##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 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 0-30665
 CNB Financial Services, Inc.
 
 West Virginia
    
    550773918(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)101 S. Washington Street, Berkeley
Springs, WV
    
    25411(Address of principal executive offices)
    
    (Zip Code)
 304 258 1520
 þ o
 o o
  Large Accelerated filer o
    
    Accelerated filer o
    
    Non-Accelerated filer o(Do not check if a smaller reporting company)
    
    Smaller Reporting Company þ
 o þ




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##### 



CNB FINANCIAL SERVICES, INC.
 TABLE OF CONTENTS
 PAGEPART 1: FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Financial Condition as of June 30, 2009 (Unaudited)
and December 31, 2008
    
    
    3Consolidated Statements of Income for the Three and Six Months ended June 30,
2009
and 2008 (Unaudited)
    
    
    4Consolidated Statements of Changes in Shareholders Equity for the Six
Months Ended June 30, 2009 (Unaudited) and the Year Ended December 31, 2008
    
    
    5Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2009 and 2008 (Unaudited)
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations for the Three and Six Months ended June 30, 2009
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    29PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1a. Risk Factors
    
    
    30Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 6. Exhibits and Reports on Form 8-K
    
    
    31SIGNATURES
    
    
    32EX-31.1EX-31.2EX-32.1EX-32.2
    2




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##### Table of Contents



CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)ASSETSCash and due from banks
    
    $
    6,819,512
    
    
    $
    4,770,724Federal funds sold
    
    
    1,050,000
    
    
    
    Certificates of deposit
    
    
    4,405,663
    
    
    
    Securities available for sale
(at approximate market value)
    
    
    58,727,235
    
    
    
    62,604,735Federal Home Loan Bank stock, at cost
    
    
    2,321,300
    
    
    
    2,321,300Loans and lease receivable, net
    
    
    198,584,137
    
    
    
    200,752,202Accrued interest receivable
    
    
    1,224,894
    
    
    
    1,272,742Foreclosed real estate (held for sale), net
    
    
    398,427
    
    
    
    253,300Premises and equipment, net
    
    
    5,705,727
    
    
    
    5,842,368Deferred income taxes
    
    
    1,825,971
    
    
    
    1,889,746Cash surrender value of life insurance
    
    
    1,566,078
    
    
    
    1,617,055Intangible assets
    
    
    218,386
    
    
    
    274,145Other assets
    
    
    2,807,633
    
    
    
    658,665TOTAL ASSETS
    
    $
    285,654,963
    
    
    $
    282,256,982LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIESDeposits:Demand
    
    $
    41,516,290
    
    
    $
    39,469,377Interest-bearing demand
    
    
    36,211,405
    
    
    
    35,554,781Savings
    
    
    24,548,792
    
    
    
    23,476,255Time, $100,000 and over
    
    
    68,273,418
    
    
    
    55,269,424Other
time
    
    
    75,202,598
    
    
    
    74,125,229$
    245,752,503
    
    
    $
    227,895,066Accrued interest payable
    
    
    1,141,603
    
    
    
    1,126,219FHLB borrowings
    
    
    10,000,000
    
    
    
    25,445,000Accrued expenses and other liabilities
    
    
    4,455,016
    
    
    
    4,572,907TOTAL LIABILITIES
    
    $
    261,349,122
    
    
    $
    259,039,192SHAREHOLDERS EQUITYCommon stock, $1 par value; 5,000,000 shares
authorized; 458,048 shares issued at June 30, 2009 and
December 31, 2008 and 445,848 outstanding at June 30, 2009 and 449,151 outstanding at December 31, 2008
    
    $
    458,048
    
    
    $
    458,048Capital surplus
    
    
    4,163,592
    
    
    
    4,163,592Retained earnings
    
    
    21,924,211
    
    
    
    21,015,652Accumulated other comprehensive income (loss)
    
    
    (1,515,882
    )
    
    
    (1,848,990
    )$
    25,029,969
    
    
    $
    23,788,302Less treasury stock, at cost, 12,200 shares in 2009 and 8,897
shares in 2008
    
    
    (724,128
    )
    
    
    (570,512
    )TOTAL SHAREHOLDERS EQUITY
    
    $
    24,305,841
    
    
    $
    23,217,790TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    285,654,963
    
    
    $
    282,256,982
  3




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##### Table of Contents



CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008INTEREST INCOMEInterest and fees on loans
    
    $
    3,206,011
    
    
    $
    3,444,702
    
    
    $
    6,474,697
    
    
    $
    7,061,430Interest and dividends on securitiesU.S. Government agencies and corporations
    
    
    60,392
    
    
    
    140,794
    
    
    
    141,190
    
    
    
    362,282Corporate bonds
    
    
    97,711
    
    
    
    91,639
    
    
    
    196,931
    
    
    
    146,717Mortgage backed securities
    
    
    343,628
    
    
    
    344,170
    
    
    
    711,361
    
    
    
    663,014State and political subdivisions
    
    
    179,366
    
    
    
    132,668
    
    
    
    337,019
    
    
    
    243,147Interest on certificates of deposit
    
    
    6,059
    
    
    
    
    
    
    
    8,625
    
    
    
    Dividend income from FHLB stock
    
    
    
    
    
    
    22,580
    
    
    
    
    
    
    
    50,377Interest on FHLB deposits
    
    
    6
    
    
    
    1,229
    
    
    
    29
    
    
    
    2,080Interest on federal funds sold
    
    
    538
    
    
    
    
    
    
    
    538
    
    
    
    $
    3,893,711
    
    
    $
    4,177,782
    
    
    $
    7,870,390
    
    
    $
    8,529,047INTEREST EXPENSEInterest on interest bearing demand,
savings and time deposits
    
    $
    1,268,891
    
    
    $
    1,398,183
    
    
    $
    2,528,096
    
    
    $
    2,920,485Interest on FHLB borrowings
    
    
    74,058
    
    
    
    174,197
    
    
    
