as a percentage of total assets
    
    
    6.65
    
    
    
    5.68
    
    
    
    6.42
    
    
    
    6.96
    
    
    
    6.92Common dividend payout ratio
    
    
    
    
    
    
    
    
    
    
    42.22
    
    
    
    25.92
    
    
    
    19.33
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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
       8




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Investment security valuations and impairments
    Income taxes
    Executive summary
      9




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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
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    6,220
    
    
    
    4.24
    %
    
    $
    6,298
    
    
    
    5.16
    %
    
    $
    12,518
    
    
    
    4.70
    %Obligations of U.S. government
sponsored
entities
    
    
    3,000
    
    
    
    4.29
    
    
    
    3,025
    
    
    
    4.40
    
    
    
    1,295
    
    
    
    5.02
    
    
    
    9,969
    
    
    
    1.81
    
    
    
    17,289
    
    
    
    3.11Obligations of state and
political 
and subdivisions
    
    
    546
    
    
    
    5.41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    546
    
    
    
    5.41Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    3.85
    
    
    
    2,245
    
    
    
    4.30
    
    
    
    72,076
    
    
    
    5.08
    
    
    
    74,417
    
    
    
    5.06Other debt securities
    
    
    994
    
    
    
    5.58
    
    
    
    2,452
    
    
    
    4.12
    
    
    
    
    
    
    
    
    
    
    
    8,823
    
    
    
    3.64
    
    
    
    12,269
    
    
    
    3.89Total amortized cost
    
    $
    4,540
    
    
    
    4.71
    %
    
    $
    5,573
    
    
    
    4.27
    %
    
    $
    9,760
    
    
    
    4.36
    %
    
    $
    97,166
    
    
    
    4.62
    %
    
    $
    117,039
    
    
    
    4.59
    %
 10




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Investment Securities Held to Maturity
    
    
    
    
    
    
    
    
    
    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
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    1,585
    
    
    
    5.06
    %
    
    $
    1,585
    
    
    
    5.06
    %Obligations of U.S. government sponsored entities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,459
    
    
    
    4.64
    
    
    
    2,459
    
    
    
    4.64Obligations of state and
political subdivisions
    
    
    
    
    
    
    
    %
    
    
    8,458
    
    
    
    5.56
    
    
    
    13,712
    
    
    
    5.97
    
    
    
    5,809
    
    
    
    6.62
    
    
    
    27,979
    
    
    
    5.98Mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    5.24
    
    
    
    
    
    
    
    
    
    
    
    7,714
    
    
    
    5.40
    
    
    
    7,877
    
    
    
    5.40Other debt securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    495
    
    
    
    7.84
    
    
    
    495
    
    
    
    7.84Total amortized cost
    
    $
    
    
    
    
    
    %
    
    $
    8,621
    
    
    
    5.55
    %
    
    $
    13,712
    
    
    
    5.97
    %
    
    $
    18,062
    
    
    
    5 73
    %
    
    $
    40,395
    
    
    
    5.77
    %
    2009
    
    2008
    
    2007Investment 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
    
    $
    12,518
    
    
    $
    12,700
    
    
    $
    4,009
    
    
    $
    3,957
    
    
    $
    6,860
    
    
    $
    6,832Obligations of U.S. government sponsored entities
    
    
    17,289
    
    
    
    17,324
    
    
    
    19,157
    
    
    
    19,012
    
    
    
    10,844
    
    
    
    10,895Obligations of state and political subdivisions
    
    
    546
    
    
    
    553
    
    
    
    548
    
    
    
    552
    
    
    
    551
    
    
    
    557Mortgage-backed securities
    
    
    74,417
    
    
    
    77,138
    
    
    
    88,356
    
    
    
    90,630
    
    
    
    74,640
    
    
    
    74,273Other debt securities
    
    
    12,269
    
    
    
    10,268
    
    
    
    11,645
    
    
    
    7,798
    
    
    
    9,618
    
    
    
    8,968Equity securities:Marketable securities
    
    
    713
    
    
    
    695
    
    
    
    678
    
    
    
    638
    
    
    
    646
    
    
    
    618Nonmarketable securities
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    115Federal Reserve Bank and Federal Home Loan Bank stock
    
    
    3,213
    
    
    
    3,213
    
    
    
    2,889
    
    
    
    2,889
    
    
    
    1,360
    
    
    
    1,360Total
    
    $
    121,080
    
    
    $
    122,006
    
    
    $
    127,397
    
    
    $
    125,591
    
    
    $
    104,634
    
    
    $
    103,618
 2009
    
    2008
    
    2007Investment 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
    
    
    
    8,520
    
    
    
    14,594
    
    
    
    14,522Mortgage-backed securities
    
    
    7,877
    
    
    
    8,186
    
    
    
    12,089
    
    
    
    12,358
    
    
    
    5,175
    
    
    
    5,132Obligations of state and political subdivisions
    
    
    27,979
    
    
    
    29,042
    
    
    
    31,629
    
    
    
    32,222
    
    
    
    31,665
    
    
    
    31,868Other debt securities
    
    
    495
    
    
    
    502
    
    
    
    1,496
    
    
    
    1,437
    
    
    
    2,504
    
    
    
    2,483Total
    
    $
    40,395
    
    
    $
    41,782
    
    
    $
    53,714
    
    
    $
    54,537
    
    
    $
    53,938
    
    
    $
    54,005
   11




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Consolidated Average Balance Sheet with Related Interest and Rates
 2009
    
    2008
    
    2007Average
    
    
    
    
    
    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
    
    $
    34,625
    
    
    $
    54
    
    
    
    .16
    %
    
    $
    10,647
    
    
    $
    217
    
    
    
    2.04
    %
    
    $
    28,179
    
    
    $
    1,392
    
    
    
    4.94
    %Interest-bearing deposits with banks1
    
    
    1,494
    
    
    
    50
    
    
    
    3.33
    
    
    
    1,008
    
    
    
    24
    
    
    
    2.41
    
    
    
    1,429
    
    
    
    90
    
    
    
    6.30Investment
securities2:Taxable
    
    
    139,984
    
    
    
    6,668
    
    
    
    4.76
    
    
    
    145,963
    
    
    
    7,404
    
    
    
    5.07
    
    
    
    126,327
    
    
    
    6,613
    
    
    
    5.23Tax-exempt
    
    
    31,457
    
    
    
    1,903
    
    
    
    6.05
    
    
    
    32,123
    
    
    
    1,955
    
    
    
    6.08
    
    
    
    34,095
    
    
    
    2,080
    
    
    
    6.10Total investment securities
    
    
    171,441
    
    
    
    8,571
    
    
    
    5.00
    
    
    
    178,086
    
    
    
    9,359
    
    
    
    5.25
    
    
    
    160,422
    
    
    
    8,693
    
    
    
    5.42Loans 3, 4,6Commercial
    
    
    53,198
    
    
    
    3,094
    
    
    
    5.82
    
    
    
    44,929
    
    
    
    2,832
    
    
    
    6.28
    
    
    
    38,882
    
    
    
    2,640
    
    
    
    6.79Real estate
    
    
    223,992
    
    
    
    12,960
    
    
    
    5.79
    
    
    
    206,289
    
    
    
    14,026
    
    
    
    6.80
    
    
    
    178,579
    
    
    
    13,753
    
    
    
    7.70Installment
    
    
    1,463
    
    
    
    92
    
    
    
    6.29
    
    
    
    1,434
    
    
    
    109
    
    
    
    7.57
    
    
    
    1,576
    
    
    
    117
    
    
    
    7.30Total loans
    
    
    278,653
    
    
    
    16,146
    
    
    
    5.79
    
    
    
    252,652
    
    
    
    16,967
    
    
    
    6.71
    
    
    
    219,037
    
    
    
    16,510
    
    
    
    7.54Total interest earning assets
    
    
    486,213
    
    
    
    24,821
    
    
    
    5.10
    
    
    
    442,393
    
    
    
    26,567
    
    
    
    6.00
    
    
    
    409,067
    
    
    
    26,685
    
    
    
    6.52Noninterest earning assets:Cash and due from banks
    
    
    8,147
    
    
    
    
    
    
    
    
    
    
    
    8,605
    
    
    
    
    
    
    
    
    
    
    
    7,591Net unrealized loss on investment
securities available for sale
    
    
    (1,681
    )
    
    
    
    
    
    
    
    
    
    
    (2,850
    )
    
    
    
    
    
    
    
    
    
    
    (1,806
    )Allowance for loan losses
    
    
    (4,717
    )
    
    
    
    
    
    
    
    
    
    
    (3,231
    )
    
    
    
    
    
    
    
    
    
    
    (2,529
    )Other assets
    
    
    21,700
    
    
    
    
    
    
    
    
    
    
    
    16,708
    
    
    
    
    
    
    
    
    
    
    
    15,597Total noninterest earning assets
    
    
    23,449
    
    
    
    
    
    
    
    
    
    
    
    19,232
    
    
    
    
    
    
    
    
    
    
    
    18,853Total assets
    
    $
    509,662
    
    
    
    
    
    
    
    
    
    
    $
    461,625
    
    
    
    
    
    
    
    
    
    
    $
    427,920Liabilities and stockholders equityInterest bearing liabilities:Demand deposits
    
    $
    53,321
    
    
    $
    393
    
    
    
    .74
    
    
    $
    46,320
    
    
    $
    456
    
    
    
    .99
    
    
    $
    37,804
    
    
    $
    737
    
    
    
    1.95Money market deposits
    
    
    107,336
    
    
    
    1,092
    
    
    
    1.02
    
    
    
    98,804
    
    
    
    2,107
    
    
    
    2.13
    
    
    
    108,498
    
    
    
    4,324
    
    
    
    3.99Savings deposits
    
    
    24,859
    
    
    
    128
    
    
    
    .52
    
    
    
    26,608
    
    
    
    138
    
    
    
    .52
    
    
    
    29,881
    
    
    
    157
    
    
    
    .53Time deposits
    
    
    197,211
    
    
    
    6,057
    
    
    
    3.07
    
    
    
    177,503
    
    
    
    7,005
    
    
    
    3.95
    
    
    
    159,059
    
    
    
    7,676
    
    
    
    4.83Total interest bearing deposits
    
    
    382,727
    
    
    
    7,670
    
    
    
    2.00
    
    
    
    349,235
    
    
    
    9,706
    
    
    
    2.78
    
    
    
    335,242
    
    
    
    12,894
    
    
    
    3.85Short-term borrowings
    
    
    606
    
    
    
    3
    
    
    
    .50
    
    
    
    2,751
    
    
    
    59
    
    
    
    2.17
    
    
    
    537
    
    
    
    23
    
    
    
    4.28Long-term debt
    
    
    50,074
    
    
    
    1,822
    
    
    
    3.64
    
    
    
    38,299
    
    
    
    1,544
    
    
    
    4.03
    
    
    
    21,613
    
    
    
    1,316
    
    
    
    6.09Total interest bearing liabilities
    
    
    433,407
    
    
    
    9,495
    
    
    
    2.19
    
    
    
    390,285
    
    
    
    11,309
    
    
    
    2.90
    
    
    
