##### 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 September 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 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)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 oAccelerated filer oNon-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 September 30, 2009 (Unaudited) and December 31, 2008
    
    
    3Consolidated Statements of Income for the Three and Nine Months ended September 30, 2009 and 2008 (Unaudited)
    
    
    4Consolidated Statements of Changes in Shareholders Equity for the Nine Months Ended September 30, 2009 (Unaudited) and the Year Ended December 31, 2008
    
    
    5Consolidated Statements of Cash Flows for the Nine Months Ended September 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 Nine Months ended September 30, 2009
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    30Item 4.
    
    Controls and Procedures
    
    
    31PART II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    32Item 1a.
    
    Risk Factors
    
    
    32Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    32Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    32SIGNATURES
    
    
    33EX-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
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Audited)ASSETSCash and due from banks
    
    $
    3,792,211
    
    
    $
    4,770,724Federal funds sold
    
    
    9,950,000
    
    
    
    Certificates of deposit
    
    
    3,671,963
    
    
    
    Securities available for sale
(at approximate market value)
    
    
    65,776,958
    
    
    
    62,604,735Federal Home Loan Bank stock, at cost
    
    
    2,321,300
    
    
    
    2,321,300Loans and lease receivable, net
    
    
    194,947,099
    
    
    
    200,752,202Accrued interest receivable
    
    
    1,315,101
    
    
    
    1,272,742Foreclosed real estate (held for sale), net
    
    
    284,329
    
    
    
    253,300Premises and equipment, net
    
    
    5,635,459
    
    
    
    5,842,368Deferred income taxes
    
    
    1,503,179
    
    
    
    1,889,746Cash surrender value of life insurance
    
    
    1,566,078
    
    
    
    1,617,055Intangible assets
    
    
    190,507
    
    
    
    274,145Other assets
    
    
    760,181
    
    
    
    658,665TOTAL ASSETS
    
    $
    291,714,365
    
    
    $
    282,256,982LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIESDeposits:Demand
    
    $
    40,973,675
    
    
    $
    39,469,377Interest-bearing demand
    
    
    38,035,888
    
    
    
    35,554,781Savings
    
    
    25,295,717
    
    
    
    23,476,255Time, $100,000 and over
    
    
    70,407,956
    
    
    
    55,269,424Other time
    
    
    75,817,335
    
    
    
    74,125,229$
    250,530,571
    
    
    $
    227,895,066Accrued interest payable
    
    
    1,127,652
    
    
    
    1,126,219FHLB borrowings
    
    
    10,000,000
    
    
    
    25,445,000Accrued expenses and other liabilities
    
    
    4,322,473
    
    
    
    4,572,907TOTAL LIABILITIES
    
    $
    265,980,696
    
    
    $
    259,039,192SHAREHOLDERS EQUITYCommon stock, $1 par value; 5,000,000 shares
authorized; 458,048 shares issued at September 30, 2009 and
December 31, 2008 and 445,448 outstanding at
September 30, 2009 and 449,151 outstanding at December 31,
2008
    
    $
    458,048
    
    
    $
    458,048Capital surplus
    
    
    4,163,592
    
    
    
    4,163,592Retained earnings
    
    
    22,538,531
    
    
    
    21,015,652Accumulated other comprehensive income (loss)
    
    
    (683,694
    )
    
    
    (1,848,990
    )$
    26,476,477
    
    
    $
    23,788,302Less treasury stock, at cost, 12,600 shares in 2009 and 8,897
shares in 2008
    
    
    (742,808
    )
    
    
    (570,512
    )TOTAL SHAREHOLDERS EQUITY
    
    $
    25,733,669
    
    
    $
    23,217,790TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    291,714,365
    
    
    $
    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
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008INTEREST INCOMEInterest and fees on loans
    
    $
    3,227,137
    
    
    $
    3,442,160
    
    
    $
    9,701,834
    
    
    $
    10,503,590Interest and dividends on securities
U.S. Government agencies and
corporations
    
    
    48,362
    
    
    
    150,103
    
    
    
    189,552
    
    
    
    512,385Corporate bonds
    
    
    86,655
    
    
    
    99,964
    
    
    
    283,586
    
    
    
    246,681Mortgage backed securities
    
    
    327,452
    
    
    
    370,876
    
    
    
    1,038,813
    
    
    
    1,033,890State and political subdivisions
    
    
    202,095
    
    
    
    135,292
    
    
    
    539,114
    
    
    
    378,439Interest on certificates of deposit
    
    
    5,517
    
    
    
    
    
    
    
    14,142
    
    
    
    Dividend income from FHLB stock
    
    
    
    
    
    
    19,641
    
    
    
    
    
    
    
    70,018Interest on FHLB deposits
    
    
    4
    
    
    
    460
    
    
    