    160,891
    
    
    
    444,786$
    1,342,949
    
    
    $
    1,572,380
    
    
    $
    2,688,987
    
    
    $
    3,365,271NET INTEREST INCOME
    
    $
    2,550,762
    
    
    $
    2,605,402
    
    
    $
    5,181,403
    
    
    $
    5,163,776PROVISION FOR LOAN LOSSES
    
    
    375,000
    
    
    
    120,000
    
    
    
    765,000
    
    
    
    225,000NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
    
    $
    2,175,762
    
    
    $
    2,485,402
    
    
    $
    4,416,403
    
    
    $
    4,938,776NONINTEREST INCOMEService charges on deposit accounts
    
    $
    336,159
    
    
    $
    344,265
    
    
    $
    626,734
    
    
    $
    674,806Other service charges, commissions
and fees
    
    
    204,630
    
    
    
    211,154
    
    
    
    387,108
    
    
    
    411,432Other operating income
    
    
    20,772
    
    
    
    16,761
    
    
    
    98,340
    
    
    
    37,060Income from title company
    
    
    3,267
    
    
    
    3,002
    
    
    
    5,061
    
    
    
    6,730Net gain on sales of loans
    
    
    19,542
    
    
    
    9,383
    
    
    
    20,324
    
    
    
    35,970Net gain (loss) on sales and calls of securities
    
    
    (1,672
    )
    
    
    4,315
    
    
    
    32,023
    
    
    
    94,256Net (loss) on other real estate owned
    
    
    (31,663
    )
    
    
    
    
    
    
    (48,436
    )
    
    
    (484
    )$
    551,035
    
    
    $
    588,880
    
    
    $
    1,121,154
    
    
    $
    1,259,770NONINTEREST EXPENSESSalaries
    
    $
    648,579
    
    
    $
    726,714
    
    
    $
    1,338,380
    
    
    $
    1,452,727Employee benefits
    
    
    282,312
    
    
    
    346,214
    
    
    
    577,636
    
    
    
    688,792Occupancy of premises
    
    
    125,570
    
    
    
    123,179
    
    
    
    235,940
    
    
    
    241,866Furniture and equipment expense
    
    
    159,078
    
    
    
    201,233
    
    
    
    319,145
    
    
    
    407,271Other operating expenses
    
    
    796,838
    
    
    
    528,620
    
    
    
    1,451,256
    
    
    
    1,094,132$
    2,012,377
    
    
    $
    1,925,960
    
    
    $
    3,922,357
    
    
    $
    3,884,788INCOME BEFORE INCOME TAXES
    
    $
    714,420
    
    
    $
    1,148,322
    
    
    $
    1,615,200
    
    
    $
    2,313,758PROVISION FOR INCOME TAXES
    
    
    201,294
    
    
    
    378,679
    
    
    
    470,341
    
    
    
    764,685NET INCOME
    
    $
    513,126
    
    
    $
    769,643
    
    
    $
    1,144,859
    
    
    $
    1,549,073BASIC EARNINGS PER SHARE
    
    $
    1.15
    
    
    $
    1.70
    
    
    $
    2.56
    
    
    $
    3.42
  4




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##### Table of Contents



CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (Unaudited)
 AccumulatedOther
    
    
    TotalCommon
    
    
    Treasury
    
    
    Capital
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersStock
    
    
    Stock
    
    
    Surplus
    
    
    Earnings
    
    
    Income
    
    
    EquityBALANCE, JANUARY 1,
2008
    
    $
    458,048
    
    
    $
    (207,633
    )
    
    $
    4,163,592
    
    
    $
    19,155,244
    
    
    $
    (747,806
    )
    
    $
    22,821,445Comprehensive income:Net income for
six months
ended
June
30,
2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,549,073
    
    
    
    
    
    
    
    1,549,073Change in
unrealized gains
(losses) on
securities
available
for sale
(net of tax
of $486,619)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (793,958
    )
    
    
    (793,958
    )Total Comprehensive
Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    755,115Acquisition of
teasury stock, at
cost,3,900 shares
    
    
    
    
    
    
    (256,875
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (256,875
    )Cash dividends ($.53
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (239,056
    )
    
    
    
    
    
    
    (239,056
    )BALANCE, JUNE 30, 2008
    
    $
    458,048
    
    
    $
    (464,508
    )
    
    $
    4,163,592
    
    
    $
    20,465,261
    
    
    $
    (1,541,764
    )
    
    $
    23,080,629BALANCE, JANUARY 1,
2009
    
    $
    458,048
    
    
    $
    (570,512
    )
    
    $
    4,163,592
    
    
    $
    21,015,652
    
    
    $
    (1,848,990
    )
    
    $
    23,217,790Comprehensive income:Net income for
six months
ended
June
30,
2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,144,859
    
    
    
    
    
    
    
    1,144,859Change in
unrealized gains
(losses) on
securities
available
for sale
(net of tax
of $204,163)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333,108
    
    
    
    333,108Total Comprehensive
Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,477,967Acquisition of treasury stock, at
cost,
3,303 shares
    
    
    
    
    
    
    (153,616
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (153,616
    )Cash dividends ($.53
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (236,300
    )
    
    
    
    
    
    
    (236,300
    )BALANCE, JUNE 30, 2009
    
    $
    458,048
    
    
    $
    (724,128
    )
    
    $
    4,163,592
    
    
    $
    21,924,211
    
    
    $
    (1,515,882
    )
    
    $
    24,305,841
  5




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##### Table of Contents



CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months endedJune 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    1,144,859
    
    
    $
    1,549,073Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization on premises, equipment and software
    
    
    254,340
    
    
    
    281,961Provision for loan losses
    
    
    765,000
    
    
    
    225,000Deferred income taxes
    
    
    (140,387
    )
    
    
    (76,262
    )Net (gain) loss on sale of securities
    
    
    (32,023
    )
    
    
    (94,256
    )Loss on sale of real estate owned
    
    
    48,436
    
    
    