    357,392
    
    
    
    14,233
    
    
    
    3.98Noninterest bearing liabilities:Demand deposits
    
    
    34,509
    
    
    
    
    
    
    
    
    
    
    
    38,149
    
    
    
    
    
    
    
    
    
    
    
    37,393Other liabilities
    
    
    6,898
    
    
    
    
    
    
    
    
    
    
    
    5,082
    
    
    
    
    
    
    
    
    
    
    
    5,588Total noninterest bearing liabilities
    
    
    41,407
    
    
    
    
    
    
    
    
    
    
    
    43,231
    
    
    
    
    
    
    
    
    
    
    
    42,981Stockholders equity
    
    
    34,848
    
    
    
    
    
    
    
    
    
    
    
    28,109
    
    
    
    
    
    
    
    
    
    
    
    27,547Total liabilities and stockholders equity
    
    $
    509,662
    
    
    
    
    
    
    
    
    
    
    $
    461,625
    
    
    
    
    
    
    
    
    
    
    $
    427,920Net interest income (tax equivalent basis)
    
    
    
    
    
    
    15,326
    
    
    
    2.91
    
    
    
    
    
    
    
    15,258
    
    
    
    3.10
    
    
    
    
    
    
    
    12,452
    
    
    
    2.54Tax
equivalent basis adjustment5
    
    
    
    
    
    
    (647
    )
    
    
    
    
    
    
    
    
    
    
    (665
    )
    
    
    
    
    
    
    
    
    
    
    (707
    )Net interest income7
    
    
    
    
    
    $
    14,679
    
    
    
    
    
    
    
    
    
    
    $
    14,593
    
    
    
    
    
    
    
    
    
    
    $
    11,745Average rate
paid to fund interest earning Assets
    
    
    
    
    
    
    
    
    
    
    1.95
    
    
    
    
    
    
    
    
    
    
    
    2.56
    
    
    
    
    
    
    
    
    
    
    
    3.48Net interest income as a percentage of
interest earning assets (tax equivalent basis)
    
    
    
    
    
    
    
    
    
    
    3.15
    %
    
    
    
    
    
    
    
    
    
    
    3.44
    %
    
    
    
    
    
    
    
    
    
    
    3.04
    %
 
 1
    
    Includes $42,000 in 2009, $- in 2008 and $39,000 in 2007, 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 $421,000, $413,000 and $611,000 in 2009, 2008 and 2007 respectively.5
    
    The tax equivalent adjustment was computed assuming a 34% statutory federal income tax rate in
2009, 2008 and 2007.6
    
    Includes $387,000 in 2009, $421,000 in 2008 and $336,000 in 2007 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 nine basis points in 2009, 2008 and 2007, respectively.  
 12




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##### Table of Contents



2009 Net Interest Income Increase
    
    2008 Net Interest Income Increase(Decrease) from 2008 due to:
    
    (Decrease) from 2007 due to:In thousands
    
    Volume
    
    Rate
    
    Total
    
    Volume
    
    Rate
    
    TotalInterest incomeLoans:Commercial
    
    $
    519
    
    
    $
    (257
    )
    
    $
    262
    
    
    $
    349
    
    
    $
    (157
    )
    
    $
    192Real estate
    
    
    1,204
    
    
    
    (2,270
    )
    
    
    (1,066
    )
    
    
    2,134
    
    
    
    (1,861
    )
    
    
    273Installment
    
    
    (1
    )
    
    
    (16
    )
    
    
    (17
    )
    
    
    (1
    )
    
    
    (7
    )
    
    
    (8
    )Total loans
    
    
    1,722
    
    
    
    (2,543
    )
    
    
    (821
    )
    
    
    2,482
    
    
    
    (2,025
    )
    
    
    457Taxable investment securities
    
    
    (303
    )
    
    
    (433
    )
    
    
    (736
    )
    
    
    1,027
    
    
    
    (236
    )
    
    
    791Tax-exempt investment securities
    
    
    (40
    )
    
    
    (12
    )
    
    
    (52
    )
    
    
    (120
    )
    
    
    (5
    )
    
    
    (125
    )Federal funds sold and securities
purchased under agreements to resell
    
    
    489
    
    
    
    (652
    )
    
    
    (163
    )
    
    
    (866
    )
    
    
    (309
    )
    
    
    (1,175
    )Interest-bearing deposits with banks
    
    
    12
    
    
    
    14
    
    
    
    26
    
    
    
    (20
    )
    
    
    (46
    )
    
    
    (66
    )Total interest income
    
    
    1,880
    
    
    
    (3,626
    )
    
    
    (1,746
    )
    
    
    2,503
    
    
    
    (2,621
    )
    
    
    (118
    )Interest expenseDemand deposits
    
    
    (69
    )
    
    
    132
    
    
    
    63
    
    
    
    (166
    )
    
    
    447
    
    
    
    281Savings deposits
    
    
    9
    
    
    
    1
    
    
    
    10
    
    
    
    17
    
    
    
    2
    
    
    
    19Money market deposits
    
    
    (182
    )
    
    
    1,197
    
    
    
    1,015
    
    
    
    (387
    )
    
    
    2,604
    
    
    
    2,217Time deposits
    
    
    (778
    )
    
    
    1,726
    
    
    
    948
    
    
    
    (891
    )
    
    
    1,562
    
    
    
    671Short-term borrowings
    
    
    46
    
    
    
    10
    
    
    
    56
    
    
    
    (95
    )
    
    
    59
    
    
    
    (36
    )Long-term debt
    
    
    (475
    )
    
    
    197
    
    
    
    (278
    )
    
    
    (1,017
    )
    
    
    789
    
    
    
    (228
    )Total interest expense
    
    
    (1,449
    )
    
    
    3,263
    
    
    
    1,814
    
    
    
    (2,539
    )
    
    
    5,463
    
    
    
    2,924Net interest income
    
    $
    431
    
    
    $
    (363
    )
    
    $
    68
    
    
    $
    (36
    )
    
    $
    2,842
    
    
    $
    2,806
 Loans
      Maturities and interest sensitivities of loans
  Due fromOne YearDue in One
    
    Through
    
    Due AfterIn thousands
    
    Year or Less
    
    Five Years
    
    Five Years
    
    TotalCommercial
    
    $
    14,982
    
    
    $
    21,815
    
    
    $
    13,525
    
    
    $
    50,322Real estate:Construction
    
    
    45,008
    
    
    
    380
    
    
    
    1,584
    
    
    
    46,972Mortgage
    
    
    20,442
    
    
    
    27,885
    
    
    
    129,694
    
    
    
    178,021Installment
    
    
    421
    
    
    
    396
    
    
    
    110
    
    
    
    927Total
    
    $
    80,853
    
    
    $
    50,476
    
    
    $
    144,913
    
    
    $
    276,242Loans at fixed
interest rates
    
    $
    19,417
    
    
    $
    39,127
    
    
    $
    21,886
    
    
    $
    80,430Loans at variable
interest rates
    
    
    61,436
    
    
    
    11,349
    
    
    
    123,027
    
    
    
    195,812Total
    
    $
    80,853
    
    
    $
    50,476
    
    
    $
    144,913
    
    
    $
    276,242
  13




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##### Table of Contents



In thousands
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Commercial
    
    $
    53,820
    
    
    $
    44,366
    
    
    $
    44,504
    
    
    $
    32,572
    
    
    $
    2,536Real estate
    
    
    221,601
    
    
    
    226,546
    
    
    
    187,447
    
    
    
    165,828
    
    
    
    155,711Installment
    
    
    926
    
    
    
    1,153
    
    
    
    1,061
    
    
    
    1,176
    
    
    
    1,261Total loans
    
    
    276,347
    
    
    
    272,065
    
    
    
    233,012
    
    
    
    199,576
    
    
    
    179,508Less: Unearned income
    
    
    105
    
    
    
    159
    
    
    
    188
    
    
    
    292
    
    
    
    291Loans
    
    $
    276,242
    
    
    $
    271,906
    
    
    $
    232,824
    
    
    $
    199,284
    
    
    $
    179,217
 Summary of loan loss experience
  Dollars in thousands
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Balance, January 1
    
    $
    3,800
    
    
    $
    3,000
    
    
    $
    2,400
    
    
    $
    2,165
    
    
    $
    2,076Charge-offs:Commercial loans
    
    
    1,703
    
    
    
    651
    
    
    
    118
    
    
    
    108
    
    
    
    68Real estate loans
    
    
    1,537
    
    
    
    118
    
    
    
    22
    
    
    
    2
    
    
    
    Installment loans
    
    
    30
    
    
    
    23
    
    
    
    66
    
    
    
    39
    
    
    
    16Total
    
    
    3,270
    
    
    
    792
    
    
    
    206
    
    
    
    149
    
    
    
    84Recoveries:Commercial loans
    
    
    
    
    
    
    5
    
    
    
    2
    
    
    
    87
    
    
    
    5Real estate loans
    
    
    15
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    29Installment loans
    
    
    
    
    
    
    1
    
    
    
    30
    
    
    
    18
    
    
    
    24Total
    
    
    15
    
    
    
    6
    
    
    
    34
    
    
    
    105
    
    
    
    58Net (charge-offs) recoveries
    
    
    (3,255
    )
    
    
    (786
    )
    
    
    (172
    )
    
    
    (44
    )
    
    
    (26
    )Provision for loan
losses charged to operations
    
    
    8,105
    
    
    
    1,586
    
    
    
    772
    
    
    
    279
    
    
    
    115Balance, December 31
    
    $
    8,650
    
    
    $
    3,800
    
    
    $
    3,000
    
    
    $
    2,400
    
    
    $
    2,165Net charge-offs as a
percentage of average loans
    
    
    1.17
    %
    
    
    .31
    %
    
    
    .08
    %
    
    
    .03
    %
    
    
    .02
    %Allowance for loan losses as a
percentage of loans
    
    
    3.13
    
    
    
    1.40
    
    
    
    1.29
    
    
    
    1.20
    
    
    
    1.21Allowance for loan losses as a
percentage of nonperforming loans
    
    
    48.35
    
    
    
    44.13
    
    
    
    37.67
    
    
    
    40.45
    
    
    
    107.39
         14




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##### Table of Contents



Allocation of the allowance for loan losses
  2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Percentage
    
    
    
    
    
    
    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
    
    $
    1,352
    
    
    
    18.13
    %
    
    $
    1,102
    
    
    
    15.22
    %
    
    $
    1,098
    
    
    
    19.11
    %
    
    $
    730
    
    
    
    16.32
    %
    
    $
    626
    
    
    
    13.14
    %Real estate
    
    
    7,095
    
    
    
    81.32
    
    
    
    2,306
    
    
    
    84.00
    
    
    
    1,709
    
    
    
    80.43
    
    
    
    1,427
    
    
    
    83.09
    
    
    
    1,174
    
    
    
    86.39Installment
    
    
    19
    
    
    
    .55
    
    
    
    6
    
    
    
    .78
    
    
    
    91
    
    
    
    .46
    
    
    
    21
    
    
    
    .49
    
    
    
    25
    
    
    