    33
    
    
    
    2,540Interest on federal funds sold
    
    
    2,750
    
    
    
    
    
    
    
    3,288
    
    
    
    $
    3,899,972
    
    
    $
    4,218,496
    
    
    $
    11,770,362
    
    
    $
    12,747,543INTEREST EXPENSEInterest on interest bearing demand,
savings and time deposits
    
    $
    1,280,828
    
    
    $
    1,319,813
    
    
    $
    3,808,924
    
    
    $
    4,240,298Interest on FHLB borrowings
    
    
    73,161
    
    
    
    211,251
    
    
    
    234,052
    
    
    
    656,037$
    1,353,989
    
    
    $
    1,531,064
    
    
    $
    4,042,976
    
    
    $
    4,896,335NET INTEREST INCOME
    
    $
    2,545,983
    
    
    $
    2,687,432
    
    
    $
    7,727,386
    
    
    $
    7,851,208PROVISION FOR LOAN LOSSES
    
    
    400,000
    
    
    
    160,000
    
    
    
    1,165,000
    
    
    
    385,000NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES
    
    $
    2,145,983
    
    
    $
    2,527,432
    
    
    $
    6,562,386
    
    
    $
    7,466,208NONINTEREST INCOMEService charges on deposit accounts
    
    $
    344,025
    
    
    $
    363,041
    
    
    $
    970,759
    
    
    $
    1,037,847Other service charges, commissions
and fees
    
    
    206,890
    
    
    
    202,258
    
    
    
    593,998
    
    
    
    613,690Other operating income
    
    
    17,575
    
    
    
    15,385
    
    
    
    115,915
    
    
    
    52,445Income from title company
    
    
    
    
    
    
    2,312
    
    
    
    5,061
    
    
    
    9,042Net gain on sales of loans
    
    
    12,628
    
    
    
    15,812
    
    
    
    32,952
    
    
    
    51,782Net gain (loss) on sales and calls of securities
    
    
    568
    
    
    
    
    
    
    
    32,591
    
    
    
    94,256Net (loss) on other real estate owned
    
    
    (38,308
    )
    
    
    (10,000
    )
    
    
    (86,744
    )
    
    
    (10,484
    )$
    543,378
    
    
    $
    588,808
    
    
    $
    1,664,532
    
    
    $
    1,848,578NONINTEREST EXPENSESSalaries
    
    $
    690,747
    
    
    $
    702,662
    
    
    $
    2,029,127
    
    
    $
    2,155,389Employee benefits
    
    
    264,747
    
    
    
    320,170
    
    
    
    842,383
    
    
    
    1,008,962Occupancy of premises
    
    
    126,526
    
    
    
    129,393
    
    
    
    362,466
    
    
    
    371,259Furniture and equipment expense
    
    
    163,529
    
    
    
    199,651
    
    
    
    482,674
    
    
    
    606,922Other operating expenses
    
    
    635,606
    
    
    
    639,337
    
    
    
    2,086,862
    
    
    
    1,733,470$
    1,881,155
    
    
    $
    1,991,213
    
    
    $
    5,803,512
    
    
    $
    5,876,002INCOME BEFORE INCOME TAXES
    
    $
    808,206
    
    
    $
    1,125,027
    
    
    $
    2,423,406
    
    
    $
    3,438,784PROVISION FOR INCOME TAXES
    
    
    193,886
    
    
    
    372,497
    
    
    
    664,227
    
    
    
    1,137,182NET INCOME
    
    $
    614,320
    
    
    $
    752,530
    
    
    $
    1,759,179
    
    
    $
    2,301,602BASIC EARNINGS PER SHARE
    
    $
    1.38
    
    
    $
    1.67
    
    
    $
    3.94
    
    
    $
    5.09
  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 nine months
ended September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,301,602
    
    
    
    
    
    
    
    2,301,602Change in unrealized gains
(losses) on securities
available for sale (net of tax of
$633,210)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,033,132
    )
    
    
    (1,033,132
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,268,470Acquisition of teasury stock, at cost,
4,720 shares
    
    
    
    
    
    
    (309,057
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309,057
    )Cash dividends ($.53 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (239,056
    )
    
    
    
    
    
    
    (239,056
    )BALANCE, SEPTEMBER 30, 2008
    
    $
    458,048
    
    
    $
    (516,690
    )
    
    $
    4,163,592
    
    
    $
    21,217,790
    
    
    $
    (1,780,938
    )
    
    $
    23,541,802BALANCE, JANUARY 1, 2009
    
    $
    458,048
    
    
    $
    (570,512
    )
    
    $
    4,163,592
    
    
    $
    21,015,652
    
    
    $
    (1,848,990
    )
    
    $
    23,217,790Comprehensive income:Net income for nine months
ended September 30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,759,179
    