    484Net (gain) on loans sold
    
    
    (20,324
    )
    
    
    (35,970
    )Loans originated for sale
    
    
    (4,029,800
    )
    
    
    (3,208,550
    )Proceeds from loans sold
    
    
    4,050,124
    
    
    
    3,244,520Decrease in accrued interest receivable
    
    
    47,848
    
    
    
    107,222(Increase) decrease in other assets
    
    
    (2,079,124
    )
    
    
    232,759Increase (decrease) in accrued interest payable
    
    
    15,384
    
    
    
    (158,616
    )(Increase) in cash surrender value on life insurance in excess
of premiums paid
    
    
    (87,999
    )
    
    
    (85,085
    )Proceeds from life insurance death benefits
    
    
    194,184
    
    
    
    Increase (decrease) in accrued expenses and other liabilities
    
    
    (117,891
    )
    
    
    444,258Amortization of deferred loan (fees) cost
    
    
    95,235
    
    
    
    36,326Amortization (accretion) of premium and discount on securities
    
    
    212
    
    
    
    421Amortization (accretion) of premium and discount on certificates of deposit
    
    
    (364
    )
    
    
    NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    $
    107,710
    
    
    $
    2,463,285CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in loans, not originated for sale
    
    $
    729,498
    
    
    $
    3,343,934Proceeds from sales of securities
    
    
    1,319,395
    
    
    
    2,803,399Proceeds from maturities, repayments and calls of securities
    
    
    10,455,130
    
    
    
    26,724,313Proceeds from maturities of certificates of deposit
    
    
    250,000
    
    
    
    Purchases of securities
    
    
    (7,355,276
    )
    
    
    (26,668,104
    )Purchases of certificates of deposit
    
    
    (4,659,620
    )
    
    
    Purchases of Federal Home Loan Bank stock
    
    
    
    
    
    
    (1,125,000
    )Redemptions of Federal Home Loan Bank stock
    
    
    
    
    
    
    1,264,400Purchases of premises, equipment and software
    
    
    (100,131
    )
    
    
    (110,137
    )Proceeds from sale of real estate owned
    
    
    402,906
    
    
    
    150,361Costs to acquire foreclosed real estate
    
    
    (18,137
    )
    
    
    (4,800
    )Net (increase) in federal funds sold
    
    
    (1,050,000
    )
    
    
    Premiums paid on life insurance
    
    
    (55,208
    )
    
    
    (58,434
    )NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    $
    (81,443
    )
    
    $
    6,319,932CASH FLOWS FROM FINANCING ACTIVITIES:Net increase (decrease) in demand and savings deposits
    
    $
    3,776,074
    
    
    $
    (759,639
    )Net increase (decrease) in time deposits
    
    
    14,081,363
    
    
    
    (166,379
    )Net (decrease) in FHLB borrowings
    
    
    (15,445,000
    )
    
    
    (7,300,000
    )Purchase of treasury stock
    
    
    (153,616
    )
    
    
    (256,875
    )Cash dividends paid
    
    
    (236,300
    )
    
    
    (239,056
    )NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    $
    2,022,521
    
    
    $
    (8,721,949
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    $
    2,048,788
    
    
    $
    61,268CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    4,770,724
    
    
    
    7,791,093CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    6,819,512
    
    
    $
    7,852,361SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period:Interest
    
    $
    2,673,603
    
    
    $
    3,523,887Income taxes
    
    $
    389,400
    
    
    $
    722,150Net transfer to foreclosed real estate, held for sale
from loans receivable
    
    $
    578,332
    
    
    $
    233,753Unrealized gain (loss) on investment securities
available for sale (net of tax)
    
    $
    333,108
    
    
    $
    (793,958
    )
  6




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
      6/30/2009
    
    6/30/2008Quarter ending
    
    
    446,696
    
    
    
    451,573Year to date ending
    
    
    447,124
    
    
    
    453,261
 7




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    WeightedJune 30, 2009
    
    
    AverageGross
    
    
    Gross
    
    
    Estimated
    
    
    TaxAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    EquivalentCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    YieldAvailable for sale:U.S. Government agencies
and corporationsWithin one year
    
    $
    500,000
    
    
    $
    387
    
    
    $
    
    
    
    $
    500,387
    
    
    
    5.30
    %After 1 but within 5 years
    
    
    1,964,729
    
    
    
    16,430
    
    
    
    
    
    
    
    1,981,159
    
    
    
    2.57After 5 but within 10 years
    
    
    2,894,886
    
    
    
    48,373
    
    
    
    
    
    
    
    2,943,259
    
    
    
    4.44$
    5,359,615
    
    
    $
    65,190
    
    
    $
    
    
    
    $
    5,424,805
    
    
    
    3.84
    %Corporate BondsAfter 1 but within 5 years
    
    $
    1,739,451
    
    
    $
    
    
    
    $
    55,124
    
    
    $
    1,684,327
    
    
    
    5.30
    %After 5 but within 10 years
    
    
    5,480,805
    
    
    
    5,530
    
    
    
    377,949
    
    
    
    5,108,386
    
    
    
    5.47$
    7,220,256
    
    
    $
    5,530
    
    
    $
    433,073
    
    
    
    6,792,713
    
    
    
    5.43
    %States and political subdivisionsWithin one year
    
    $
    1,008,743
    
    
    $
    2,461
    
    
    $
    
    
    
    $
    1,011,204
    
    
    
    1.67
    %After 1 but within 5 years
    
    
    8,765,127
    
    
    
    148,379
    
    
    
    
    
    
    
    8,913,506
    
    
    
    2.82After 5 but within 10 years
    
    
    11,424,440
    
    
    
    121,115
    
    
    
    96,878
    
    
    
    11,448,677
    
    
    
    3.98$
    21,198,310
    
    
    $
    271,955
    
    
    $
    96,878
    
    
    $
    21,373,387
    
    
    