    .47Unallocated
    
    
    184
    
    
    
    
    
    
    
    386
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    222
    
    
    
    
    
    
    
    340
    
    
    
    Total
    
    $
    8,650
    
    
    
    100.00
    %
    
    $
    3,800
    
    
    
    100.00
    %
    
    $
    3,000
    
    
    
    100.00
    %
    
    $
    2,400
    
    
    
    100.00
    %
    
    $
    2,165
    
    
    
    100.00
    %
  Nonperforming assets
  In thousands
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Loans past due 90 days or more and
still accruing:Commercial
    
    $
    555
    
    
    $
    
    
    
    $
    43
    
    
    $
    
    
    
    $
    Real estate
    
    
    1,012
    
    
    
    376
    
    
    
    377
    
    
    
    1,254
    
    
    
    162Installment
    
    
    
    
    
    
    8
    
    
    
    18
    
    
    
    5
    
    
    
    7Loans past due 90 days or more and
still accruing
    
    
    1,567
    
    
    
    384
    
    
    
    438
    
    
    
    1,259
    
    
    
    169Nonaccrual loans:Commercial
    
    
    1,237
    
    
    
    1,864
    
    
    
    1,996
    
    
    
    797
    
    
    
    742Real estate
    
    
    15,080
    
    
    
    6,356
    
    
    
    5,485
    
    
    
    3,899
    
    
    
    1,020Installment
    
    
    6
    
    
    
    7
    
    
    
    45
    
    
    
    38
    
    
    
    85Total nonaccrual loans
    
    
    16,323
    
    
    
    8,227
    
    
    
    7,526
    
    
    
    4,734
    
    
    
    1,847Total nonperforming loans
    
    
    17,890
    
    
    
    8,611
    
    
    
    7,964
    
    
    
    5,993
    
    
    
    2,016Other real estate owned
    
    
    2,352
    
    
    
    1,547
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    20,242
    
    
    $
    10,158
    
    
    $
    7,964
    
    
    $
    5,993
    
    
    $
    2,016
     Other assets
  15




---



##### Table of Contents



Other real estate owned
  Deposits
          Short-term borrowings
  Long-term debt
  Results of operations  2009 compared with 2008
          16




---



##### Table of Contents



Liquidity
          Contractual obligations
   17




---



##### Table of Contents



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
    
    $
    19,932
    
    
    $
    
    
    
    $
    
    
    
    $
    19,932Commercial mortgages
    
    
    17,918
    
    
    
    
    
    
    
    
    
    
    
    17,918Credit cards
    
    
    
    
    
    
    
    
    
    
    1,142
    
    
    
    1,142Residential
mortgages
    
    
    427
    
    
    
    
    
    
    
    
    
    
    
    427Home equity and
other revolving
lines of credit
    
    
    607
    
    
    
    
    
    
    
    
    
    
    
    607Standby letters of
credit
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    34
  Effects of inflation
    Interest rate sensitivity
      18




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##### Table of Contents



Interest Sensitivity Gap Analysis
 December 31, 2009One Year
    
    Three YearsOne Year
    
    to
    
    to
    
    More thanIn thousands
    
    Or Less
    
    Three Years
    
    Five Years
    
    Five Years
    
    TotalInterest earning assets:Federal funds sold and securities
purchased under agreements
to resell
    
    $
    5,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,500Interest-bearing deposits with
banks
    
    
    342
    
    
    
    267
    
    
    
    
    
    
    
    
    
    
    
    609Investment securities
    
    
    53,072
    
    
    
    27,233
    
    
    
    26,426
    
    
    
    55,252
    
    
    
    161,983Loans
    
    
    126,012
    
    
    
    76,248
    
    
    
    50,930
    
    
    
    23,052
    
    
    
    276,242184,926
    
    
    
    103,748
    
    
    
    77,356
    
    
    
    78,304
    
    
    
    444,334Interest bearing liabilities:Deposits:Savings
    
    
    149,853
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    149,853Time
    
    
    133,525
    
    
    
    39,846
    
    
    
    23,530
    
    
    
    4,218
    
    
    
    201,119Short-term borrowings
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Long-term debt
    
    
    7,300
    
    
    
    18,000
    
    
    
    8,500
    
    
    
    15,200
    
    
    
    49,000290,778
    
    
    
    57,846
    
    
    
    32,030
    
    
    
    19,418
    
    
    
    400,072Interest sensitivity gap:Period gap
    
    $
    (105,852
    )
    
    $
    45,902
    
    
    $
    45,326
    
    
    $
    58,886
    
    
    $
    44,262Cumulative gap
    
    
    (105,852
    )
    
    
    (59,950
    )
    
    
    (14,624
    )
    
    
    44,262
    
    
    
    
      Capital
  Consolidated
    
    Bank OnlyDecember 31,
    
    December 31,Dollars in thousands
    
    2009
    
    2008
    
    2009
    
    2008Total stockholders equity
    
    $
    31,013
    
    
    $
    28,092
    
    
    $
    35,539
    
    
    $
    32,386Net unrealized (gain) loss
on investment securities
available for sale
    
    
    (533
    )
    
    
    1,124
    
    
    
    (533
    )
    
    
    1,124Net unrealized loss on
equity securities available
for sale
    
    
    (11
    )
    
    
    (25
    )
    
    
    (11
    )
    
    
    (25
    )Disallowed intangibles
    
    
    (744
    )
    
    
    (985
    )
    
    
    (744
    )
    
    
    (985
    )Disallowed deferred tax
assets
    
    
    
    
    
    
    
    
    
    
    Qualifying trust preferred
securities
    
    
    4,000
    
    
    
    4,000
    
    
    
    
    
    
    
    Tier 1 capital
    
    
    33,725
    
    
    
    32,206
    
    
    
    34,251
    
    
    
    32,500Qualifying long-term debt
    
    
    5,200
    
    
    
    5,220
    
    
    
    5,000
    
    
    
    5,000Allowance for loan
losses
    
    
    4,013
    
    
    
    3,800
    
    
    
    4,011
    
    
    
    3,800Other
    
    
    80
    
    
    
    165
    
    
    
    80
    
    
    
    165Tier 2 capital
    
    
    9,293
    
    
    
    9,185
    
    
    
    9,091
    
    
    
    8,965Total capital
    
    $
    43,018
    
    
    $
    41,391
    
    
    $
    43,342
    
    
    $
    41,465Risk-weighted assets
    
    $
    322,838
    
    
    $
    327,479
    
    
    $
    322,606
    
    
    $
    326,961Average total assets
    
    
    484,362
    
    
    
    492,388
    
    
    
    484,107
    
    
    
    492,827Risk-based capital ratios:Tier 1 capital to risk-adjusted assets
    
    
    10.45
    %
    
    
    9.83
    %
    
    
    10.62
    %
    
    
    9.94
    %Regulatory minimum
    
    
    5.00
    
    
    
    5.00
    
    
    
    5.00
    
    
    
    5.00Total capital to risk-adjusted assets
    
    
    13.32
    
    
    
    12.64
    
    
    
    13.43
    
    
    
    12.68Regulatory minimum
    
    
    8.00
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    8.00Leverage ratio
    
    
    6.96
    
    
    
    6.54
    
    
    
    7.08
    
    
    
    6.61Total stockholders equity
to total assets
    
    
    6.63
    
    
    
    5.67
    
    
    
    7.63
    
    
    
    6.55
   19




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##### Table of Contents



Results of operations  2008 compared with 2007
                 
 Item 7a. Quantitative and Qualitative Disclosure about Market Risk
  20




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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
    
    2009
    
    2008AssetsCash and due from banks (Note 2)
    
    $
    6,808
    
    
    $
    7,613Federal funds sold (Note 3)
    
    
    5,500
    
    
    
    18,200Interest-bearing deposits with banks
    
    
    609
    
    
    
    726Investment securities available for sale (Note 4)
    
    
    122,006
    
    
    
    125,591Investment securities held to maturity (Market value of $41,782
at December 31, 2009 and $54,537 at December 31, 2008) (Note 5)
    
    
    40,395
    
    
    
    53,714Loans held for sale
    
    
    190
    
    
    
    267Loans (Note 6)
    
    
    276,242
    
    
    
    271,906Less: Allowance for loan losses (Note 7)
    
    
    8,650
    
    
    
    3,800Net loans
    
    
    267,592
    
    
    
    268,106Premises and equipment (Note 8)
    
    
    2,949
    
    
    
    3,242Accrued interest receivable
    
    
    2,546
    
    
    
    2,796Cash surrender value of life insurance
    
    
    5,537
    
    
    
    5,345Other real estate owned
    
    
    2,352
    
    
    
    1,547Other assets (Notes 13 and 14)
    
    
    9,855
    
    
    
    7,392Total assets
    
    $
    466,339
    
    
    $
    494,539Liabilities and Stockholders EquityDeposits: (Notes 4, 5, and 9)Demand
    
    $
    29,304
    
    
    $
    36,270Savings
    
    
    149,853
    
    
    
    183,172Time
    
    
    201,119
    
    
    
    187,675Total deposits
    
    
    380,276
    
    
    
    407,117Accrued expenses and other liabilities
    
    
    5,950
    
    
    
    5,880Short-term portion of long-term debt (Note 11)
    
    
    5,000
    
    
    
    5,000Short-term borrowings (Note 10)
    
    
    100
    
    
    
    1,850Long-term debt (Note 11)
    
    
    44,000
    
    
    
    46,600Total liabilities
    
    
    435,326
    
    
    
    466,447Commitments and contingencies (Note 20)Stockholders equity (Notes 15, 16 and 23):Preferred stock, no par value: Authorized 100,000 shares (Note 15);Series A , issued and outstanding 8 shares in 2009 and 2008
    
    
    200
    
    
    
    200Series C , issued and outstanding 108 shares in 2009 and 2008
    
    
    27
    
    
    
    27Series D , issued and outstanding 3,280 shares in 2009 and 2008
    
    
    820
    
    
    
    820Preferred stock, no par value, perpetual noncumulative: Authorized 200 shares;Series E, issued and outstanding 49 shares in 2009 and 2008
    
    
    2,450
    
    
    
    2,450Preferred stock, no par value, perpetual noncumulative: Authorized 7,000 shares;Series F, issued and outstanding 7,000 shares in 2009 and 2008
    
    
    6,790
    
    
    
    6,790Preferred stock, no par value, perpetual noncumulative: Authorized 9,439 shares;Series G, issued and outstanding 9,439 shares
    
    
    9,499
    
    
    
    Common stock, par value $10: Authorized 400,000 shares;134,530 shares issued in 2009 and 2008131,290 shares outstanding in 2009 and 131,330 shares outstanding in 2008
    
    
    1,345
    
    
    
    1,345Surplus
    
    
    1,115
    
    
    
    1,115Retained earnings
    
    
    8,462
    
    
    
    16,694Accumulated other comprehensive loss
    
    
    533
    
    
    
    (1,124
    )Treasury stock, at cost - 3,240 and 3,200 common shares in 2009 and 2008, respectively
    
    
    (228
    )
    
    
    (225
    )Total stockholders equity
    
    
    31,013
    
    
    
