##### Table of Contents



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 0-11535
 CITY NATIONAL BANCSHARES CORPORATION
  New Jersey
    
    22-2434751(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)900 Broad Street,
    
    07102Newark, New Jersey
    
    (Zip Code)
     
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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Index
    
    PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2009 (Unaudited) and December 31, 2008
    
    
    3Consolidated Statements of Income (Unaudited) for the Three Months and Nine Months Ended
September 30, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2009
and 2008
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Part II Other Information
    
    
    21Item 1. Legal proceedings
    
    
    21Item 6. Exhibits and Reports on Form 8-K
    
    
    22Signatures
    
    
    24EX-31EX-32




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CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets (Unaudited)
 September 30,
    
    December 31,Dollars in thousands, except per share data
    
    2009
    
    2008AssetsCash and due from banks
    
    $
    7,937
    
    
    $
    7,613Federal funds sold
    
    
    15,500
    
    
    
    18,200Interest bearing deposits with banks
    
    
    602
    
    
    
    726Investment securities available for sale
    
    
    118,108
    
    
    
    125,591Investment securities held to maturity (Market value of $46,875
at September 30, 2009 and $54,537 at December 31,2008 )
    
    
    44,891
    
    
    
    53,714Loans held for sale
    
    
    121
    
    
    
    267Loans
    
    
    285,207
    
    
    
    271,906Less: Allowance for loan losses
    
    
    6,000
    
    
    
    3,800Net loans
    
    
    279,207
    
    
    
    268,106Premises and equipment
    
    
    3,011
    
    
    
    3,242Accrued interest receivable
    
    
    2,576
    
    
    
    2,796Bank-owned life insurance
    
    
    5,489
    
    
    
    5,345Other real estate owned
    
    
    2,474
    
    
    
    1,547Other assets
    
    
    8,660
    
    
    
    7,392Total assets
    
    $
    488,576
    
    
    $
    494,539Liabilities and Stockholders EquityDeposits:Demand
    
    $
    31,958
    
    
    $
    36,270Savings
    
    
    161,344
    
    
    
    183,172Time
    
    
    201,454
    
    
    
    187,675Total deposits
    
    
    394,756
    
    
    
    407,117Accrued expenses and other liabilities
    
    
    6,740
    
    
    
    5,880Short-term borrowings
    
    
    
    
    
    
    1,850Long-term debt
    
    
    49,100
    
    
    
    51,600Total liabilities
    
    
    450,596
    
    
    
    466,447Commitments and contingenciesStockholders equityPreferred stock, no par value: Authorized 100,000 shares ;Series A , issued and outstanding 8 shares in 2009 and 2008
    
    
    200
    
    
    
    200Series C , issued and outstanding 108 shares in 2009 and 2008
    
    
    27
    
    
    
    27Series D , issued and outstanding 3,280 shares in 2009 and 2008
    
    
    820
    
    
    
    820Preferred stock, no par value, perpetual noncumulative: Authorized 200 shares;Series E, issued and outstanding 49 shares in 2009 and 2008
    
    
    2,450
    
    
    
    2,450Preferred stock, no par value, perpetual noncumulative: Authorized 7,000 shares;Series F, issued and outstanding 7,000 shares in 2009 and 2008
    
    
    6,790
    
    
    
    6,790Preferred stock, no par value, perpetual noncumulative: Authorized 9,439 shares;Series G, issued and outstanding 9,439 shares
    
    
    9,499
    
    
    
    Common stock, par value $10: Authorized 400,000 shares;134,530 shares issued in 2009 and 2008131,290 shares outstanding in 2009 and 131,330 shares outstanding in 2008
    
    
    1,345
    
    
    
    1,345Surplus
    
    
    1,115
    
    
    
    1,115Retained earnings
    
    
    15,720
    
    
    
    16,694Accumulated other comprehensive income (loss)
    
    
    242
    
    
    
    (1,124
    )Treasury stock, at cost - 3,240 and 3,200 common shares in 2009 and 2008, respectively
    
    
    (228
    )
    
    
    (225
    )Total stockholders equity
    
    
    37,980
    
    
    
    28,092Total liabilities and stockholders equity
    
    $
    488,576
    
    
    $
    494,539
  3




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CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
Consolidated Statements of Income (Unaudited)
 Three months ended
    