    3.39
    %Mortgage backed securities:Government issued or guaranteed
    
    $
    14,545,658
    
    
    $
    476,057
    
    
    $
    3,348
    
    
    $
    15,018,367
    
    
    
    5.34
    %Collateralized mortgage obligations:Government issued or guaranteed
    
    $
    8,639,115
    
    
    $
    279,317
    
    
    $
    15,951
    
    
    $
    8,902,481
    
    
    
    5.24
    %Privately issued
    
    
    1,535,387
    
    
    
    
    
    
    
    319,905
    
    
    
    1,215,482
    
    
    
    6.87$
    10,174,502
    
    
    $
    279,317
    
    
    $
    335,856
    
    
    $
    10,117,963
    
    
    
    5.49
    %Total securities available for sale
    
    $
    58,498,341
    
    
    $
    1,098,049
    
    
    $
    869,155
    
    
    $
    58,727,235
    
    
    
    4.53
    %Restricted:Federal Home Loan Bank stock
    
    $
    2,321,300
    
    
    $
    
    
    
    $
    
    
    
    $
    2,321,300
    
    
    
    
    %
 8




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  WeightedDecember 31, 2008
    
    
    AverageGross
    
    
    Gross
    
    
    Estimated
    
    
    TaxAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    EquivalentCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    YieldAvailable for sale:U.S. Government agencies
and corporationsWithin one year
    
    $
    3,714,859
    
    
    $
    4,957
    
    
    $
    
    
    
    $
    3,719,816
    
    
    
    3.90
    %After 1 but within 5 years
    
    
    1,592,342
    
    
    
    368
    
    
    
    
    
    
    
    1,592,710
    
    
    
    3.15After 5 but within 10 years
    
    
    5,394,502
    
    
    
    96,724
    
    
    
    
    
    
    
    5,491,226
    
    
    
    4.56$
    10,701,703
    
    
    $
    102,049
    
    
    $
    
    
    
    $
    10,803,752
    
    
    
    4.12
    %Corporate BondsAfter 1 but within 5 years
    
    $
    1,735,480
    
    
    $
    
    
    
    $
    173,968
    
    
    $
    1,561,512
    
    
    
    5.64
    %After 5 but within 10 years
    
    
    5,478,377
    
    
    
    
    
    
    
    448,115
    
    
    
    5,030,262
    
    
    
    5.47$
    7,213,857
    
    
    $
    
    
    
    $
    622,083
    
    
    
    6,591,774
    
    
    
    5.51
    %States and political subdivisionsWithin one year
    
    $
    874,070
    
    
    $
    5,303
    
    
    $
    
    
    
    $
    879,373
    
    
    
    2.80
    %After 1 but within 5 years
    
    
    4,635,138
    
    
    
    46,652
    
    
    
    5,120
    
    
    
    4,676,670
    
    
    
    3.33After 5 but within 10 years
    
    
    11,581,159
    
    
    
    35,359
    
    
    
    207,323
    
    
    
    11,409,195
    
    
    
    3.72$
    17,090,367
    
    
    $
    87,314
    
    
    $
    212,443
    
    
    $
    16,965,238
    
    
    
    3.57
    %Mortgage backed securities:Government issued or guaranteed
    
    $
    17,278,086
    
    
    $
    511,216
    
    
    $
    5,937
    
    
    $
    17,783,365
    
    
    
    5.35
    %Collateralized mortgage obligations:Government issued or guaranteed
    
    $
    8,942,326
    
    
    $
    141,517
    
    
    $
    41,825
    
    
    $
    9,042,018
    
    
    
    5.06
    %Privately issued
    
    
    1,691,093
    
    
    
    
    
    
    
    272,505
    
    
    
    1,418,588
    
    
    
    7.01$
    10,633,419
    
    
    $
    141,517
    
    
    $
    314,330
    
    
    $
    10,460,606
    
    
    
    5.37
    %Total securities available for sale
    
    $
    62,917,432
    
    
    $
    842,096
    
    
    $
    1,154,793
    
    
    $
    62,604,735
    
    
    
    4.68
    %Restricted:Federal Home Loan Bank stock
    
    $
    2,321,300
    
    
    $
    
    
    
    $
    
    
    
    $
    2,321,300
    
    
    
    2.35
    %
   9




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    June 30, 2009Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesCorporate bonds
    
    $
    
    
    
    $
    
    
    
    $
    6,261,643
    
    
    $
    433,073
    
    
    $
    6,261,643
    
    
    $
    433,073State and political subdivisions
    
    
    2,820,282
    
    
    
    57,567
    
    
    
    1,111,964
    
    
    
    39,311
    
    
    
    3,932,246
    
    
    
    96,878Mortgage backed securities:Government issued or guaranteed
    
    
    993,540
    
    
    
    3,348
    
    
    
    
    
    
    
    
    
    
    
    993,540
    
    
    
    3,348Collateralized mortgage obligations:Government issued or guaranteed
    
    
    582,078
    
    
    
    10,415
    
    
    
    395,224
    
    
    
    5,536
    
    
    
    977,302
    
    
    
    15,951Privately issued
    
    
    
    
    
    
    
    
    
    
    1,215,482
    
    
    
    319,905
    
    
    
    1,215,482
    
    
    
    319,905Total temporarily impaired
securities
    
    $
    4,395,900
    
    
    $
    71,330
    
    
    $
    8,984,313
    
    
    $
    797,825
    
    
    $
    13,380,213
    
    
    $
    869,155
 December 31, 2008Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesCorporate bonds
    
    $
    6,591,774
    
    
    $
    622,083
    
    
    $
    
    
    
    $
    
    
    
    $
    6,591,774
    
    
    $
    622,083State and political subdivisions
    
    
    7,296,127
    
    
    
    210,761
    
    
    
    217,773
    
    
    
    1,682
    
    
    
    7,513,900
    
    
    
    212,443Mortgage backed securities:Government issued or guaranteed
    
    
    296,216
    
    
    
    271
    
    
    
    492,011
    
    
    