    28,092Total liabilities and stockholders equity
    
    
    466,339
    
    
    $
    494,539
  21




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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
    
    2009
    
    2008
    
    2007Interest incomeInterest and fees on loans
    
    
    16,146
    
    
    $
    16,967
    
    
    $
    16,510Interest on Federal funds sold and securities
purchased under agreements to resell
    
    
    54
    
    
    
    217
    
    
    
    1,392Interest on deposits with banks
    
    
    50
    
    
    
    24
    
    
    
    90Interest and dividends on investment securities:Taxable
    
    
    6,668
    
    
    
    7,404
    
    
    
    6,613Tax-exempt
    
    
    1,256
    
    
    
    1,290
    
    
    
    1,373Total interest income
    
    
    24,174
    
    
    
    25,902
    
    
    
    25,978Interest expenseInterest on deposits (Note 9)
    
    
    7,670
    
    
    
    9,706
    
    
    
    12,894Interest on short-term borrowings
    
    
    3
    
    
    
    59
    
    
    
    23Interest on long-term debt
    
    
    1,822
    
    
    
    1,544
    
    
    
    1,316Total interest expense
    
    
    9,495
    
    
    
    11,309
    
    
    
    14,233Net interest income
    
    
    14,679
    
    
    
    14,593
    
    
    
    11,745Provision for loan losses (Note 7)
    
    
    8,105
    
    
    
    1,586
    
    
    
    772Net interest income after provision
for loan losses
    
    
    6,574
    
    
    
    13,007
    
    
    
    10,973Other operating incomeService charges on deposit accounts
    
    
    1,476
    
    
    
    1,443
    
    
    
    1,332Agency fees on commercial loans
    
    
    236
    
    
    
    318
    
    
    
    328Other income (Note 12)
    
    
    1,401
    
    
    
    1,250
    
    
    
    1,024Net gains (losses) on securities transactions (Notes 4 and 5)
    
    
    11
    
    
    
    (44
    )
    
    
    10Other than temporary impairment losses on securities
    
    
    (2,443
    )
    
    
    (2,688
    )
    
    
    Portion of loss recognized in other comprehensive income, before tax
    
    
    110
    
    
    
    
    
    
    
    Net impairment losses on securities recognized in earnings
    
    
    (2,333
    )
    
    
    (2,688
    )
    
    
    Total other operating income
    
    
    791
    
    
    
    279
    
    
    
    2,694Other operating expensesSalaries and other employee benefits (Note 14)
    
    
    5,800
    
    
    
    6,205
    
    
    
    5,992Occupancy expense (Note 8)
    
    
    1,326
    
    
    
    1,304
    
    
    
    1,201Equipment expense (Note 8)
    
    
    648
    
    
    
    651
    
    
    
    562Management consulting fees
    
    
    683
    
    
    
    212
    
    
    
    256FDIC insurance expense
    
    
    1,082
    
    
    
    429
    
    
    
    40Other real estate owned expense
    
    
    558
    
    
    
    
    
    
    
    Other expenses (Note 12)
    
    
    3,284
    
    
    
    3,477
    
    
    
    3,377Total other operating expenses
    
    
    13,381
    
    
    
    12,278
    
    
    
    11,428(Loss) income before income tax expense
    
    
    (6,016
    )
    
    
    1,008
    
    
    
    2,239Income tax expense (benefit) (Note 13)
    
    
    1,806
    
    
    
    (50
    )
    
    
    372Net (loss) income
    
    $
    (7,822
    )
    
    $
    1,058
    
    
    $
    1,867Net (loss) income per common share (Note 17)Basic
    
    $
    (68.36
    )
    
    $
    1.87
    
    
    $
    8.28Diluted
    
    
    (68.36
    )
    
    
    1.87
    
    
    
    8.09Basic average common shares outstanding
    
    
    131,300
    
    
    
    131,688
    
    
    
    132,306Diluted average common shares outstanding
    
    
    131,300
    
    
    
    131,688
    
    
    
    148,623Cash dividends declared per common share
    
    $
    2.00
    
    
    $
    3.60
    
    
    $
    3.50
  22




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##### Table of Contents



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, 2007
    
    $
    1,345
    
    
    $
    1,115
    
    
    $
    10,287
    
    
    $
    16,290
    
    
    $
    (978
    )
    
    $
    (109
    )
    
    $
    27,950Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,867
    
    
    
    
    
    
    
    
    
    
    
    1,867Other comprehensive incomeUnrealized holding gains on securities
arising during the period (net of tax of $(145))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    
    
    
    
    363Reclassification adjustment for gains (losses)
included in net income (net of tax of $2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,222Proceeds from issuance of preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )
    
    
    (65
    )Dividends paid on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (464
    )
    
    
    
    
    
    
    
    
    
    
    (464
    )Dividends paid on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (771
    )
    
    
    
    
    
    
    
    
    
    
    (771
    )Balance, December 31, 2007
    
    
    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 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 incomeUnrealized holding gains on securities
arising during the period (net of tax of $(470))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    705
    
    
    
    
    
    
    
    705Reclassification adjustment for losses
included in net income (net of tax of $(374))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,959
    
    
    
    
    
    
    
    1,959Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    )
    
    $
    31,013
  23




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##### Table of Contents



CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
 Consolidated Statements of Cash Flows
 Year Ended December 31,In thousands
    
    2009
    
    2008
    
    2007Operating activitiesNet (loss) income
    
    $
    (7,822
    )
    
    $
    1,058
    
    
    $
    1,867Adjustments to reconcile net income to net cash from operating activities:Depreciation and amortization
    
    
    432
    
    
    
    495
    
    
    
    430Provision for loan losses
    
    
    8,105
    
    
    
    1,586
    
    
    
    772Premium amortization (discount accretion) of investment securities
    
    
    17
    
    
    
    (65
    )
    
    
    (335
    )Amortization of intangible assets
    
    
    194
    
    
    
    213
    
    
    
    197Net (gains) losses on sales and early redemptions of investment securities
    
    
    (11
    )
    
    
    44
    
    
    
    (10
    )Net impairment losses on investment securities
    
    
    2,333
    
    
    
    2,688
    
    
    
    Net losses (gains) on sales of loans held for sale
    
    
    10
    
    
    
    (18
    )
    
    
    (72
    )Net losses and writedowns of other real estate owned
    
    
    427
    
    
    
    
    
    
    
    Loans originated for sale
    
    
    (312
    )
    
    
    (1,001
    )
    
    
    (3,312
    )Proceeds from sales and principal payments from loans held for sale
    
    
    273
    
    
    
    978
    
    
    
    3,767Decrease (increase) in accrued interest receivable
    
    
    250
    
    
    
    (124
    )
    
    
    (167
    )Deferred taxes
    
    
    2,372
    
    
    
    (1,056
    )
    
    
    (453
    )Net increase in bank-owned life insurance
    
    
    (192
    )
    
    
    (197
    )
    
    
    (185
    )Increase in other assets
    
    
    (6,104
    )
    
    
    (383
    )
    
    
    (1,560
    )Increase in accrued expenses and other liabilities
    
    
    70
    
    
    
    777
    
    
    
    226Net cash provided by operating activities
    
    
    42
    
    
    
    4,995
    
    
    
    1,165Investing activitiesPurchase of loans
    
    
    
    
    
    
    
    
    
    
    (18,734
    )Increase in loans, net
    
    
    (8,993
    )
    
    
    (41,415
    )
    
    
    (14,978
    )Decrease (increase) in interest bearing deposits with banks
    
    
    117
    
    
    
    (448
    )
    
    
    375Proceeds from maturities of investment securities available for
sale, including principal repayments and early redemptions
    
    
    27,100
    
    
    
    21,774
    
    
    
    48,501Proceeds from maturities of investment securities held to
maturity, including principal repayments and early redemptions
    
    
    15,574
    
    
    
    10,964
    
    
    
    4,792Proceeds from sales of investment securities available for sale
    
    
    189
    
    
    
    5,179
    
    
    
    3,195Purchases of investment securities available for sale
    
    
    (22,096
    )
    
    
    (50,849
    )
    
    
    (38,230
    )Purchases of investment securities held to maturity
    
    
    (2,462
    )
    
    
    (12,274
    )
    
    
    (5,280
    )Purchases of bank-owned life insurance, net
    
    
    
    
    
    
    (220
    )
    
    
    Proceeds from sales of other real estate owned
    
    
    275
    
    
    
    
    
    
    
    Purchases of premises and equipment
    
    
    (139
    )
    
    
    (136
    )
    
    
    (302
    )Net cash provided by (used in) investing activities
    
    
    9,565
    
    
    
    (67,425
    )
    
    
    (20,661
    )Financing activitiesPurchase of deposits
    
    
    
    
    
    
    
    
    
    
    11,016(Decrease) increase in deposits
    
    
    (26,841
    )
    
    
    12,261
    
    
    
    41,424(Decrease) increase in short-term borrowings
    
    
    (1,750
    )
    
    
    700
    
    
    
    750(Decrease) increase in long-term debt
    
    
    (2,600
    )
    
    
    31,800
    
    
    
    194Proceeds from issuance of preferred stock
    
    
    9,439
    
    
    
    
    
    
    
    Purchases of treasury stock
    
    
    (3
    )
    
    
    (51
    )
    
    
    (65
    )Dividends paid on preferred stock
    
    
    (1,094
    )
    
    
    (812
    )
    
    
    (771
    )Dividends paid on common stock
    
    
    (263
    )
    
    
    (474
    )
    
    
    (464
    )Net cash (used in) provided by financing activities
    
    
    (23,112
    )
    
    
    43,424
    
    
    
    52,084Net (decrease) increase in cash and cash equivalents
    
    
    (13,505
    )
    
    
    (19,006
    )
    
    
    32,588Cash and cash equivalents at beginning of year
    
    
    25,813
    
    
    
    44,819
    
    
    
    12,231Cash and cash equivalents at end of year
    
    $
    12,308
    
    
    $
    25,813
    
    
    $
    44,819Cash paid during the year:Interest
    
    $
    9,864
    
    
    $
    11,728
    
    
    $
    14,050Income taxes
    
    
    1,279
    
    
    
    1,582
    
    
    
    842Non-cash transactionsTransfer of investments from held to maturity to available for sale
    
    
    184
    
    
    
    1,500
    
    
    
    Transfer of loans to other real estate owned
    
    
    1,508
    
    
    
    1,547
    
    
    
    Transfer of loans held for sale to loans
    
    
    106
    
    
    
    
    
    
    
    
  24




---



##### Table of Contents



Note 1 Summary of significant accounting policies
  Business
   Principles of consolidation
  Cash and cash equivalents
  Investment securities held to maturity and investment securities available for sale
      Loans held for sale
  25




---



##### Table of Contents



Loans
     Allowance for loan losses
         Bank premises and equipment
  Other assets
  Other real estate owned
  26




---



##### Table of Contents



Core deposit premiums
  Long-term debt
   Income taxes
    Net income per common share
  Comprehensive income
  Recent accounting pronouncements
      27