    Nine months endedSeptember 30,
    
    September 30,Dollars in thousands, except per share data
    
    2009
    
    2008
    
    2009
    
    2008Interest incomeInterest and fees on loans
    
    $
    4,234
    
    
    $
    4,229
    
    
    $
    12,098
    
    
    $
    12,615Interest on Federal funds sold and securities
purchased under agreements to resell
    
    
    5
    
    
    
    9
    
    
    
    48
    
    
    
    183Interest on deposits with banks
    
    
    38
    
    
    
    1
    
    
    
    43
    
    
    
    17Interest and dividends on investment securities:Taxable
    
    
    1,605
    
    
    
    1,904
    
    
    
    5,133
    
    
    
    5,480Tax-exempt
    
    
    311
    
    
    
    324
    
    
    
    968
    
    
    
    967Total interest income
    
    
    6,193
    
    
    
    6,467
    
    
    
    18,290
    
    
    
    19,262Interest expenseInterest on deposits
    
    
    1,941
    
    
    
    2,418
    
    
    
    5,971
    
    
    
    7,368Interest on short-term borrowings
    
    
    1
    
    
    
    44
    
    
    
    3
    
    
    
    59Interest on long-term debt
    
    
    449
    
    
    
    400
    
    
    
    1,378
    
    
    
    1,097Total interest expense
    
    
    2,391
    
    
    
    2,862
    
    
    
    7,352
    
    
    
    8,524Net interest income
    
    
    3,802
    
    
    
    3,605
    
    
    
    10,938
    
    
    
    10,738Provision for loan losses
    
    
    1,674
    
    
    
    189
    
    
    
    2,611
    
    
    
    622Net interest income after provision
for loan losses
    
    
    2,128
    
    
    
    3,416
    
    
    
    8,327
    
    
    
    10,116Other operating incomeService charges on deposit accounts
    
    
    380
    
    
    
    346
    
    
    
    1,110
    
    
    
    1,032Agency fees on commercial loans
    
    
    56
    
    
    
    78
    
    
    
    190
    
    
    
    252Other income
    
    
    323
    
    
    
    380
    
    
    
    1,145
    
    
    
    951Net (losses) gains on sales of investment securities
    
    
    2
    
    
    
    (1,429
    )
    
    
    12
    
    
    
    (1,473
    )Other than temporary impairment losses on securities
    
    
    (1,256
    )
    
    
    
    
    
    
    (3,571
    )
    
    
    Portion of loss recognized in other comprehensive income, before tax
    
    
    149
    
    
    
    
    
    
    
    1,277
    
    
    
    Net impairment losses on securities recognized in earnings
    
    
    (1,107
    )
    
    
    
    
    
    
    (2,294
    )
    
    
    Total other operating income
    
    
    (346
    )
    
    
    (625
    )
    
    
    163
    
    
    
    762Other operating expensesSalaries and other employee benefits
    
    
    1,644
    
    
    
    1,369
    
    
    
    4,869
    
    
    
    4,657Occupancy expense
    
    
    341
    
    
    
    344
    
    
    
    993
    
    
    
    969Equipment expense
    
    
    201
    
    
    
    165
    
    
    
    541
    
    
    
    488Data processing expense
    
    
    74
    
    
    
    57
    
    
    
    218
    
    
    
    190Other expenses
    
    
    1,240
    
    
    
    926
    
    
    
    3,629
    
    
    
    2,838Total other operating expenses
    
    
    3,500
    
    
    
    2,861
    
    
    
    10,250
    
    
    
    9,142(Loss) income before income tax expense
    
    
    (1,718
    )
    
    
    (70
    )
    
    
    (1,760
    )
    
    
    1,736Income tax (benefit) expense
    
    
    (1,209
    )
    
    
    (120
    )
    
    
    (928
    )
    
    
    321Net (loss) income
    
    $
    (509
    )
    
    $
    50
    
    
    $
    (832
    )
    
    $
    1,415Net (loss) income per common shareBasic
    
    $
    (6.36
    )
    
    $
    (0.75
    )
    
    $
    (13.08
    )
    
    $
    5.72Diluted
    
    
    (6.36
    )
    
    
    (0.75
    )
    