    5,666
    
    
    
    788,227
    
    
    
    5,937Collateralized mortgage obligations:Government issued or guaranteed
    
    
    1,130,704
    
    
    
    9,320
    
    
    
    393,802
    
    
    
    32,505
    
    
    
    1,524,506
    
    
    
    41,825Privately issued
    
    
    1,418,529
    
    
    
    272,505
    
    
    
    
    
    
    
    
    
    
    
    1,418,529
    
    
    
    272,505Total temporarily impaired
securities
    
    $
    16,733,350
    
    
    $
    1,114,940
    
    
    $
    1,103,586
    
    
    $
    39,853
    
    
    $
    17,836,936
    
    
    $
    1,154,793
 10




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   June 30,
    
    
    December 31,2009
    
    
    2008Loans:Real estate
    
    $
    132,511,243
    
    
    $
    137,770,172Commercial real estate
    
    
    43,059,990
    
    
    
    40,613,894Consumer
    
    
    17,251,584
    
    
    
    16,665,647Commercial
    
    
    8,333,985
    
    
    
    7,931,399Overdrafts
    
    
    81,501
    
    
    
    91,515$
    201,238,303
    
    
    $
    203,072,627Leases
    
    
    100,368
    
    
    
    105,219$
    201,338,671
    
    
    $
    203,177,846Net deferred loan fees, costs,
premiums and discounts
    
    
    362,674
    
    
    
    325,742Allowance for loan losses
    
    
    (3,117,208
    )
    
    
    (2,751,386
    )$
    198,584,137
    
    
    $
    200,752,202
  June 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Balance, Beginning
    
    $
    2,751,386
    
    
    $
    2,144,461
    
    
    $
    2,144,461Provision charged to
operations
    
    
    765,000
    
    
    
    225,000
    
    
    
    940,500Recoveries
    
    
    129,179
    
    
    
    63,508
    
    
    
    188,860Loans charged off
    
    
    (528,357
    )
    
    
    (160,148
    )
    
    
    (522,435
    )Balance, Ending
    
    $
    3,117,208
    
    
    $
    2,272,821
    
    
    $
    2,751,386
 11




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CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   June 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(in thousands)Impaired loans without a valuation allowance
    
    $
    
    
    
    $
    
    
    
    $
    Impaired loans with a valuation allowance (1)
    
    
    1,375,400
    
    
    
    867,908
    
    
    
    1,227,068Total impaired loans
    
    $
    1,375,400
    
    
    $
    867,908
    
    
    $
    1,227,068Valuation allowance related to impaired loans
    
    $
    440,285
    
    
    $
    229,052
    
    
    $
    383,350
 
 (1)
    
    Some of these loans have government agency guarantees reducing the banks exposure
by $44,842 for June 30, 2009, $71,191 at June 30, 2008 and $57,611 for December 31, 2008 June 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(in thousands)Average investment in impaired loans
    
    $
    1,301,234
    
    
    $
    1,139,004
    
    
    $
    1,318,584Interest income recognized on impaired loans
    
    $
    29,458
    
    
    $
    12,237
    
    
    $
    52,430Interest income recognized on a cash basis on
impaired loans
    
    $
    29,458
    
    
    $
    12,237
    
    
    $
    52,430
  June 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Foreclosed real estate (other real estate owned)
    
    $
    398,427
    
    
    $
    238,553
    
    
    $
    253,300Impaired loans, not on nonaccrual
    
    
    778,483
    
    
    
    297,088
    
    
    
    130,905Nonaccrual loans, impaired (1)
    
    
    596,917
    
    
    
    570,820
    
    
    
    1,096,163Nonaccrual loans, not impaired
    
    
    682,727
    
    
    
    680,119
    
    
    
    402,520Loans past due 90 days or more still accruing interest
    
    
    
    
    
    
    
    
    
    
    Total non-performing assets
    
    $
    2,456,554
    
    
    $
    1,786,580
    
    
    $
    1,882,888
 
 (1)
    
    Some of these loans have government agency guarantees reducing the banks
exposure by $44,842 at June 30, 2009, $71,191 at June 30, 2008 and $57,611 at December 31,
2008. 12




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Time Deposits
    
    
    All Time$100,000 and Over
    
    
    DepositsWithin 3 months
    
    $
    6,253,266
    
    
    $
    12,676,0543 months thru 6 months
    
    
    8,562,099
    
    
    
    13,462,0116 months thru 12 months
    
    
    8,418,580
    
    
    
    17,511,615Over 12 months
    
    
    45,039,473
    
    
    
    99,826,336$
    68,273,418
    
    
    $
    143,476,016
  June 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Federal Home Loan Bank advances
    
    $
    10,000,000
    
    
    $
    30,200,000
    
    
    $
    25,445,000
     June 30,2009
    
    
    2008Service cost
    
    $
    118,199
    
    
    $
    121,433Interest cost
    
    
    158,123
    
    
    
    153,951Expected return on plan assets
    
    
    (163,754
    )
    
    
    (151,314
    )Amortization of prior service costs
    
    
    6,172
    
    
    
    6,172Recognized net actuarial loss
    
    
    36,643
    
    
    
    25,951Net periodic plan cost
    
    $
    155,383
    
    
    $
    156,193
  13




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CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
         
 
 
  Securities available for sale and certificates of deposit investments
  14




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##### Table of Contents



CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Fair Value Measurements at June 30, 2009 Using Quoted PricesSignificantIn Active
    
    Other
    
    Significant(In Thousands)
    
    Balance at
    
    Markets for
    
    Observable
    
    UnobservableJune 30,
    
    Identical Assets
    
    Inputs
    
    InputsDescription
    
    2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Available-for-sale securities
    
    $
    58,727
    
    
    $
    
    
    
    $
    58,727
    
    
    $
    Certificates of deposit investments
    
    $
    4,406
    
    
    $
    
    
    