---



##### Table of Contents



Reclassifications
  Note 2 Cash and due from banks
  Note 3 Federal funds sold and securities purchased under agreements to resell
  Note 4 Investment securities available for sale
  28




---



##### Table of Contents



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
 Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Fair2008 In thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Treasury securities
and obligations of U.S.
government agencies
    
    $
    4,009
    
    
    $
    5
    
    
    $
    57
    
    
    $
    3,957Obligations of U.S.
government sponsored
entities
    
    
    19,157
    
    
    
    181
    
    
    
    326
    
    
    
    19,012Obligations of state and
political subdivisions
    
    
    548
    
    
    
    4
    
    
    
    
    
    
    
    552Mortgage-backed
securities
    
    
    88,356
    
    
    
    2,408
    
    
    
    134
    
    
    
    90,630Other debt securities
    
    
    11,645
    
    
    
    149
    
    
    
    3,996
    
    
    
    7,798Equity securities:Marketable securities
    
    
    678
    
    
    
    
    
    
    
    40
    
    
    
    638Nonmarketable
securities
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    115Federal Reserve Bank
and Federal Home
Loan Bank stock
    
    
    2,889
    
    
    
    
    
    
    
    
    
    
    
    2,889Total
    
    $
    127,397
    
    
    $
    2,747
    
    
    $
    4,553
    
    
    $
    125,591
  Amortized
    
    FairIn thousands
    
    Cost
    
    ValueDue within one year:Obligations of U.S. government sponsored
entities
    
    $
    3,000
    
    
    $
    3,015Obligations of state and political subdivisions
    
    
    546
    
    
    
    553Other debt securities
    
    
    994
    
    
    
    1,014Due after one year but within five years:Obligations of U.S. government sponsored
entities
    
    
    3,025
    
    
    
    3,102Mortgage-backed securities
    
    
    96
    
    
    
    97Other debt securities
    
    
    2,452
    
    
    
    2,314Due after five years but within ten years:U.S. Treasury securities and obligations
of U.S. government agencies
    
    
    6,220
    
    
    
    6,321Obligations of U.S.
government sponsored
entities
    
    
    1,295
    
    
    
    1,353Mortgage-backed securities
    
    
    2,245
    
    
    
    2,309Due after ten years:U.S. Treasury securities and obligations
of U.S. government agencies
    
    
    6,299
    
    
    
    6,380Obligations of U.S. government sponsored
entities
    
    
    9,968
    
    
    
    9,854Mortgage-backed securities
    
    
    72,076
    
    
    
    74,731Other debt securities
    
    
    8,823
    
    
    
    6,940Total debt securities
    
    
    117,039
    
    
    
    117,983Equity securities
    
    
    4,041
    
    
    
    4,023Total
    
    $
    121,080
    
    
    $
    122,006
   In thousands
    
    2009
    
    2008
    
    2007Taxable
    
    $
    5,732
    
    
    $
    6,001
    
    
    $
    5,187Tax-exempt
    
    
    68
    
    
    
    20
    
    
    
    94Total
    
    $
    5,800
    
    
    $
    6,021
    
    
    $
    5,281
   Less 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
 29




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##### Table of Contents



Less than 12 Months
    
    12 Months or More
    
    TotalGross Unrealized
    
    
    
    
    
    Gross Unrealized
    
    
    
    
    
    Gross Unrealized2008 In thousands
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesU.S. Treasury securities and obligations
of U.S. government agencies
    
    $
    2,701
    
    
    $
    53
    
    
    $
    168
    
    
    $
    4
    
    
    $
    2,869
    
    
    $
    57Obligations of U.S. Government
sponsored entities
    
    
    3,891
    
    
    
    68
    
    
    
    4,881
    
    
    
    258
    
    
    
    8,772
    
    
    
    326Mortgaged-backed securities
    
    
    5,142
    
    
    
    65
    
    
    
    2,760
    
    
    
    69
    
    
    
    7,902
    
    
    
    134Other debt securities
    
    
    2,722
    
    
    
    274
    
    
    
    3,829
    
    
    
    3,722
    
    
    
    6,551
    
    
    
    3,996Equity securities
    
    
    
    
    
    
    
    
    
    
    678
    
    
    
    40
    
    
    
    678
    
    
    
    40Total
    
    $
    14,456
    
    
    $
    460
    
    
    $
    12,316
    
    
    $
    4,093
    
    
    $
    26,772
    
    
    $
    4,553
    For the Nine MonthsIn thousands
    
    Ended December 31, 2009Beginning balance as of April 1, 2009
    
    $
    288Add: Initial other-than-temporary credit
losses
    
    
    944Additional other-than-temporary credit
losses
    
    
    1,257Balance, December 31, 2009
    
    $
    2,489
       30




---



##### Table of Contents



Note 5 Investment securities held to maturity
  Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Fair2009 In 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
 Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    Fair2008 In thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueObligations of U.S.
government
sponsored entities
    
    $
    8,500
    
    
    $
    20
    
    
    $
    
    
    
    $
    8,520Obligations of state
and
political subdivisions
    
    
    31,629
    
    
    
    814
    
    
    
    221
    
    
    
    32,222Mortgage-backed
securities
    
    
    12,089
    
    
    
    269
    
    
    
    
    
    
    
    12,358Other debt securities
    
    
    1,496
    
    
    
    
    
    
    
    59
    
    
    
    1,437Total
    
    $
    53,714
    
    
    $
    1,103
    
    
    $
    280
    
    
    $
    54,537
   Amortized
    
    FairIn thousands
    
    Cost
    
    ValueDue after one year but within five years:Obligations of state and political
subdivisions
    
    $
    8,458
    
    
    $
    9,007Mortgage-backed securities
    
    
    163
    
    
    
    170Due after five years but within ten years:Obligations of state and political
subdivisions
    
    
    13,712
    
    
    
    14,198Due after ten years:U.S. Treasury securities and obligations
of U.S. government agencies
    
    
    1,585
    
    
    
    1,647Obligations of U.S. government sponsored
entities
    
    
    2,459
    
    
    
    2,405Obligations of state and political
subdivisions
    
    
    5,809
    
    
    
    5,837Mortgage-backed securities
    
    
    7,714
    
    
    
    8,016Other debt securities
    
    
    495
    
    
    
    502Total
    
    $
    40,395
    
    
    $
    41,782
  In thousands
    
    2009
    
    2008
    
    2007Taxable
    
    $
    936
    
    
    $
    1,403
    
    
    $
    1,426Tax-exempt
    
    
    1,188
    
    
    
    1,270
    
    
    
    1,279Total
    
    $
    2,124
    
    
    $
    2,673
    
    
    $
    2,705
  31




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##### Table of Contents



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
 Less than 12 Months
    
    12 Months or More
    
    TotalGross Unrealized
    
    
    
    
    
    Gross Unrealized
    
    
    
    
    
    Gross Unrealized2008 In thousands
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesObligations of state and political
subdivisions
    
    $
    4,753
    
    
    $
    146
    
    
    $
    647
    
    
    $
    75
    
    
    $
    5,400
    
    
    $
    221Other debt securities
    
    
    1,437
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    1,437
    
    
    
    59Total
    
    $
    6,190
    
    
    $
    205
    
    
    $
    647
    
    
    $
    75
    
    
    $
    6,837
    
    
    $
    280
  Note 6 Loans
  In thousands
    
    2009
    
    2008Commercial
    
    $
    53,820
    
    
    $
    44,366Real estate
    
    
    221,601
    
    
    
    226,546Installment
    
    
    926
    
    
    
    1,153Total loans
    
    
    276,347
    
    
    
    272,065Less: Unearned income
    
    
    105
    
    
    
    159Loans
    
    $
    276,242
    
    
    $
    271,906
   In thousands
    
    2009
    
    2008Nonaccrual loans
    
    $
    16,323
    
    
    $
    8,227Loans with interest or principal 90
days or more past due and still accruing
    
    
    1,567
    
    
    
    384Total nonperforming loans
    
    $
    17,890
    
    
    $
    8,611
  In thousands
    
    2009
    
    2008
    
    2007Interest income foregone
    
    $
    (785
    )
    
    $
    (692
    )
    
    $
    (465
    )Interest income received
    
    
    188
    
    
    
    467
    
    
    
    429$
    (597
    )
    
    $
    (225
    )
    
    $
    (36
    )
    Note 7 Allowance for loan losses
  In thousands
    
    2009
    
    2008
    
    2007Balance, January 1
    
    $
    3,800
    
    
    $
    3,000
    
    
    $
    2,400Provision for loan
losses
    
    
    8,105
    
    
    
    1,586
    
    
    
    772Recoveries of loans previously
charged off
    
    
    15
    
    
    
    6
    
    
    
    3411,920
    
    
    
    4,592
    
    
    
    3,206Less: Charge-offs
    
    
    3,270
    
    
    
    792
    
    
    
    206Balance, December 31
    
    $
    8,650
    
    
    $
    3,800
    
    
    $
    3,000
 Note 8 Premises and equipment
  In thousands
    
    2009
    
    2008Land
    
    $
    329
    
    
    $
    329Premises
    
    
    1,520
    
    
    
    1,520Furniture and equipment
    
    
    4,326
    
    
    
    4,238Leasehold improvements
    
    
    3,368
    
    
    
    3,316Total cost
    
    
    9,543
    
    
    
    9,403Less: Accumulated depreciation and amortization
    
    
    6,594
    
    
    
    6,161Total premises and equipment
    
    $
    2,949
    
    
    $
    3,242
  32




---



##### Table of Contents



Note 9 Deposits
  In thousands
    
    2009
    
    2008Noninterest bearing demand
    
    $
    29,304
    
    
    $
    36,270Interest bearing:Demand
    
    
    51,839
    
    
    
    39,040Savings
    
    
    24,728
    
    
    
    24,670Money market
    
    
    73,286
    
    
    
    119,462Time
    
    
    201,119
    
    
    
    187,675Total interest bearing deposits
    
    
    350,972
    
    
    
    370,847Total deposits
    
    $
    380,276
    
    
    $
    407,117
  In thousands
    
    2009
    
    2008Three months or less
    
    $
    53,599
    
    
    $
    47,301Over three months but within six months
    
    
    32,947
    
    
    
    4,893Over six months but within twelve months
    
    
    16,209
    
    
    
    21,370Over twelve months
    
    
    30,649
    
    
    
    24,733Total deposits
    
    $
    133,404
    
    
    $
    98,297
  Note 10 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
    
    End2009Federal 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
    %
    
    $
    5,9232008Federal funds
purchased
    
    $
    
    
    
    
    
    %
    
    $
    2,140
    
    
    
    2.23
    %
    
    $
    19,780Securities sold under
repurchase
agreements
    
    
    1,850
    
    
    
    .30
    %
    
    
    157
    
    
    
    1.39
    
    
    
    2,000Demand note issued
to the U.S. Treasury
    
    
    
    
    
    
    
    
    
    
    454
    
    
    
    2.13
    
    
    
    6,000Total
    
    $
    1,850
    
    
    
    .30
    %
    
    $
    2,751
    
    
    