    
    (13.08
    )
    
    
    5.72Basic average common shares outstanding
    
    
    131,290
    
    
    
    131,616
    
    
    
    131,303
    
    
    
    131,784Diluted average common shares outstanding
    
    
    131,290
    
    
    
    131,616
    
    
    
    131,303
    
    
    
    131,784
  4




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CITY NATIONAL BANCSHARES CORPORATION AND SUBSIDIARY
 
 Consolidated Statements of Cash Flows (Unaudited)
 Nine Months EndedSeptember 30,Dollars in thousands
    
    2009
    
    2008Operating activitiesNet (loss) income
    
    $
    (832
    )
    
    $
    1,415Adjustments to reconcile net income to net cash from operating
activities:Depreciation and amortization
    
    
    325
    
    
    
    372Provision for loan losses
    
    
    2,611
    
    
    
    622Premium amortization (discount accretion) on investment
securities
    
    
    5
    
    
    
    (77
    )Amortization of intangible assets
    
    
    148
    
    
    
    160Net (gains) losses on securities transactions
    
    
    (12
    )
    
    
    44Net impairment losses on investment securities
    
    
    2,294
    
    
    
    1,429Net gains on sales of loans held for sale
    
    
    (5
    )
    
    
    (10
    )Net loss on sale of other real estate owned
    
    
    42
    
    
    
    Loans originated for sale
    
    
    (122
    )
    
    
    (501
    )Proceeds from sales and principal payments from loans held for
sale
    
    
    273
    
    
    
    548Decrease (increase) in accrued interest receivable
    
    
    220
    
    
    
    (50
    )Net increase in bank-owned life insurance
    
    
    (144
    )
    
    
    (369
    )Deferred taxes
    
    
    912
    
    
    
    (1,445
    )(Increase) decrease in other assets
    
    
    (3,241
    )
    
    
    1,665Increase (decrease) in accrued expenses and other liabilities
    
    
    771
    
    
    
    (460
    )Net cash provided by operating activities
    
    
    3,245
    
    
    
    3,343Investing activitiesIncrease in loans, net
    
    
    (14,681
    )
    
    
    (30,500
    )Decrease in interest bearing deposits with banks
    
    
    124
    
    
    
    73Proceeds from maturities of investment securities available
for sale,
including principal payments and early redemptions
    
    
    22,234
    
    
    
    18,000Proceeds from maturities of investment securities held to
maturity,
including principal payments and early redemptions
    
    
    10,084
    
    
    
    8,708Proceeds from sales of investment securities available for sale
    
    
    692
    
    
    
    4,807Purchases of investment securities available for sale
    
    
    (14,155
    )
    
    
    (46,494
    )Purchases of investment securities held to maturity
    
    
    (1,462
    )
    
    
    (12,274
    )Purchases of premises and equipment
    
    
    (94
    )
    
    
    (128
    )Net cash provided by (used in) investing activities
    
    
    2,742
    
    
    
    (57,808
    )Financing activitiesDecrease in deposits
    
    
    (12,361
    )
    
    
    (500
    )Decrease in short-term borrowings
    
    
    (1,850
    )
    
    
    (Decrease) increase in long-term debt
    
    
    (2,500
    )
    
    
    24,900Issuance of preferred stock
    
    
    9,439
    
    
    
    Purchases of treasury stock
    
    
    (3
    )
    
    
    (38
    )Dividends paid on preferred stock
    
    
    (825
    )
    
    
    (662
    )Dividends paid on common stock
    
    
    (263
    )
    
    
    (474
    )Net cash (used in) provided by financing activities
    
    
    (8,363
    )
    
    
    23,226Net decrease in cash and cash equivalents
    
    
    (2,376
    )
    
    
    (31,239
    )Cash and cash equivalents at beginning of period
    
    
    25,813
    
    
    
    44,819Cash and cash equivalents at end of period
    
    $
    23,437
    
    
    $
    13,580Cash paid during the yearInterest
    
    $
    9,612
    
    
    $
    8,487Income taxes
    
    
    1,254
    
    
    
    1,424Noncash transactionsTransfer of
investments from held to maturity to available for sale
    
    
183

    
    
    70Transfer of
loans to other real estate owned
    
    
    969
    
    
    