    $
    4,406
    
    
    $
    
   Loans held for sale
  Impaired loans
   15




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##### Table of Contents



CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Other Real Estate Owned
   Carrying Value at June 30, 2009Quoted Prices
    
    SignificantIn Active
    
    Other
    
    Significant(In Thousands)
    
    Balance at
    
    Markets for
    
    Observable
    
    UnobservableJune 30,
    
    Identical Assets
    
    Inputs
    
    InputsDescription
    
    2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Impaired loans, net of government agency
guarantees and reserve for losses
    
    $
    890
    
    
    $
    
    
    
    $
    890
    
    
    $
    Other real estate owned
    
    $
    398
    
    
    $
    
    
    
    $
    398
    
    
    $
    
  16




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##### Table of Contents



CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   June 30, 2009
    
    December 31, 2008Carrying
    
    
    
    
    
    CarryingAmount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial Assets:Cash, due from banks and
federal funds sold
    
    $
    6,819,512
    
    
    $
    6,819,512
    
    
    $
    4,770,724
    
    
    $
    4,770,724Securities available for
sale
    
    
    58,727,235
    
    
    
    58,727,235
    
    
    
    62,604,735
    
    
    
    62,604,735Loans
    
    
    198,584,137
    
    
    
    201,360,457
    
    
    
    200,752,202
    
    
    
    201,347,332Accrued interest receivable
    
    
    1,224,894
    
    
    
    1,224,894
    
    
    
    1,272,742
    
    
    
    1,272,742Financial Liabilities:Demand deposits
    
    $
    102,276,487
    
    
    $
    102,276,487
    
    
    $
    98,500,413
    
    
    $
    98,500,413Time deposits
    
    
    143,476,016
    
    
    
    151,401,000
    
    
    
    129,394,653
    
    
    
    137,539,118Accrued interest payable
    
    
    1,141,603
    
    
    
    1,141,603
    
    
    
    1,126,219
    
    
    
    1,126,219FHLB borrowings
    
    
    10,000,000
    
    
    
    10,000,000
    
    
    
    25,445,000
    
    
    
    25,445,000Off-Balance SheetFinancial Instruments:Letters of credit
    
    $
    
    
    
    $
    2,199
    
    
    $
    
    
    
    $
    2,149
     17




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##### Table of Contents



CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
     The FASB Accounting Standards Codification
   18




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##### Table of Contents



CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
         19




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
          20




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,
 ,
            21




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TABLE 1. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;

INTEREST RATES AND INTEREST DIFFERENTIAL
 JUNE 30, 2009
    
    
    JUNE 30, 2008QTR
    
    
    
    
    
    
    
    
    
    
    QTRAVERAGE
    
    
    QTR
    
    
    YIELD/
    
    
    AVERAGE
    
    
    QTR
    
    
    YIELD/BALANCE
    
    
    INTEREST
    
    
    RATE (4)
    
    
    BALANCE
    
    
    INTEREST
    
    
    RATE (4)(IN THOUSANDS OF DOLLARS)Interest earning assets:Federal funds sold
    
    $
    1,165
    
    
    $
    1
    
    
    
    0.18
    %
    
    $
    
    
    
    $
    
    
    
    
    
    %Certificates of deposit
    
    
    2,704
    
    
    
    6
    
    
    
    0.89
    
    
    
    
    
    
    
    
    
    
    
    Securities:Taxable
    
    
    41,790
    
    
    
    519
    
    
    
    4.97
    
    
    
    47,951
    
    
    
    603
    
    
    
    5.03Tax-exempt (1)
    
    
    18,789
    
    
    
    162
    
    
    
    5.23
    
    
    
    15,405
    
    
    
    130
    
    
    
    5.11Loans (net of unearned interest) (2)(5)(6)
    
    
    201,321
    
    
    
    3,143
    
    
    
    6.24
    
    
    
    202,789
    
    
    
    3,394
    
    
    
    6.69Total interest earning assets (1)
    
    $
    265,769
    
    
    $
    3,831
    
    
    
    5.77
    %
    
    $
    266,145
    
    
    $
    4,127
    
    
    
    6.20
    %Nonearning assets:Cash and due from banks
    
    $
    5,806
    
    
    
    
    
    
    
    
    
    
    $
    6,636Bank premises and equipment, net
    
    
    5,757
    
    
    
    
    
    
    
    
    
    
    
    5,982Other assets
    
    
    7,115
    
    
    
    
    
    
    
    
    
    
    
    4,766Allowance for loan losses
    
    
    (2,979
    )
    
    
    
    
    
    
    
    
    
    
    (2,249
    )Total assets
    
    $
    281,468
    
    
    
    
    
    
    
    
    
    
    $
    281,280Interest bearing liabilities:Savings deposits
    
    $
    24,759
    
    
    $
    6
    
    
    
    0.10
    %
    
    $
    24,212
    
    
    $
    18
    
    
    
    0.30
    %Time deposits
    
    
    138,999
    
    
    
    1,233
    
    
    
    3.55
    
    
    
    126,189
    
    
    
    1,308
    
    
    
    4.15NOW accounts
    
    
    21,936
    
    
    
    25
    
    
    
    0.46
    
    
    
    22,389
    
    
    
    47
    
    
    
    0.84Money market accounts
    
    
    12,634
    
    
    
    5
    
    
    
    0.16
    
    
    
    11,743
    
    
    
    25
    
    
    
    0.85Borrowings
    
    
    11,293
    
    
    
    74
    
    
    
    2.62
    
    
    
    27,316
    
    
    
    174
    
    
    
    2.55Total interest bearing liabilities
    
    $
    209,621
    
    
    $
    1,343
    
    
    
    2.56
    %
    
    $
    211,849
    
    
    $
    1,572
    
    
    
    2.97
    %Noninterest bearing liabilities:Demand deposits
    
    $
    42,660
    
    
    
    
    
    
    
    
    
    
    $
    41,683Other liabilities
    
    
    5,358
    
    
    
    
    
    
    
    
    
    
    