    
    
    
    
    
    
    1,759,179Change in unrealized gains
(losses) on securities
available for sale (net of tax of
$714,213)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,165,296
    
    
    
    1,165,296Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,924,475Acquisition of treasury stock, at cost,
3,703 shares
    
    
    
    
    
    
    (172,296
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (172,296
    )Cash dividends ($.53 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (236,300
    )
    
    
    
    
    
    
    (236,300
    )BALANCE, SEPTEMBER 30, 2009
    
    $
    458,048
    
    
    $
    (742,808
    )
    
    $
    4,163,592
    
    
    $
    22,538,531
    
    
    $
    (683,694
    )
    
    $
    25,733,669
  5




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##### Table of Contents



CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine months endedSeptember 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    1,759,179
    
    
    $
    2,301,602Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization on premises, equipment and software
    
    
    380,255
    
    
    
    416,556Provision for loan losses
    
    
    1,165,000
    
    
    
    385,000Deferred income taxes
    
    
    (327,645
    )
    
    
    (144,913
    )Net (gain) on sale of securities
    
    
    (32,591
    )
    
    
    (94,256
    )Loss on sale of real estate owned
    
    
    86,744
    
    
    
    10,484Net (gain) on loans sold
    
    
    (32,952
    )
    
    
    (51,782
    )Loans originated for sale
    
    
    (7,141,400
    )
    
    
    (4,239,250
    )Proceeds from loans sold
    
    
    7,174,177
    
    
    
    4,291,032(Increase) decrease in accrued interest receivable
    
    
    (42,359
    )
    
    
    90,650(Increase) decrease in other assets
    
    
    (40,007
    )
    
    
    350,324Increase (decrease) in accrued interest payable
    
    
    1,433
    
    
    
    (292,548
    )(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
    
    
    (250,434
    )
    
    
    738,293Amortization of deferred loan (fees) cost
    
    
    136,126
    
    
    
    45,249Amortization (accretion) of premium and discount on securities
    
    
    11,005
    
    
    
    7,442Amortization (accretion) of premium and discount on certificates of deposit
    
    
    (380
    )
    
    
    NET CASH PROVIDED BY OPERATING ACTIVITIES
    
    $
    2,952,336
    
    
    $
    3,728,798CASH FLOWS FROM INVESTING ACTIVITIES:Net decrease in loans, not originated for sale
    
    $
    3,818,107
    
    
    $
    1,771,981Proceeds from sales of securities
    
    
    2,327,895
    
    
    
    2,803,399Proceeds from maturities, repayments and calls of securities
    
    
    13,060,660
    
    
    
    28,073,757Proceeds from maturities of certificates of deposit
    
    
    1,238,000
    
    
    
    Purchases of securities
    
    
    (16,660,699
    )
    
    
    (30,015,024
    )Purchases of certificates of deposit
    
    
    (4,908,620
    )
    
    
    Purchases of Federal Home Loan Bank stock
    
    
    
    
    
    
    (1,459,000
    )Redemptions of Federal Home Loan Bank stock
    
    
    
    
    
    
    1,640,500Purchases of premises, equipment and software
    
    
    (151,165
    )
    
    
    (207,289
    )Proceeds from sale of real estate owned
    
    
    588,695
    
    
    
    150,361Costs to acquire foreclosed real estate
    
    
    (20,423
    )
    
    
    (12,437
    )Net (increase) in federal funds sold
    
    
    (9,950,000
    )
    
    
    Premiums paid on life insurance
    
    
    (55,208
    )
    
    
    (58,434
    )NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
    
    $
    (10,712,758
    )
    
    $
    2,687,814CASH FLOWS FROM FINANCING ACTIVITIES:Net increase (decrease) in demand and savings deposits
    
    $
    5,804,867
    
    
    $
    (1,287,197
    )Net increase (decrease) in time deposits
    
    
    16,830,638
    
    
    
    (1,862,829
    )Net (decrease) in FHLB borrowings
    
    
    (15,445,000
    )
    
    
    (3,150,000
    )Purchase of treasury stock
    
    
    (172,296
    )
    
    
    (309,057
    )Cash dividends paid
    
    
    (236,300
    )
    
    
    (239,056
    )NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
    
    $
    6,781,909
    
    
    $
    (6,848,139
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    $
    (978,513
    )
    
    $
    (431,527
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    4,770,724
    
    
    
    7,791,093CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    3,792,211
    
    
    $
    7,359,566SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the period:Interest
    
    $
    4,041,543
    
    
    $
    5,188,883Income taxes
    
    $
    840,900
    
    
    $
    1,188,550Net transfer to foreclosed real estate, held for sale
from loans receivable
    
    $
    686,045
    
    
    $
    562,071Unrealized gain (loss) on investment securities
available for sale (net of tax)
    