    -
  5




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Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,In thousands, except per share data
    
    2009
    
    2008
    
    2009
    
    2008Net (loss) income
    
    $
    (509
    )
    
    $
    50
    
    
    $
    (832
    )
    
    $
    1,415Dividends on preferred stock
    
    
    326
    
    
    
    149
    
    
    
    885
    
    
    
    662Net (loss) income applicable to basic
common shares
    
    
    (835
    )
    
    
    (99
    )
    
    
    (1,717
    )
    
    
    753Dividends applicable to convertible
preferred stock
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    147Net (loss) income applicable to diluted
common shares
    
    $
    (835
    )
    
    $
    (99
    )
    
    $
    (1,570
    )
    
    $
    900Number of average common sharesBasic
    
    
    131,290
    
    
    
    131,616
    
    
    
    131,303
    
    
    
    131,784Diluted
    
    
    131,290
    
    
    
    131,616
    
    
    
    131,303
    
    
    
    131,784Net (loss) income per common shareBasic
    
    $
    (6.36
    )
    
    $
    (.75
    )
    
    $
    (13.08
    )
    
    $
    5.72Diluted
    
    
    (6.36
    )
    
    
    (.75
    )
    
    
    (13.08
    )
    
    
    5.72
      6




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7




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8




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Gross
    
    GrossSeptember 30, 2009
    
    Amortized
    
    Unrealized
    
    Unrealized
    
    FairIn thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Treasury securities
and obligations of U.S.
government agencies
    
    $
    12,219
    
    
    $
    276
    
    
    $
    52
    
    
    $
    12,443Obligations of U.S.
government sponsored
entities
    
    
    14,053
    
    
    
    247
    
    
    
    103
    
    
    
    14,197Obligations of state and
political subdivisions
    
    
    547
    
    
    
    10
    
    
    
    
    
    
    
    557Mortgage-backed
securities
    
    
    74,395
    
    
    
    2,978
    
    
    
    13
    
    
    
    77,360Other debt securities
    
    
    12,391
    
    
    
    355
    
    
    
    3,213
    
    
    
    9,533Equity securities:Marketable securities
    
    
    704
    
    
    
    
    
    
    
    14
    
    
    
    690Nonmarketable
securities
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    115Federal Reserve Bank
and Federal Home Loan Bank stock
    
    
    3,213
    
    
    
    
    
    
    
    
    
    
    
    3,213Total
    
    $
    117,637
    
    
    $
    3,866
    
    
    $
    3,395
    
    
    $
    118,108
 Gross
    
    GrossDecember 31, 2008
    
    Amortized
    
    Unrealized
    
    Unrealized
    
    FairIn thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Treasury securities
and obligations of U.S.
government agencies
    
    $
    4,009
    
    
    $
    5
    
    
    $
    57
    
    
    $
    3,957Obligations of U.S.
government sponsored
entities
    
    
    19,157
    
    
    
    181
    
    
    
    326
    
    
    
    19,012Obligations of state and
political subdivisions
    
    
    548
    
    
    
    4
    
    
    
    
    
    
    
    552Mortgage-backed
securities
    
    
    88,356
    
    
    
    2,408
    
    
    
    134
    
    
    
    90,630Other debt securities
    
    
    11,645
    
    
    
    149
    
    
    
    3,996
    
    
    
    7,798Equity securities:Marketable securities
    
    
    678
    
    
    
    
    
    
    
    40
    
    
    
    638Nonmarketable
securities
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    115Federal Reserve Bank
and Federal Home Loan Bank stock
    
    
    2,889
    
    
    
    
    
    
    
    
    
    
    
    2,889Total
    
    $
    127,397
    
    
    $
    2,747
    
    
    $
    4,553
    
    
    $
    125,591
  9




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##### Table of Contents



Amortized
    
    
    FairIn thousands
    
    Cost
    
    
    ValueDue within one year:Obligations of U.S. government sponsored
entities
    
    $
    3000
    
    
    $
    3,047Obligations of U.S. state and political
subdivisions
    
    
    547
    
    
    
    556Other debt securities
    
    
    992
    
    
    
    1,020Due after one year but within five years:Obligations of U.S. government sponsored
entities
    
    
    2,413
    
    
    