    4,027Shareholders equity
    
    
    23,829
    
    
    
    
    
    
    
    
    
    
    
    23,721Total liabilities and
shareholders equity
    
    $
    281,468
    
    
    
    
    
    
    
    
    
    
    $
    281,280Net interest income (1)
    
    
    
    
    
    $
    2,488
    
    
    
    
    
    
    
    
    
    
    $
    2,555Net interest spread (3)
    
    
    
    
    
    
    
    
    
    
    3.21
    %
    
    
    
    
    
    
    
    
    
    
    3.23
    %Net interest
income to average interest earning assets (1)
    
    
    
    
    
    
    
    
    
    
    3.74
    %
    
    
    
    
    
    
    
    
    
    
    3.84
    %
 
 (1)
    
    Yields are expressed on a tax equivalent basis using a 34% tax rate.(2)
    
    For the purpose of these computations, nonaccruing loans are included in the amounts of average
loans outstanding.(3)
    
    Net interest spread is the difference between the weighted average yield on
interest-earning assets and the weighted average cost of interest-bearing liabilities.(4)
    
    Yields/Rates are expressed on an annualized basis.(5)
    
    Interest income on loans excludes fees of $62,662 in 2009 and $50,566 in 2008.(6)
    
    Interest income on loans includes fees of $23,321 in 2009 and $14,971 in 2008 from student
loans and lease receivables. 22




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TABLE 2. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;

INTEREST RATES AND INTEREST DIFFERENTIAL
 JUNE 30, 2009
    
    
    JUNE 30, 2008YTD
    
    
    
    
    
    
    
    
    
    
    YTDAVERAGE
    
    
    YTD
    
    
    YIELD/
    
    
    AVERAGE
    
    
    YTD
    
    
    YIELD/BALANCE
    
    
    INTEREST
    
    
    RATE (4)
    
    
    BALANCE
    
    
    INTEREST
    
    
    RATE (4)(IN THOUSANDS OF DOLLARS)Interest earning assets:Federal funds sold
    
    $
    586
    
    
    $
    1
    
    
    
    0.18
    %
    
    $
    
    
    
    $
    
    
    
    
    
    %Certificates of deposit
    
    
    1,747
    
    
    
    9
    
    
    
    1.03
    
    
    
    
    
    
    
    
    
    
    
    Securities:Taxable
    
    
    43,362
    
    
    
    1,069
    
    
    
    4.93
    
    
    
    49,515
    
    
    
    1,230
    
    
    
    4.97Tax-exempt (1)
    
    
    18,079
    
    
    
    317
    
    
    
    5.31
    
    
    
    14,000
    
    
    
    238
    
    
    
    5.15Loans (net of unearned interest) (2)(5)(6)
    
    
    202,147
    
    
    
    6,361
    
    
    
    6.29
    
    
    
    203,575
    
    
    
    6,964
    
    
    
    6.84Total interest earning assets (1)
    
    $
    265,921
    
    
    $
    7,757
    
    
    
    5.83
    %
    
    $
    267,090
    
    
    $
    8,432
    
    
    
    6.31
    %Nonearning assets:Cash and due from banks
    
    $
    5,881
    
    
    
    
    
    
    
    
    
    
    $
    6,711Bank premises and equipment, net
    
    
    5,783
    
    
    
    
    
    
    
    
    
    
    
    6,034Other assets
    
    
    6,672
    
    
    
    
    
    
    
    
    
    
    
    4,926Allowance for loan losses
    
    
    (2,948
    )
    
    
    
    
    
    
    
    
    
    
    (2,220
    )Total assets
    
    $
    281,309
    
    
    
    
    
    
    
    
    
    
    $
    282,541Interest bearing liabilities:Savings deposits
    
    $
    24,442
    
    
    $
    16
    
    
    
    0.13
    %
    
    $
    23,689
    
    
    $
    35
    
    
    
    0.30
    %Time deposits
    
    
    136,239
    
    
    
    2,448
    
    
    
    3.59
    
    
    
    126,108
    
    
    
    2,701
    
    
    
    4.28NOW accounts
    
    
    21,494
    
    
    
    50
    
    
    
    0.47
    
    
    
    22,316
    
    
    
    113
    
    
    
    1.01Money market accounts
    
    
    12,926
    
    
    
    14
    
    
    
    0.22
    
    
    
    11,835
    
    
    
    71
    
    
    
    1.20Borrowings
    
    
    15,465
    
    
    
    161
    
    
    
    2.08
    
    
    
    29,437
    
    
    
    445
    
    
    
    3.02Total interest bearing liabilities
    
    $
    210,566
    
    
    $
    2,689
    
    
    
    2.55
    %
    
    $
    213,385
    
    
    $
    3,365
    
    
    
    3.15
    %Noninterest bearing liabilities:Demand deposits
    
    $
    41,756
    
    
    
    
    
    
    
    
    
    
    $
    41,865Other liabilities
    
    
    5,465
    
    
    
    
    
    
    
    
    
    
    
    3,978Shareholders equity
    
    
    23,522
    
    
    
    
    
    
    
    
    
    
    
    23,313Total liabilities and
shareholders equity
    
    $
    281,309
    
    
    
    
    
    
    
    
    
    
    $
    282,541Net interest income (1)
    
    
    
    
    
    $
    5,068
    
    
    
    
    
    
    
    
    
    
    $
    5,067Net interest spread (3)
    
    
    
    
    
    
    
    
    
    
    3.27
    %
    
    
    
    
    
    
    
    
    
    
    3.16
    %Net interest
income to average interest
earning assets (1)
    
    
    
    
    
    
    
    
    
    
    3.81
    %
    
    
    
    
    
    
    
    
    
    
    3.79
    %
 
 (1)
    
    Yields are expressed on a tax equivalent basis using a 34% tax rate.(2)
    
    For the purpose of these computations, nonaccruing loans are included in the amounts of average
loans outstanding.(3)
    
    Net interest spread is the difference between the weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing liabilities.(4)
    