    $
    1,165,296
    
    
    $
    (1,033,132
    )
  6




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
      9/30/2009
    
    9/30/2008Quarter ending
    
    
    445,774
    
    
    
    450,619Year to date ending
    
    
    446,669
    
    
    
    452,374
 7




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##### Table of Contents



CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    WeightedSeptember 30, 2009
    
    
    AverageGross
    
    
    Gross
    
    
    Estimated
    
    
    TaxAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair
    
    
    EquivalentCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    YieldAvailable for sale:U.S. Government agencies
and corporationsAfter 1 but within 5 years
    
    $
    2,404,704
    
    
    $
    20,436
    
    
    $
    
    
    
    $
    2,425,140
    
    
    
    2.32
    %After 5 but within 10 years
    
    
    4,875,671
    
    
    
    55,432
    
    
    
    
    
    
    
    4,931,103
    
    
    
    3.40$
    7,280,375
    
    
    $
    75,868
    
    
    $
    
    
    
    $
    7,356,243
    
    
    
    3.05
    %Corporate BondsAfter 1 but within 5 years
    
    $
    2,233,003
    
    
    $
    38,418
    
    
    $
    29,876
    
    
    $
    2,241,545
    
    
    
    5.22
    %After 5 but within 10 years
    
    
    3,983,524
    
    
    
    82,426
    
    
    
    44,502
    
    
    
    4,021,448
    
    
    
    5.55$
    6,216,527
    
    
    $
    120,844
    
    
    $
    74,378
    
    
    
    6,262,993
    
    
    
    5.43
    %States and political subdivisionsWithin one year
    
    $
    2,659,905
    
    
    $
    11,760
    
    
    $
    
    
    
    $
    2,671,665
    
    
    
    1.52
    %After 1 but within 5 years
    
    
    8,318,277
    
    
    
    270,909
    
    
    
    2,530
    
    
    
    8,586,656
    
    
    
    3.04After 5 but within 10 years
    
    
    14,092,941
    
    
    
    434,895
    
    
    
    12,620
    
    
    
    14,515,216
    
    
    
    4.20$
    25,071,123
    
    
    $
    717,564
    
    
    $
    15,150
    
    
    $
    25,773,537
    
    
    
    3.53
    %Mortgage backed securities:Government issued or
guaranteed
    
    $
    13,597,929
    
    
    $
    674,321
    
    
    $
    
    
    
    $
    14,272,250
    
    
    
    5.35
    %Collateralized mortgage obligations:Government issued or
guaranteed
    
    $
    10,600,358
    
    
    $
    354,735
    
    
    $
    4,719
    
    
    $
    10,950,374
    
    
    
    4.68
    %Privately issued
    
    
    1,444,798
    
    
    
    
    
    
    
    283,237
    
    
    
    1,161,561
    
    
    
    7.44$
    12,045,156
    
    
    $
    354,735
    
    
    $
    287,956
    
    
    $
    12,111,935
    
    
    
    5.01
    %Total securities available for sale
    
    $
    64,211,110
    
    
    $
    1,943,332
    
    
    $
    377,484
    
    
    $
    65,776,958
    
    
    
    4.32
    %Restricted:Federal Home Loan Bank stock
    
    $
    2,321,300
    
    
    $
    
    
    
    $
    
    
    
    $
    2,321,300
    
    
    
    
    %Certificates of deposit
    
    $
    3,671,000
    
    
    $
    1,015
    
    
    $
    52
    
    
    
    3,671,963
    
    
    
    0.62
    %
 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 corporations
Within 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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CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
    September 30, 2009Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedDescription of Securities
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesCorporate bonds
    
    $
    
    
    
    $
    
    
    
    $
    2,652,584
    
    
    $
    74,378
    
    
    $
    2,652,584
    
    
    $
    74,378State and political subdivisions
    
    
    784,833
    
    
    
    2,530
    
    
    
    935,200
    
    
    
    12,620
    
    
    
    1,720,033
    
    
    
    15,150Collateralized mortgage
obligations:Government issued or guaranteed
    
    
    
    
    
    
    
    
    
    
    381,201
    
    
    
    4,719
    
    
    
    381,201
    
    
    
    4,719Privately issued
    
    
    
    
    
    
    
    
    
    
    1,161,562
    
    
    
    283,237
    
    
    
    1,161,562
    
    
    
    283,237Certificates of deposit
    
    
    248,948
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    248,948
    
    
    
    52Total temporarily impaired
securities
    
    $
    1,033,781
    
    
    $
    2,582
    
    
    $
    5,130,547
    
    
    $
    374,954
    
    
    $
    6,164,328
    
    
    $
    377,536
 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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CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   September 30,
    