    2,459Mortgage-backed securities
    
    
    103
    
    
    
    104Other debt securities
    
    
    2,444
    
    
    
    2,184Due after five years but within ten years:U.S. Treasury securities and
obligations of U.S. government
agencies
    
    
    6,083
    
    
    
    6,209Obligations of U.S. government sponsored
entities
    
    
    2,236
    
    
    
    2,320Mortgage-backed securities
    
    
    2,225
    
    
    
    2,297Due after ten years:U.S. Treasury securities and
obligations of U.S. government
agencies
    
    
    6,137
    
    
    
    6,236Obligations of U.S. government sponsored
entities
    
    
    6,404
    
    
    
    6,371Mortgage-backed securities
    
    
    72,067
    
    
    
    74,958Other debt securities
    
    
    8,954
    
    
    
    6,329Total debt securities
    
    
    113,605
    
    
    
    114,090Equity securities
    
    
    4,032
    
    
    
    4,018Total
    
    $
    117,637
    
    
    $
    118,108
  September 30, 2009
    
    Less than 12 Months
    
    
    12 Months or More
    
    
    TotalGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedIn thousands
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Treasury securities and
obligations of U.S. government
agencies
    
    $
    990
    
    
    $
    6
    
    
    $
    2,796
    
    
    $
    46
    
    
    $
    3,786
    
    
    $
    52Mortgage-backed securities
    
    
    2,567
    
    
    
    10
    
    
    
    283
    
    
    
    3
    
    
    
    2,850
    
    
    
    13Obligations of U.S. government
sponsored entities
    
    
    460
    
    
    
    47
    
    
    
    2,373
    
    
    
    56
    
    
    
    2,833
    
    
    
    103Other debt securities
    
    
    
    
    
    
    
    
    
    
    3,878
    
    
    
    3,213
    
    
    
    3,878
    
    
    
    3,213Marketable equity securities
    
    
    
    
    
    
    
    
    
    
    704
    
    
    
    14
    
    
    
    704
    
    
    
    14Total
    
    $
    4,017
    
    
    $
    63
    
    
    $
    10,034
    
    
    $
    3,332
    
    
    $
    14,051
    
    
    $
    3,395
 December 31, 2008
    
    Less than 12 Months
    
    12 Months or More
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedIn thousands
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesU.S. Treasury securities and
obligations of U.S. government
agencies
    
    $
    2,701
    
    
    $
    53
    
    
    $
    168
    
    
    $
    4
    
    
    $
    2,869
    
    
    $
    57Obligations of U.S. Government
sponsored entities
    
    
    3,891
    
    
    
    68
    
    
    
    4,881
    
    
    
    258
    
    
    
    8,772
    
    
    
    326Mortgaged-backed securities
    
    
    5,142
    
    
    
    65
    
    
    
    2,760
    
    
    
    69
    
    
    
    7,902
    
    
    
    134Other debt securities
    
    
    2,722
    
    
    
    274
    
    
    
    3,829
    
    
    
    3,722
    
    
    
    6,551
    
    
    
    3,996Equity securities
    
    
    
    
    
    
    
    
    
    
    678
    
    
    
    40
    
    
    
    678
    
    
    
    40Total
    
    $
    14,456
    
    
    $
    460
    
    
    $
    12,316
    
    
    $
    4,093
    
    
    $
    26,772
    
    
    $
    4,553
  10




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##### Table of Contents



For the Six MonthsIn thousands
    
    Ended September 30, 2009Beginning balance as of April 1, 2009
    
    $
    288Add: Initial other-than-temporary credit losses
    
    
    302Additional other-than-temporary credit losses
    
    
    1,860$
    2,450
       11




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##### Table of Contents



Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairIn thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Treasury
securities and
obligations of U.S.
government agencies
    
    $
    1,700
    
    
    $
    71
    
    
    $
    
    
    
    $
    1,771Obligations of U.S.
government
sponsored entities
    
    
    5,458
    
    
    
    32
    
    
    
    
    
    
    
    5,490Obligations of state andpolitical subdivisions
    
    
    28,927
    
    
    
    1,574
    
    
    
    26
    
    
    
    30,475Mortgage-backed
securities
    
    
    8,311
    
    
    
    341
    
    
    
    
    