    Yields/Rates are expressed on an annualized basis.(5)
    
    Interest income on loans excludes fees of $113,503 in 2009 and $97,121 in 2008.(6)
    
    Interest income on loans includes fees of $48,037 in 2009 and $38,421 in 2008 from student
loans and lease receivables. 23




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24




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th th
        25




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##### Table of Contents



June 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Impaired loans, not on nonaccrual
    
    $
    778,483
    
    
    $
    297,088
    
    
    $
    130,905Nonaccrual loans, impaired (1)
    
    
    596,917
    
    
    
    570,820
    
    
    
    1,096,163Nonaccrual loans, not impaired
    
    
    682,727
    
    
    
    680,119
    
    
    
    402,520Loans past due 90 days or more still accruing interest
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    $
    2,058,127
    
    
    $
    1,548,027
    
    
    $
    1,629,588Foreclosed real estate (other real estate owned)
    
    $
    398,427
    
    
    $
    238,553
    
    
    $
    253,300Total nonperforming assets
    
    $
    2,456,554
    
    
    $
    1,786,580
    
    
    $
    1,882,888Nonperforming loans/Total loans
    
    
    1.04
    %
    
    
    0.78
    %
    
    
    0.81
    %Nonperforming assets/Total assets
    
    
    0.86
    %
    
    
    0.63
    %
    
    
    0.67
    %Allowance for loan losses/Total loans
    
    
    1.57
    %
    
    
    1.14
    %
    
    
    1.37
    %
 
 (1)
    
    Some of these loans have government agency guarantees reducing the banks
exposure by $44,842 at June 30, 2009, $71,191 at June 30, 2008 and $57,611 at December 31,
2008.    26




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June 30,
    
    
    December 31,2009
    
    
    2008Percent of
    
    
    
    
    
    
    Percent ofLoans in Each
    
    
    
    
    
    
    Loans in EachCategory to
    
    
    
    
    
    
    Category toIn thousands
    
    Amount
    
    
    Total Loans
    
    
    Amount
    
    
    Total LoansCommercial, financial and agriculture
    
    $
    1,332
    
    
    
    25
    %
    
    $
    1,178
    
    
    
    22
    %Real estate  residential mortgage
    
    
    822
    
    
    
    66
    
    
    
    543
    
    
    
    69Installment and other
    
    
    381
    
    
    
    8
    
    
    
    415
    
    
    
    8Impaired loans
    
    
    440
    
    
    
    1
    
    
    
    383
    
    
    
    1Unallocated
    
    
    142
    
    
    
    N/A
    
    
    
    232
    
    
    
    N/ATotal
    
    $
    3,117
    
    
    
    100
    %
    
    $
    2,751
    
    
    
    100
    %
       Components
    
    Actual
    
    Requiredof Capital
    
    Ratio
    
    RatioTier 1 Capital
    
    $
    25,278
    
    
    
    9.0
    %
    
    
    4.0
    %Total Risk Based Capital
    
    $
    27,436
    
    
    
    15.2
    %
    
    
    8.0
    %
 27




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        28




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ITEM 4.
    
    CONTROLS AND PROCEDURES
   29




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Item 1.
    
    Legal Proceedings
 There are no material legal proceedings to which CNB or its subsidiary is a party, or to
which any of their property is subject. However, CNB is involved in various legal
proceedings occurring in the ordinary course of business.
 
  There have been no material changes to CNBs risk factors since these factors were
previously disclosed in CNBs annual report on Form 10-K for the period ended December 31,
2008.
 
 Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
 Total Number
    
    
    
    
    
    
    Total Number of Shares Purchased
    
    Maximum Number of Sharesof Shares
    
    
    Average Price
    
    
    as Part of Publicly Announced
    
    that may yet be purchased underPeriod
    
    Purchased
    
    
    Paid per Share
    
    
    Plans or Programs
    
    the Plans or ProgramsBeginning balanceMarch 31, 2009
    
    
    
    
    
    
    
    
    
    10,650
    
    35,154April 1, 2009April 30, 2009
    
    
    50
    
    
    $
    48.50
    
    
    50
    
    35,104May 1, 2009May 31, 2009
    
    
    1,500
    
    
    $
    45.47
    
    
    1,500
    
    33,604June 1, 2009June 30, 2009
    
    
    
    
    
    $
    
    
    
    
    
    33,604Total
    
    
    1,550
    
    
    
    
    
    
    12,200
 On August 23, 2007, the Board of Directors approved a stock repurchase program to
repurchase issued shares of common stock of CNB Financial Services, Inc. Management is
authorized to repurchase up to 45,804 shares or 10% of the outstanding shares of CNB
Financial Services, Inc. common stock at the prevailing fair market value. The stock
repurchase program will terminate upon the repurchase of 45,804 shares.
 
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
 a.)
    
    The 2008 annual meeting of stockholders of CNB Financial Services, Inc. was
held April 1, 2009.b.)
    
    Proxies for the annual meeting were solicited pursuant to Regulation 14A under
the Securities and Exchange Act of 1934. There was no solicitation in opposition to
managements nominees as listed in the proxy statement, and all such nominees were
reelected.c.)
    
    (1) Election of Directors
 30




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Elected to serve as directors until the 2009 annual meeting of stockholders to be
held in 2010
 WithoutFor
    
    AuthorityKenneth W. Apple
    
    
    311,384
    
    
    
    11,900Margaret S. Bartles
    
    
    311,384
    
    
    
    11,900Martha H. Quarantillo
    
    
    311,384
    
    
    
    11,900Charles S. Trump, IV
    
    
    311,384
    
    
    
    11,900
 
 Item 6.
    
    Exhibits
     31




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In accordance with the requirements of the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 CNB Financial Services, Inc.(Registrant)Date August 7, 2009
    
    
    
    /s/ Thomas F. Rokisky, President/CEODate August 7, 2009
    
    
    
    /s/ Rebecca S. Stotler, Vice President/CFO
 32