    
    December 31,2009
    
    
    2008Loans:Real estate
    
    $
    129,706,983
    
    
    $
    137,770,172Commercial real estate
    
    
    42,735,409
    
    
    
    40,613,894Consumer
    
    
    17,442,972
    
    
    
    16,665,647Commercial
    
    
    7,349,630
    
    
    
    7,931,399Overdrafts
    
    
    102,715
    
    
    
    91,515$
    197,337,709
    
    
    $
    203,072,627Leases
    
    
    605,657
    
    
    
    105,219$
    197,943,366
    
    
    $
    203,177,846Net deferred loan fees, costs,
premiums and discounts
    
    
    372,335
    
    
    
    325,742Allowance for loan losses
    
    
    (3,368,602
    )
    
    
    (2,751,386
    )$
    194,947,099
    
    
    $
    200,752,202
  September 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Balance, Beginning
    
    $
    2,751,386
    
    
    $
    2,144,461
    
    
    $
    2,144,461Provision charged to
operations
    
    
    1,165,000
    
    
    
    385,000
    
    
    
    940,500Recoveries
    
    
    54,341
    
    
    
    120,032
    
    
    
    188,860Loans charged off
    
    
    (602,125
    )
    
    
    (357,896
    )
    
    
    (522,435
    )Balance, Ending
    
    $
    3,368,602
    
    
    $
    2,291,597
    
    
    $
    2,751,386
 11




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CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   September 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(in thousands)Impaired loans without a valuation allowance
    
    $
    
    
    
    $
    
    
    
    $
    Impaired loans with a valuation allowance (1)
    
    
    1,236,885
    
    
    
    1,935,974
    
    
    
    1,227,068Total impaired loans
    
    $
    1,236,885
    
    
    $
    1,935,974
    
    
    $
    1,227,068Valuation allowance related to impaired loans
    
    $
    275,430
    
    
    $
    453,788
    
    
    $
    383,350
 
 (1)
    
    Some of these loans have government agency guarantees reducing the
banks exposure by $38,435 for September 30, 2009, $66,431 at September 30, 2008 and $57,611 for December 31, 2008 September 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(in thousands)Average investment in impaired loans
    
    $
    1,231,977
    
    
    $
    1,673,037
    
    
    $
    1,318,584Interest income recognized on impaired loans
    
    $
    49,571
    
    
    $
    50,693
    
    
    $
    52,430Interest income recognized on a cash basis on
impaired loans
    
    $
    49,571
    
    
    $
    50,693
    
    
    $
    52,430
  September 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Foreclosed real estate (other real estate owned)
    
    $
    284,329
    
    
    $
    523,134
    
    
    $
    253,300Impaired loans, not on nonaccrual
    
    
    654,404
    
    
    
    692,871
    
    
    
    130,905Nonaccrual loans, impaired (1)
    
    
    582,481
    
    
    
    1,243,103
    
    
    
    1,096,163Nonaccrual loans, not impaired
    
    
    258,019
    
    
    
    779,254
    
    
    
    402,520Loans past due 90 days or more still accruing interest
    
    
    
    
    
    
    
    
    
    
    Total non-performing assets
    
    $
    1,779,233
    
    
    $
    3,238,362
    
    
    $
    1,882,888
 
 (1)
    
    Some of these loans have government agency guarantees reducing the banks exposure by $38,435
at September 30, 2009, $66,431 at September 30, 2008 and $57,611 at December 31, 2008. 12




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CNB FINANCIAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Time Deposits
    
    
    All Time$100,000 and Over
    
    
    DepositsWithin 3 months
    
    $
    9,544,364
    
    
    $
    16,466,7803 months thru 6 months
    
    
    6,227,909
    
    
    
    12,086,3206 months thru 12 months
    
    
    5,770,578
    
    
    
    14,026,828Over 12 months
    
    
    48,865,105
    
    
    
    103,645,363$
    70,407,956
    
    
    $
    146,225,291
  September 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Federal Home Loan Bank
advances
    
    $
    10,000,000
    
    
    $
    34,350,000
    
    
    $
    25,445,000
     September 30,2009
    
    
    2008Service cost
    
    $
    177,299
    
    
    $
    181,731Interest cost
    
    
    237,185
    
    
    
    230,511Expected return on plan assets
    
    
    (245,631
    )
    
    
    (226,971
    )Amortization of prior service costs
    
    
    9,258
    
    
    
    9,258Recognized net actuarial loss
    
    
    54,964
    
    
    
    38,926Net periodic plan cost
    
    $
    233,075
    
    
    $
    233,455
  13




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CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
       
    
    Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
    
    Level 2 inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3 inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
  Securities available for sale and certificates of deposit investments
  14




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CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   Fair Value Measurements at September 30, 2009 Using Quoted Prices(In Thousands)SignificantIn Active
    