    2.17
    %
    
    $
    27,780
   Note 11 Long-term debt
  In thousands
    
    2009
    
    2008FHLB
convertible advances due from March 4, 2010 through August 6, 2018
    
    $
    39,700
    
    
    $
    42,2006.00% capital note, due December 28, 2010
    
    
    100
    
    
    
    2008.00% capital note, due May 6, 2017
    
    
    200
    
    
    
    2005.00% senior note, due February 21, 2022
    
    
    5,000
    
    
    
    5,000Subordinated debt
    
    
    4,000
    
    
    
    4,000Total
    
    
    49,000
    
    
    
    51,600Less: Short-term portion of long-term debt
    
    
    5,000
    
    
    
    5,000Total
    
    $
    44,000
    
    
    $
    45,600
         33




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##### Table of Contents



In thousands
    
    Amount2010
    
    $
    3,3002011
    
    
    16,0002012
    
    
    2,0002013
    
    
    8,5002014
    
    
    Thereafter
    
    
    14,200Total
    
    $
    44,000
 Note 12 Other operating income and expenses
  In thousands
    
    2009
    
    2008
    
    2007Other incomeIncome from off-site ATMs
    
    $
    482
    
    
    $
    428
    
    
    $
    420Earnings on cash surrender value of
life insurance
    
    
    252
    
    
    
    248
    
    
    
    225Agency fees on commercial loans
    
    
    236
    
    
    
    318
    
    
    
    328Undistributed gain (loss) from
unconsolidated investee
    
    
    202
    
    
    
    185
    
    
    
    (9
    )Miscellaneous other income
    
    
    465
    
    
    
    389
    
    
    
    388Total other income
    
    $
    1,637
    
    
    $
    1,568
    
    
    $
    1,352Other expensesProfessional fees
    
    $
    432
    
    
    $
    342
    
    
    $
    264Data processing
    
    
    361
    
    
    
    341
    
    
    
    396Marketing expense
    
    
    361
    
    
    
    471
    
    
    
    447Miscellaneous other expenses
    
    
    2,130
    
    
    
    2,323
    
    
    
    2,270Total other expenses
    
    $
    3,284
    
    
    $
    3,477
    
    
    $
    3,377
 Note 13 Income taxes
  In thousands
    
    2009
    
    2008
    
    2007Current expense (benefit)Federal
    
    $
    (595
    )
    
    $
    755
    
    
    $
    613State
    
    
    29
    
    
    
    251
    
    
    
    212(566
    )
    
    
    1,006
    
    
    
    825Deferred expense (benefit)Federal and state
    
    
    2,372
    
    
    
    (1,056
    )
    
    
    (453
    )Total income tax expense (benefit)
    
    $
    1,806
    
    
    $
    ( 50
    )
    
    $
    372
  In thousands
    
    2009
    
    2008
    
    2007| | |Federal income tax at statutory rate
    
    $
    (2,046
    )
    
    $
    343
    
    
    $
    756Increase (decrease) in income tax
expense resulting from:State income tax expense, net of
federal benefit
    
    
    517
    
    
    
    60
    
    
    
    83Tax-exempt income
    
    
    (450
    )
    
    
    (462
    )
    
    
    (485
    )Bank-owned life insurance
    
    
    (65
    )
    
    
    (66
    )
    
    
    (63
    )Increase in valuation allowance
    
    
    3,505
    
    
    
    423
    
    
    
    Decrease in FIN 48
    
    
    
    
    
    
    (363
    )
    
    
    Other, net
    
    
    345
    
    
    
    15
    
    
    
    81Total income tax expense (benefit)
    
    $
    1,806
    
    
    $
    (50
    )
    
    $
    372
  In thousands
    
    2009
    
    2008Deferred tax assetsUnrealized losses on investment
securities available for sale
    
    $
    
    
    
    $
    1,539Allowance for loan losses
    
    
    3,071
    
    
    
    1,370Investment securities
    
    
    982
    
    
    
    Premises and equipment
    
    
    297
    
    
    
    453Deposit intangible
    
    
    207
    
    
    
    6Deferred compensation
    
    
    1,072
    
    
    
    1,166Deferred income
    
    
    46
    
    
    
    295Investment in partnership
    
    
    
    
    
    
    114Other assets
    
    
    243
    
    
    
    25Total deferred tax asset
    
    
    5,918
    
    
    
    4,968Deferred tax liabilitiesUnrealized losses on investment
securities available for sale
    
    
    393
    
    
    
    Other
    
    
    
    
    
    
    220Total deferred tax liabilities
    
    
    393
    
    
    
    220Deferred tax asset
    
    $
    5,525
    
    
    $
    4,748Valuation allowance
    
    
    4,680
    
    
    
    423Net deferred tax asset
    
    $
    845
    
    
    $
    4,325
    In thousands
    
    2009
    
    2008Balance at January 1
    
    $
    112
    
    
    $
    427Additions based on tax positions related to the
current year
    
    
    
    
    
    
    48Additions for tax positions of prior years
    
    
    
    
    
    
    Reductions for tax positions of prior years
    
    
    (112
    )
    
    
    (363
    )Balance at December 31
    
    $
    
    
    
    $
    112
  Note 14 Benefit plans
     34




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##### Table of Contents



Note 15 Preferred stock
   Year
    
    Dividend
    
    Stated
    
    Number
    
    December 31,Issued
    
    Rate
    
    Value
    
    of Shares
    
    2009
    
    2008Series 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
    
    
    
    9,439,000
    
    
    
    $
    19,726,000
    
    
    $
    10,287,000
    Note 16 Restrictions on subsidiary bank dividends
   Note 17 Net income per common share
  In thousands, except per share data
    
    2009
    
    2008
    
    2007Net (loss) income
    
    $
    (7,822
    )
    
    $
    1,058
    
    
    $
    1,867Dividends on preferred stock
    
    
    (1,154
    )
    
    
    (812
    )
    
    
    (771
    )Net (loss)income applicable to basic
common shares
    
    
    (8,976
    )
    
    
    246
    
    
    
    1,096Dividends applicable to convertible
preferred stock
    
    
    147
    
    
    
    147
    
    
    
    106Net (loss) income applicable to
diluted common shares
    
    $
    (8,829
    )
    
    $
    393
    
    
    $
    1,202Number of average common sharesBasic
    
    
    131,300
    
    
    
    131,688
    
    
    
    132,306Diluted:Average common shares outstanding
    
    
    131,300
    
    
    
    131,688
    
    
    
    132,306Average potential dilutive common
shares
    
    
    16,317
    
    
    
    16,317
    
    
    
    16,317147,617
    
    
    
    148,005
    
    
    
    148,623Net income per common shareBasic
    
    $
    (68.36
    )
    
    $
    1.87
    
    
    $
    8.28Diluted
    
    
    (68.36
    )
    
    
    1.87
    
    
    
    8.09
 Note 18 Related party transactions
   Note 19 Fair value measurement of assets and liabilities
  35




---



##### Table of Contents



(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
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (Dollars in thousands)
    
    Total
    
    Level 1
    
    Level 2
    
    Level 3Investment securities
available for sale
    
    $
    125,591
    
    
    $
    1,008
    
    
    $
    123,439
    
    
    $
    1,144Loans held for sale
    
    
    267
    
    
    
    267
    
    
    
    
    
    
    
    Total assets
    
    $
    122,858
    
    
    $
    1,275
    
    
    $
    123,439
    
    
    $
    1,144Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    Note 20 Fair value of financial instruments
     Cash, short-term investments and interest-bearing deposits with banks
  Investment securities
  Loans
  Loans held for sale
  Deposit liabilities
   Short-term borrowings
 36




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##### Table of Contents



Long-term debt
  Commitments to extend credit and letters of credit
   2009
    
    2008Carrying
    
    Fair
    
    Carrying
    
    FairIn thousands
    
    Value
    
    Value
    
    Value
    
    ValueFinancial assetsCash and other short-term
Investments
    
    $
    12,308
    
    
    $
    12,308
    
    
    $
    25,813
    
    
    $
    25,813Interest-bearing deposits
with banks
    
    
    609
    
    
    
    607
    
    
    
    726
    
    
    
    719Investment securities AFS
    
    
    122,006
    
    
    
    122,006
    
    
    
    125,591
    
    
    
    125,591Investment securities HTM
    
    
    40,395
    
    
    
    41,782
    
    
    
    53,714
    
    
    
    54,537Loans
    
    
    276,242
    
    
    
    270,054
    
    
    
    271,906
    
    
    
    259,226Loans held for sale
    
    
    190
    
    
    
    190
    
    
    
    267
    
    
    
    267Financial liabilitiesDeposits
    
    
    380,276
    
    
    
    369,758
    
    
    
    407,117
    
    
    
    396,503Short-term borrowings
    
    
    100
    
    
    
    100
    
    
    
    1,850
    
    
    
    1,850Long-term debt
    
    
    49,000
    
    
    
    49,664
    
    
    
    51,600
    
    
    
    51,692
 Note 21 Commitments and contingencies
    Note 22 Financial instruments with off-balance sheet risk
      Note 23 Parent company information
  Condensed Balance Sheet
 December 31,In thousands
    
    2009
    
    2008AssetsCash and cash equivalents
    
    $
    
    
    
    $
    32Investment in subsidiary
    
    
    35,708
    
    
    
    32,551Due from subsidiary
    
    
    5,000
    
    
    
    5,075Other assets
    
    
    193
    
    
    
    499Total assets
    
    $
    40,901
    
    
    $
    38,157Liabilities and stockholders equityOther liabilities
    
    $
    464
    
    
    $
    541Notes payable
    
    
    5,300
    
    
    
    5,400Subordinated debt
    
    
    4,124
    
    
    
    4,124Total liabilities
    
    
    9,888
    
    
    
    10,065Stockholders equity
    
    
    31,013
    
    
    
    28,092Total liabilities and stockholders equity
    
    $
    40,901
    
    
    $
    38,157
 Condensed Statement of Income
 Year Ended December 31,In thousands
    
    2009
    
    2008
    
    2007IncomeInterest income
    
    $
    1
    
    
    $
    4
    
    
    $
    13Other operating income
    
    
    78
    
    
    
    31
    
    
    
    Dividends from subsidiaries
    
    
    687
    
    
    
    870
    
    
    
    750Interest from subsidiaries
    
    
    361
    
    
    
    579
    
    
    
    835Total income
    
    
    1,127
    
    
    
    1,484
    
    
    
    1,598ExpensesInterest expense
    
    
    439
    
    
    
    542
    
    
    
    756Other operating expenses
    
    
    3
    
    
    
    3
    
    
    
    3Net losses on securities
transactions
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    15
    
    
    
    21
    
    
    
    36Total expenses
    
    
    457
    
    
    
    566
    
    
    
    795Income before equity in undistributed income of
subsidiaries
    
    
    670
    
    
    
    918
    
    
    
    803Equity in undistributed (loss) income
of subsidiaries
    
    
    (8,492
    )
    
    
    140
    
    
    
    1,064Net (loss) income
    
    $
    (7,822
    )
    
    $
    1,058
    
    
    $
    1,867
 37




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##### Table of Contents



Condensed Statement of Cash Flows
 Year Ended December 31,In thousands
    
    2009
    
    2008
    
    2007Operating activitiesNet (loss) income
    
    $
    (7,822
    )
    