    Other
    
    SignificantMarkets for
    
    Observable
    
    UnobservableBalance at
    
    Identical Assets
    
    Inputs
    
    InputsDescription
    
    September 30, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Available-for-sale securities
    
    $
    65,777
    
    
    $
    
    
    
    $
    65,777
    
    
    $
    Certificates of deposit investments
    
    
    3,672
    
    
    
    
    
    
    
    3,672
    
    
    
    
   Loans held for sale
  Impaired loans
   15




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CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  Other Real Estate Owned
   Carrying Value at September 30, 2009(In Thousands)

    
    
    
    
    
    Quoted PricesIn Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableBalance at September
    
    Assets
    
    Inputs
    
    InputsDescription
    
    30, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Assets:Impaired loans, net of government
agency
guarantees and reserve for losses
    
    $
    923
    
    
    $
    
    
    
    $
    923
    
    
    $
    Other real estate owned
    
    $
    284
    
    
    $
    
    
    
    $
    284
    
    
    $
    
   16




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CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
  September 30, 2009
    
    
    December 31, 2008Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash, due from banks and
federal funds sold
    
    $
    3,792,211
    
    
    $
    3,792,211
    
    
    $
    4,770,724
    
    
    $
    4,770,724Securities available for
sale
    
    
    65,776,958
    
    
    
    65,776,958
    
    
    
    62,604,735
    
    
    
    62,604,735Loans
    
    
    194,947,099
    
    
    
    199,636,219
    
    
    
    200,752,202
    
    
    
    201,347,332Accrued interest receivable
    
    
    1,315,101
    
    
    
    1,315,101
    
    
    
    1,272,742
    
    
    
    1,272,742Financial Liabilities:Demand deposits
    
    $
    104,305,280
    
    
    $
    104,305,280
    
    
    $
    98,500,413
    
    
    $
    98,500,413Time deposits
    
    
    146,225,291
    
    
    
    153,823,506
    
    
    
    129,394,653
    
    
    
    137,539,118Accrued interest payable
    
    
    1,127,652
    
    
    
    1,127,652
    
    
    
    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
    
    $
    
    
    
    $
    1,800
    
    
    $
    
    
    
    $
    2,149
     17




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CNB FINANCIAL SERVICES, INC  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
   a.
    
    The power to direct the activities of a variable interest entity that most significantly
impact the entitys economic performance
 b.
    
    The obligation to absorb losses of the entity that could potentially be significant to the
variable interest entity or the right to receive benefits from the entity that could
potentially be significant to the variable interest entity.
      18




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




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




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,
 ,
         21




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22




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TABLE 1. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
 SEPTEMBER 30, 2009
    
    
    SEPTEMBER 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
    
    $
    5,645
    
    
    $
    3
    
    
    
    0.16
    %
    
    $
    
    
    
    $
    
    
    
    
    1.94
    %Certificates of deposit
    
    
    3,599
    
    
    
    6
    
    
    
    0.67
    
    
    
    
    
    
    
    
    
    
    
    Securities:Taxable
    
    
    40,921
    
    
    
    496
    
    
    
    4.85
    
    
    
    50,457
    
    
    
    644
    
    
    
    5.11Tax-exempt (1)
    
    
    21,032
    
    
    
    168
    
    
    
    4.84
    
    
    
    15,365
    
    
    
    133
    
    
    
    5.25Loans (net of unearned interest) (2)(5)(6)
    
    
    199,166
    
    
    
    3,168
    
    
    
    6.36
    
    
    
    200,991
    
    
    
    3,384
    
    
    
    6.73Total interest earning assets (1)
    
    $
    270,363
    
    
    $
    3,841
    
    
    
    5.68
    %
    
    $
    266,813
    
    
    $
    4,161
    
    
    
    6.24
    %Nonearning assets:Cash and due from banks
    
    $
    6,085
    
    
    
    
    
    
    
    
    
    
    $
    6,837Bank premises and equipment, net
    
    
    5,681
    
    
    
    
    
    
    
    
    
    
    
    5,943Other assets
    
    
    6,496
    
    
    
    
    
    
    
    
    
    
    
    5,841Allowance for loan losses
    
    
    (3,235
    )
    
    
    
    
    
    
    
    
    
    
    (2,315
    )Total assets
    
    $
    285,390
    
    
    
    
    
    
    
    
    
    
    $
    283,119Interest bearing liabilities:Savings deposits
    
    $
    25,110
    
    
    $
    6
    
    
    
    0.10
    %
    
    $
    23,636
    
    
    $
    18
    
    
    
    0.30
    %Time deposits
    
    
    143,461
    
    
    
    1,245
    
    
    
    3.47
    
    
    
    123,071
    
    
    
    1,230
    
    
    