    $
    1,058
    
    
    $
    1,867Adjustments to reconcile net income
to cash used in operating activities:Equity in undistributed loss (income) of
subsidiaries
    
    
    8,492
    
    
    
    (140
    )
    
    
    (1,064
    )Decrease (increase) in other assets
    
    
    306
    
    
    
    (149
    )
    
    
    (228
    )(Decrease) increase in other liabilities
    
    
    (77
    )
    
    
    460
    
    
    
    (78
    )Net cash provided by operating activities
    
    
    899
    
    
    
    1,229
    
    
    
    497Investing activitiesProceeds from sales and maturities of
investment securities available for sale
including principal payments
    
    
    
    
    
    
    543
    
    
    
    Purchases of investment securities
available for sale
    
    
    
    
    
    
    (543
    )
    
    
    Increase in investment in
subsidiaries
    
    
    (8,925
    )
    
    
    (3,739
    )
    
    
    (1,784
    )Decrease in loans to
subsidiaries
    
    
    75
    
    
    
    4,075
    
    
    
    740Net cash (used in) provided by investing
activities
    
    
    (8,850
    )
    
    
    336
    
    
    
    (1,044
    )Financing activitiesDecrease in subordinated debt
    
    
    
    
    
    
    
    
    
    
    (3,093
    )(Decrease) increase in notes payable
    
    
    (100
    )
    
    
    (200
    )
    
    
    4,694Proceeds from issuance of preferred stock
    
    
    9,439
    
    
    
    
    
    
    
    Purchases of treasury stock
    
    
    (3
    )
    
    
    (51
    )
    
    
    (65
    )Dividends paid
    
    
    (1,417
    )
    
    
    (1,286
    )
    
    
    (1,235
    )Net cash provided by (used in) financing
activities
    
    
    7,919
    
    
    
    (1,537
    )
    
    
    301Increase (decrease) in cash and
cash equivalents
    
    
    (32
    )
    
    
    28
    
    
    
    (246
    )Cash and cash equivalents at
beginning of year
    
    
    32
    
    
    
    4
    
    
    
    250Cash and cash equivalents at
end of year
    
    $
    
    
    
    $
    32
    
    
    $
    4
 Note 24 Regulatory capital requirements
       FDIC RequirementsMinimum Capital For ClassificationBank Actual
    
    Adequacy
    
    as Well-CapitalizedIn thousands
    
    Amount Ratio
    
    Amount Ratio
    
    Amount RatioDecember 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
    
    
    
    10.00December 31, 2008Leverage (Tier 1)
capital
    
    $
    32,500
    
    
    
    6.61
    %
    
    $
    13,078
    
    
    
    4.00
    %
    
    $
    16,347
    
    
    
    5.00
    %Risk-based capital:Tier 1
    
    
    32,500
    
    
    
    9.94
    
    
    
    13,078
    
    
    
    4.00
    
    
    
    19,617
    
    
    
    6.00Total
    
    
    41,465
    
    
    
    12.68
    
    
    
    26,156
    
    
    
    8.00
    
    
    
    38,694
    
    
    
    10.00
   38




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##### Table of Contents



Note 25 Summary of quarterly financial information
 (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 securities 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
    )
 (unaudited)
    
    2008Dollars in thousands,
    
    First
    
    Second
    
    Third
    
    Fourthexcept per share data
    
    Quarter
    
    Quarter
    
    Quarter
    
    QuarterInterest income
    
    $
    6,454
    
    
    $
    6,341
    
    
    $
    6,467
    
    
    $
    6,640Interest expense
    
    
    3,009
    
    
    
    2,653
    
    
    
    2,862
    
    
    
    2,785Net interest income
    
    
    3,445
    
    
    
    3,688
    
    
    
    3,605
    
    
    
    3,855Provision for loan losses
    
    
    168
    
    
    
    265
    
    
    
    189
    
    
    
    964Net gains (losses) on securities transactions
    
    
    6
    
    
    
    (50
    )
    
    
    (1,429
    )
    
    
    (1,259
    )Other operating income
    
    
    673
    
    
    
    758
    
    
    
    804
    
    
    
    776Other operating expenses
    
    
    3,107
    
    
    
    3,174
    
    
    
    2,861
    
    
    
    3,136Income (loss) before income
tax expense
    
    
    849
    
    
    
    957
    
    
    
    (70
    )
    
    
    (728
    )Income tax expense
(benefit)
    
    
    184
    
    
    
    257
    
    
    
    (120
    )
    
    
    (371
    )Net income (loss)
    
    $
    665
    
    
    $
    700
    
    
    $
    50
    
    
    $
    (357
    )Net income (loss) per
share-basic
    
    $
    2.28
    
    
    $
    4.18
    
    
    $
    (.75
    )
    
    $
    (3.84
    )Net income (loss) per
share-diluted
    
    $
    2.28
    
    
    $
    3.72
    
    
    $
    (.75
    )
    
    $
    (3.38
    )
  Note 26. Subsequent events
     39




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
 40




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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
 (a)
    
    Evaluation of Disclosure Controls and Procedures.Management of the Corporation, including the Chief Executive Officer and the Chief Financial
Officer, have conducted an evaluation of the effectiveness of the Corporations disclosure
controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 as of
the end of the period covered by this report (the Evaluation Date). Based on that evaluation,
the Chief Executive Officer and the Chief Financial Officer concluded that, as of the Evaluation
Date, the Corporations disclosure controls and procedures were effective in ensuring that all
material information relating to the Corporation, including all consolidated subsidiaries,
required to be filed in this report has been made known to them in a timely manner.(b)
    
    Managements Report on Internal Control Over Financial ReportingManagement 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,
2009.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.(c)
    
    Changes in Internal Control Over Financial Reporting.There have not been any changes in the Companys internal control over financial reporting as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the final
fiscal quarter of the year to which this report relates that have materially affected, or are
reasonably likely to materially affect, the Corporations internal control over financial
reporting.
 
 Item 9B. Other Information.
  
 Part III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 Directors
 Director
    
    Term
    
    Principal Occupations During Past FiveName of Director
    
    Age
    
    Since
    
    Ends
    
    YearsBarbara Bell Coleman
    
    
    59
    
    
    
    1995
    
    
    
    2010
    
    
    President, BBC Associates, L.L.C. (consulting services)Eugene Giscombe
    
    
    69
    
    
    
    1991
    
    
    
    2012
    
    
    President, Giscombe Realty, LLC (real estate brokerage,
leasing and management firm); President, 103 East 125th
Street Corporation (real estate holding company)Louis E. Prezeau
    
    
    67
    
    
    
    1989
    
    
    
    2012
    
    
    President and Chief Executive Officer, City National
Bank of New Jersey and City National Bancshares
CorporationLemar C. Whigham
    
    
    66
    
    
    
    1989
    
    
    
    2010
    
    
    President, L & W Enterprises (vending machine operations)H. ONeil Williams
    
    
    63
    
    
    
    2009
    
    
    
    2012
    
    
    Managing Partner, Mitchell & Titus, LLP (CPA Firm)
 41




---



Barbara Bell Coleman
 Eugene Giscombe th th
 Louis E. Prezeau
 Lemar C. Whigham
 H. ONeil Williams
 Executive Officers
  In OfficeName
    
    Age
    
    Since
    
    Office and Business ExperienceLouis E. Prezeau
    
    
    67
    
    
    
    1989
    
    
    President and Chief Executive
Officer, City National
Bancshares Corporation and
City National Bank of New
JerseyStanley Weeks
    
    
    53
    
    
    
    1994
    
    
    Executive Vice President,
City National Bank of New
Jersey; 1984-1994, Vice
President, First Fidelity
Bank, N.A.Edward R. Wright
    
    
    64
    
    
    
    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 L. Oseguera
    
    
    44
    
    
    
    1990
    
    
    Senior Vice President, City
National Bank of New Jersey,
Vice President, City National
Bank of New Jersey
 42




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##### Table of Contents



Corporate Governance
 General
  Committees
 Nominating
Committee
   Audit and Examining Committee
  Loan and Discount Committee
 Investment Committee
 Personnel/Director and Management Review Committee
 Marketing Committee
 Compliance Committee
 43




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##### Table of Contents



Separation of Roles of Chairman and CEO
  Stockholder Communications to the Board
  Code of Ethics and Conduct
  Section 16(A) Beneficial Ownership Reporting Compliance
  
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
  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.
 44




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##### Table of Contents



Prezeau Compensation
   Prezeau Employment Agreement
  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 the
Corporations 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 the Corporations common
stockholders equity.
    45




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##### Table of Contents



Prezeau Trust Agreement
  Messrs. Weeks, Wright and Oseguera
  Supplemental Employee Retirement Plan
       46




---



##### Table of Contents



Other Benefits
  Ø
    
    401(k) plan;Ø
    
    Medical and dental health insurance plans; andØ
    
    Life insurance plans.
 47




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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
    
    
    2007
    
    
    $
    268,000
    
    
    $
    82,500
    
    
    $
    263,304
    (6)
    
    $
    47,422
    (2)
    
    $
    661,226President and Chief Executive
    
    
    2008
    
    
    $
    268,000
    
    
    $
    52,500
    
    
    $
    122,577
    (6)
    
    $
    40,065
    (2)
    
    $
    483,142Officer, City National Bancshares
    
    
    2009
    
    
    $
    268,000
    
    
    $
    0
    
    
    $
    44,247
    (6)
    
    $
    42,404
    (2)
    
    $
    354,651Corporation and City National
Bank of  New
JerseyStanley M. Weeks
    
    
    2007
    
    
    $
    150,000
    
    
    $
    20,000
    
    
    $
    17,963
    (1)
    
    $
    8,550
    (3)
    
    $
    196,513Executive Vice President and Chief
    
    
    2008
    
    
    $
    155,000
    
    
    $
    19,100
    
    
    $
    21,652
    (1)
    
    $
    8,674
    (3)
    
    $
    204,426Credit Officer, City National Bank of
    
    
    2009
    
    
    $
    155,000
    
    
    $
    0
    
    
    $
    24,094
    (1)
    
    $
    8,675
    (3)
    
    $
    187,769New JerseyEdward R. Wright
    
    
    2007
    
    
    $
    126,500
    
    
    $
    15,030
    
    
    $
    48,191
    (1)
    
    $
    9,795
    (4)
    
    $
    199,516Senior Vice President and Chief
    
    
    2008
    
    
    $
    131,500
    
    
    $
    15,630
    
    
    $
    56,912
    (1)
    
    $
    9,464
    (4)
    
    $
    213,506Financial Officer, City National
    
    
    2009
    
    
    $
    131,500
    
    
    $
    0
    
    
    $
    68,928
    (1)
    
    $
    9,944
    (4)
    
    $
    210,372Bancshares
Corporation and
City 
National
Bank of New
JerseyRaul Oseguera
    
    
    2007
    
    
    $
    105,000
    
    
    $
    10,560
    
    
    $
    19,521
    (1)
    
    $
    6,091
    (5)
    