    4.00NOW accounts
    
    
    21,893
    
    
    
    25
    
    
    
    0.46
    
    
    
    21,806
    
    
    
    44
    
    
    
    0.81Money market accounts
    
    
    12,833
    
    
    
    5
    
    
    
    0.16
    
    
    
    13,319
    
    
    
    28
    
    
    
    0.84Borrowings
    
    
    10,023
    
    
    
    73
    
    
    
    2.91
    
    
    
    33,582
    
    
    
    211
    
    
    
    2.51Total interest bearing liabilities
    
    $
    213,320
    
    
    $
    1,354
    
    
    
    2.54
    %
    
    $
    215,414
    
    
    $
    1,531
    
    
    
    2.84
    %Noninterest bearing liabilities:Demand deposits
    
    $
    41,993
    
    
    
    
    
    
    
    
    
    
    $
    40,638Other liabilities
    
    
    5,752
    
    
    
    
    
    
    
    
    
    
    
    3,918Shareholders equity
    
    
    24,325
    
    
    
    
    
    
    
    
    
    
    
    23,149Total liabilities and
shareholders equity
    
    $
    285,390
    
    
    
    
    
    
    
    
    
    
    $
    283,119Net interest income (1)
    
    
    
    
    
    $
    2,487
    
    
    
    
    
    
    
    
    
    
    $
    2,630Net interest spread (3)
    
    
    
    
    
    
    
    
    
    
    3.14
    %
    
    
    
    
    
    
    
    
    
    
    3.40
    %Net interest income to average
interest earning assets (1)
    
    
    
    
    
    
    
    
    
    
    3.68
    %
    
    
    
    
    
    
    
    
    
    
    3.94
    %
 
 (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 $59,168 in 2009 and $57,772 in 2008.(6)
    
    Interest income on loans includes fees of $19,666 in 2009 and $14,630 in 2008 from student
loans and lease receivables. 23




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TABLE 2. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS EQUITY;
INTEREST RATES AND INTEREST DIFFERENTIAL
 SEPTEMBER 30, 2009
    
    
    SEPTEMBER 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
    
    $
    2,291
    
    
    $
    3
    
    
    
    0.17
    %
    
    $
    
    
    
    $
    
    
    
    
    2.40
    %Certificates of deposit
    
    
    2,371
    
    
    
    14
    
    
    
    0.79
    
    
    
    
    
    
    
    
    
    
    
    Securities:Taxable
    
    
    42,539
    
    
    
    1,566
    
    
    
    4.91
    
    
    
    49,832
    
    
    
    1,874
    
    
    
    5.01Tax-exempt (1)
    
    
    19,074
    
    
    
    485
    
    
    
    5.14
    
    
    
    14,458
    
    
    
    370
    
    
    
    5.17Loans (net of unearned interest) (2)(5)(6)
    
    
    201,142
    
    
    
    9,529
    
    
    
    6.32
    
    
    
    202,707
    
    
    
    10,349
    
    
    
    6.81Total interest earning assets (1)
    
    $
    267,417
    
    
    $
    11,597
    
    
    
    5.78
    %
    
    $
    266,997
    
    
    $
    12,593
    
    
    
    6.29
    %Nonearning assets:Cash and due from banks
    
    $
    5,950
    
    
    
    
    
    
    
    
    
    
    $
    6,753Bank premises and equipment, net
    
    
    5,749
    
    
    
    
    
    
    
    
    
    
    
    6,004Other assets
    
    
    6,613
    
    
    
    
    
    
    
    
    
    
    
    5,233Allowance for loan losses
    
    
    (3,044
    )
    
    
    
    
    
    
    
    
    
    
    (2,252
    )Total assets
    
    $
    282,685
    
    
    
    
    
    
    
    
    
    
    $
    282,735Interest bearing liabilities:Savings deposits
    
    $
    24,667
    
    
    $
    23
    
    
    
    0.12
    %
    
    $
    23,671
    
    
    $
    53
    
    
    
    0.30
    %Time deposits
    
    
    138,672
    
    
    
    3,693
    
    
    
    3.55
    
    
    
    125,088
    
    
    
    3,931
    
    
    
    4.19NOW accounts
    
    
    21,629
    
    
    
    74
    
    
    
    0.46
    
    
    
    22,145
    
    
    
    157
    
    
    
    0.95Money market accounts
    
    
    12,894
    
    
    
    19
    
    
    
    0.20
    
    
    
    12,333
    
    
    
    99
    
    
    
    1.07Borrowings
    
    
    13,631
    
    
    
    234
    
    
    
    2.29
    
    
    
    30,829
    
    
    
    656
    
    
    
    2.84Total interest bearing liabilities
    
    $
    211,493
    
    
    $
    4,043
    
    
    
    2.55
    %
    
    $
    214,066
    
    
    $
    4,896
    
    
    
    3.05
    %Noninterest bearing liabilities:Demand deposits
    
    $
    41,837
    
    
    
    
    
    
    
    
    
    
    $
    41,454Other liabilities
    
    
    5,563
    
    
    
    
    
    
    
    
    
    
    
    3,957Shareholders equity
    
    
    23,792
    
    
    
    
    
    
    
    
    
    
    
    23,258Total liabilities and
shareholders equity
    
    $
    282,685
    
    
    
    
    
    
    
    
    
    
    $
    282,735Net interest income (1)
    
    
    
    
    
    $
    7,554
    
    
    
    
    
    
    
    
    
    
    $
    7,697Net interest spread (3)
    
    
    
    
    
    
    
    
    
    
    3.23
    %
    
    
    
    
    
    
    
    
    
    
    3.24
    %Net interest income to average interest earning assets (1)
    
    
    
    
    
    
    
    
    
    
    3.77
    %
    
    
    
    
    
    
    
    
    
    
    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 $172,671 in 2009 and $154,893 in 2008.(6)
    
    Interest income on loans includes fees of $67,704 in 2009 and $53,050 in 2008 from student loans and lease receivables. 24




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25




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th th
        26




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September 30,
    
    
    December 31,2009
    
    
    2008
    
    
    2008Impaired loans, not on nonaccrual
    
    
    654,404
    
    
    
    692,871
    
    
    
    130,905Nonaccrual loans, impaired (1)
    
    
    582,481
    
    
    
    1,243,103
    
    
    
    1,096,163Nonaccrual loans, not impaired
    
    
    258,019
    
    
    
    779,254
    
    
    
    402,520Loans past due 90 days or more still accruing interest
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    $
    1,494,904
    
    
    $
    2,715,228
    
    
    $
    1,629,588Foreclosed real estate (other real estate owned)
    
    $
    284,329
    
    
    $
    523,134
    
    
    $
    253,300Total nonperforming assets
    
    $
    1,779,233
    
    
    $
    3,238,362
    
    
    $
    1,882,888Nonperforming loans/Total loans
    
    
    0.77
    %
    
    
    1.36
    %
    
    
    0.81
    %Nonperforming assets/Total assets
    
    
    0.61
    %
    
    
    1.14
    %
    
    
    0.67
    %Allowance for loan losses/Total loans
    
    
    1.73
    %
    
    
    1.15
    %
    
    
    1.37
    %
 
 (1)
    
    Some of these loans have government agency guarantees reducing the banks exposure by $38,435
at September 30, 2009, $66,431 at September 30, 2008 and $57,611 at December 31, 2008.  27




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In thousands
    
    September 30,
    
    
    December 31,2009
    
    
    2008Percent of
    
    
    
    
    
    
    Percent ofLoans in Each
    
    
    
    
    
    
    Loans in EachCategory to
    
    
    
    
    
    
    Category toAmount
    
    
    Total Loans
    
    
    Amount
    
    
    Total LoansCommercial, financial
and agriculture
    
    $
    1,258
    
    
    
    25
    %
    
    $
    1,178
    
    
    
    22
    %Real estate 
residential mortgage
    
    
    1,281
    
    
    
    65
    
    
    
    543
    
    
    
    69Installment and other
    
    
    454
    
    
    
    9
    
    
    
    415
    
    
    
    8Impaired loans
    
    
    275
    
    
    
    1
    
    
    
    383
    
    
    
    1Unallocated
    
    
    101
    
    
    
    N/A
    
    
    
    232
    
    
    
    N/ATotal
    
    $
    3,369
    
    
    
    100
    %
    
    $
    2,751
    
    
    
    100
    %
   28




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Components
    
    Actual
    
    Requiredof Capital
    
    Ratio
    
    RatioTier 1 Capital
    
    $
    25,923
    
    
    
    9.1
    %
    
    
    4.0
    %Total Risk Based Capital
    
    $
    28,123
    
    
    
    16.1
    %
    
    
    8.0
    %
 29




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        30




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ITEM 4. CONTROLS AND PROCEDURES
   31




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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 balanceJune 30, 2009
    
    
    
    
    
    
    
    
    
    
    12,200
    
    
    
    33,604July 1, 2009July 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    33,604August 1, 2009August 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    33,604September 1, 2009September 30, 2009
    
    
    400
    
    
    $
    46.70
    
    
    
    400
    
    
    
    33,204Total
    
    
    400
    
    
    
    
    
    
    
    12,600
  
      32




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CNB Financial Services, Inc.
(Registrant)Date  November 13, 2009
    /s/ Thomas F. Rokisky, President/CEODate November 13, 2009
    /s/ Rebecca S. Stotler, Vice President/CFO 33