    $
    141,172Senior Vice President, City National
    
    
    2008
    
    
    $
    111,500
    
    
    $
    17,230
    
    
    $
    20,828
    (1)
    
    $
    6,875
    (5)
    
    $
    156,433of Bank New Jersey
    
    
    2009
    
    
    $
    111,500
    
    
    $
    0
    
    
    $
    22,609
    (1)
    
    $
    6,345
    (5)
    
    $
    140,454
 
 (1)
    
    Represents the change in the net present value of benefits during 2009 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 the Corporations profit sharing plan of $8,040, $7,777 and
$8,040 in 2007, 2008 and 2009, respectively. Also includes $11,088, $11,088 and $10,164 in
2007, 2008, and 2009 representing Mr. Prezeaus use of a Bank-leased automobile in such years.
Includes Director Fees Paid in cash of $18,400, $18,000, and $24,200 in 2007, 2008 and 2009,
respectively. Also includes contributions to a trust created pursuant to a Trust Agreement
(see section below titled Prezeau Trust Agreement) of $9,894, $3,200 and $6,694 in 2007,
2008 and 2009, respectively, to reimburse the trust for payment of life insurance premiums on
the life of Mr. Prezeau.(3)
    
    Includes payments made under the Corporations profit sharing plan of $3,750, $3,874 and
$3,875 in 2007, 2008 and 2009, respectively, and automobile allowance payments of $4,800,
$4,800 and $4,800, in 2007, 2008 and 2009, respectively.(4)
    
    Includes payments made under the Corporations profit sharing plan of $3,795, $3,464 and
$3,944, respectively, and automobile allowance payments of $6,000, $6,000 and $6,000,
respectively.(5)
    
    Includes payments made under the Corporations profit sharing plan of $3,091, $3,875 and
$3,345, respectively, and automobile allowance payments of $3,000, $3,000 and $3,000,
respectively.(6)
    
    Includes Changes in Pension Value of $11,980, $4,089 and $1,716, in 2007, 2008 and 2009,
respectively, from the Directors Retirement Plan, Changes in Pension Value of $763,304,
$118,488 and $24,471 in 2007, 2008 and 2009, respectively, from the SERP and $18,080 of the
above market return from the trust created pursuant to the Trust Agreement in 2009. The above
market return from the trust created pursuant to the Trust Agreement is not reflected for
years 2007 and 2008. Pension Benefits Table
  Present Value of
    
    PaymentsNumber of Years of
    
    Accumulated Benefits
    
    During LastName
    
    Plan name
    
    Credited Service
    
    (Accrued 12-31-09)
    
    Fiscal YearLouis E. Prezeau(1)
    
    SERP
    
    20
    
    $1,401,732
    
    $0Louis E. Prezeau(2)
    
    Directors Retirement Plan
    
    20
    
    $64,102
    
    $0Stanley M. Weeks
    
    SERP
    
    15
    
    $153,548
    
    $0Edward R. Wright (1)
    
    SERP
    
    15
    
    $413,229
    
    $0Raul Oseguera
    
    SERP
    
    19
    
    $93,914
    
    $0
 
 (1)
    
    Mr. Prezeau and Mr. Wright are currently eligible for normal retirement and early retirement,
respectively, under the SERP. See Executive CompensationSupplemental Employee Retirement Plan.(2)
    
    Mr. Prezeau is currently eligible for normal retirement under the Directors Retirement Plan.
See Executive CompensationDirectors CompensationDirectors Retirement Plan. 48




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##### Table of Contents



Payments Upon Separation of Service and Change of Control
  SERP RetirementPaymentassumingTermination
    
    Dismissal Without Cause
    
    Payments Upon aName
    
    at 12-31-09
    
    (No Change-in-Control)
    
    Change-in-Control(4)
    
    DeathLouis E. Prezeau
    
    $
    1,401,732
    (1)
    
    $
    0
    
    
    $
    1,542,604
    
    
    $
    173,921Stanley M. Weeks
    
    $
    0
    (2)
    
    $
    0
    
    
    $
    443,344
    
    
    $
    99,264Edward R. Wright
    
    $
    52,600
    (3)
    
    $
    0
    
    
    $
    504,608
    
    
    $
    56,892Raul Oseguera
    
    $
    0
    (2)
    
    $
    0
    
    
    $
    428,971
    
    
    $
    101,633
 
 (1)
    
    Represents a lump sum payment as a result of normal retirement. Mr. Prezeaus benefit
includes a $64,102 lump sum payment from the Directors Retirement Plan.(2)
    
    Not entitled to benefits because such benefits were not vested at December 31, 2009(3)
    
    Represents annual payout over 15 years as a result of early retirement. For total payout,
multiply by 15.(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 $334,887 from the
Directors Retirement Plan. Non-Qualified Deferred Compensation Table
  Executive
    
    Registrant
    
    
    
    
    
    Aggregate
    
    Aggregatecontributions in
    
    contributions in
    
    Aggregate
    
    withdrawals/distributions
    
    balance at 20092009
    
    2009
    
    earnings in 2009
    
    in 2009
    
    year endName
    
    ($)
    
    ($)
    
    ($)(1)
    
    ($)
    
    ($)(2)Louis E. Prezeau
    
    $
    0
    
    
    $
    6,694
    (2)(3)
    
    $
    29,918
    
    
    
    (3
    )
    
    $
    279,324
 
 (1)
    
    $18,080 of the earnings in 2009 are reported as compensation in the Summary
Compensation Table contained herein.(2)
    
    Represents reimbursement by the Corporation to the trust established by the Trust
Agreement of amounts paid for life insurance premiums on Mr. Prezeaus life.(3)
    
    The Trust used $18,700 of cash value to pay life insurance premiums, of which the
Corporation reimbursed the Trust for $6,694. Director Compensation
  Directors Retirement Plan
    49




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##### Table of Contents



Director Compensation Table
  Change in Pension Value andNon-QualifiedFees Earned or
    
    Deferred Compensation Earnings
    
    All OtherName
    
    Paid in Cash (1)
    
    (2)
    
    Compensation
    
    TotalDouglas Anderson(3)
    
    $
    16,050
    
    
    $
    66,016
    
    
    $
    0
    
    
    $
    82,066Barbara Bell Coleman
    
    $
    25,450
    
    
    $
    4,965
    
    
    $
    0
    
    
    $
    30,415Eugene Giscombe*
    
    $
    28,100
    
    
    $
    1,957
    
    
    $
    0
    
    
    $
    30,057Lemar C. Whigham
    
    $
    28,200
    
    
    $
    3,640
    
    
    $
    0
    
    
    $
    31,840H. ONeil Williams
    
    $
    25,400
    
    
    $
    0
    
    
    $
    0
    
    
    $
    25,400
 
 *
    
    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 2009 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 until
retirement.(3)
    
    Douglas Anderson resigned from the Board of Directors in June 29, 2010. Mr. Andersons
change in pension value includes an additional expense accrual to provide for benefits due
upon his early retirement. COMPENSATION COMMITTEE REPORT
    
 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Released Stockholder Matters
 STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
 50




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##### Table of Contents



COMMON STOCK
 Number ofSharesBeneficiallyName of Beneficial Owner
    
    Owned
    
    Percent of ClassBarbara Bell Coleman, Director
    
    
    1,177
    
    
    
    
    *Eugene Giscombe, Director
c/o City National Bancshares Corporation
900 Broad Street Newark, New Jersey 07102
    
    
    10,580
    (1)
    
    
    8.06
    %Louis E. Prezeau, Director, President and CEO
c/o City National Bancshares Corporation
900 Broad Street Newark, New Jersey 07102
    
    
    23,218
    (2)
    
    
    17.68
    %Lemar C. Whigham, Directorc/o City National Bancshares Corporation
900 Broad Street Newark, New Jersey 07102
    
    
    9,624
    (3)
    
    
    7.33
    %H. ONeil Williams, Director
    
    
    210
    
    
    
    
    *Raul Oseguera, Senior Vice President
    
    
    750
    
    
    
    
    *Stanley M. Weeks, Executive Vice President
    
    
    408
    
    
    
    
    *Edward R. Wright, Senior Vice President
    
    
    5,000
    
    
    
    3.81
    %Directors and named executive officers as a group (9 persons)
    
    
    50,967
    
    
    
    38.82
    %Carolyn M. Whigham, 5% stockholder580 Dr. Martin Luther King Jr. Blvd., Newark, NJ 07102
    
    
    8,495
    
    
    
    6.47
    %
 
 (1)
    
    Includes 780 shares held by his wife.(2)
    
    Includes 2,375 shares held by his sons, 110 shares held by his daughter and 1,402 shares held
by his wife.(3)
    
    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
  
 Part IV
 
 Item 14. Principal Accountant Fees and Services
  51




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##### Table of Contents



2009
    
    2008Audit fees
    
    $
    290,000
    
    
    $
    135,000Audit-related Fees
    
    
    
    
    
    
    Tax service fees
    
    
    88,000
    
    
    
    36,550All other fees
    
    
    
    
    
    
    $
    378,000
    
    
    $
    171,550
  
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this report:
     52




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##### Table of Contents



By:
    
    /s/ Louis E. Prezeau

Louis E. Prezeau
    
    By:
    
    /s/ Edward R. Wright

Edward R. WrightPresident and Chief
    
    
    
    Chief Financial OfficerExecutive Officer
    
    
    
    and Principal Accounting OfficerDate:
    
    April 29, 2010
    
    Date:
    
    April 29, 2010
  Signature
    
    Title
    
    Date/s/ Barbara Bell Coleman

Barbara Bell Coleman
    
    Director
    
    April 29, 2010/s/ Eugene Giscombe

Eugene Giscombe
    
    Director,
Chairperson  of the Board
    
    April 29, 2010/s/ Louis E. Prezeau

Louis E. Prezeau
    
    Director,
President  and Chief Executive Officer
    
    April 29, 2010/s/ Lemar C. Whigham

Lemar C. Whigham
    
    Director
    
    April 29, 2010/s/ H. ONeil Williams

H. ONeil Williams
    
    Director
    
    April 29, 2010
 53




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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).
 54




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit(10)(c)
    
    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)(d)
    
    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)(e)
    
    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)(f)
    
    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)(g)
    
    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)(h)
    
    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)(i)
    
    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)(j)
    
    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)(k)
    
    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)(l)
    
    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)(m)
    
    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).(10)(n)
    
    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).
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit(10)(o)
    
    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)(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 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)(q)
    
    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)(r)
    
    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)(s)
    
    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(t)
    
    Form of Salary Continuation Agreement (Supplemental Executive Retirement Plan)
amended and restated as of July 10, 2007 (filed herewith).10(u)
    
    Irrevocable Trust Agreement between the Corporation, Bank and Pierre Jospitre, as
Trustee for benefit of Mr. Prezeau, dated December 30, 1994 (filed herewith).,10(v)
    
    First Amendment to Trust Agreement between the Corporation, Bank and Pierre Jospitre,
as Trustee for benefit of Mr. Prezeau dated December 30, 1994, 2009 (filed herewith).(11)
    
    Statement regarding computation of per share earnings. The required information is
included on page 19.(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).
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