    
    
    8,652Other debt securities
    
    
    495
    
    
    
    
    
    
    
    8
    
    
    
    487Total
    
    $
    44,891
    
    
    $
    2,018
    
    
    $
    34
    
    
    $
    46,875
  Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairIn thousands
    
    Cost
    
    Gains
    
    Losses
    
    ValueObligations of U.S.
government
sponsored entities
    
    $
    8,500
    
    
    $
    20
    
    
    $
    
    
    
    $
    8,520Obligations of state and
political subdivisions
    
    
    31,629
    
    
    
    814
    
    
    
    221
    
    
    
    32,222Mortgage-backed
securities
    
    
    12,089
    
    
    
    269
    
    
    
    
    
    
    
    12,358Other debt securities
    
    
    1,496
    
    
    
    
    
    
    
    59
    
    
    
    1,437Total
    
    $
    53,714
    
    
    $
    1,103
    
    
    $
    280
    
    
    $
    54,537
  12




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##### Table of Contents



Amortized
    
    FairIn thousands
    
    Cost
    
    ValueDue after one year but within five years:Obligations of state and political
subdivisions
    
    $
    7,280
    
    
    $
    7,765Mortgage-backed securities
    
    
    108
    
    
    
    113Due after five years but within ten years:Obligations of U.S. government sponsored
entities
    
    
    1,000
    
    
    
    1,001Obligations of state and political
subdivisions
    
    
    14,236
    
    
    
    15,003Mortgage-backed securities
    
    
    67
    
    
    
    70Due after ten years:U.S. Treasury securities and
obligations of U.S. government agencies
    
    
    1,700
    
    
    
    1,771Obligations of U.S. government sponsored
entities
    
    
    4,458
    
    
    
    4,490Obligations of state and political subdivisions
    
    
    7,411
    
    
    
    7,706Mortgage-backed securities
    
    
    8,136
    
    
    
    8,469Other debt securities
    
    
    495
    
    
    
    487Total
    
    $
    44,891
    
    
    $
    46,875
  September 30, 2009
    
    Less than 12 Months
    
    12 Months or More
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedIn thousands
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesObligations of states and political
subdivisions
    
    $
    
    
    
    $
    
    
    
    $
    696
    
    
    $
    26
    
    
    $
    696
    
    
    $
    26Other debt securities
    
    
    
    
    
    
    
    
    
    
    487
    
    
    
    8
    
    
    
    487
    
    
    
    8Total
    
    $
    
    
    
    $
    
    
    
    $
    1,183
    
    
    $
    34
    
    
    $
    1,183
    
    
    $
    34
 December 31, 2008
    
    Less than 12 Months
    
    12 Months or More
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    UnrealizedIn thousands
    
    Fair Value
    
    Losses
    
    Fair Value
    
    Losses
    
    Fair Value
    
    LossesObligations of state and political
subdivisions
    
    $
    4,753
    
    
    $
    146
    
    
    $
    647
    
    
    $
    75
    
    
    $
    5,400
    
    
    $
    231Other debt securities
    
    
    1,437
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    1,437
    
    
    
    59Total
    
    $
    6,190
    
    
    $
    205
    
    
    $
    647
    
    
    $
    75
    
    
    $
    6,837
    
    
    $
    280
        13




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##### Table of Contents



(Dollars in thousands)
    
    Total
    
    Level 1
    
    Level 2
    
    Level 3Investment securities available for sale
    
    $
    118,108
    
    
    $
    
    
    
    $
    118,032
    
    
    $
    76Total assets
    
    $
    118,108
    
    
    $
    
    
    
    $
    118,032
    
    
    $
    76Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Three Months
    
    Nine MonthsEnded
    
    EndedSeptember 30, 2009
    
    September 30, 2009Balance, beginning of period
    
    $
    204
    
    
    $
    1,144Net transfers into Level 3
    
    
    
    
    
    
    Total gains (losses) included in:Net income
    
    
    (1,107
    )
    
    
    (2,294
    )Other comprehensive income
    
    
    979
    
    
    
    1,226Balance, end of period
    
    $
    76
    
    
    $
    76
     10. Fair value of financial instruments
     Cash, short-term investments and interest-bearing deposits with banks
  Investment securities
  Loans
  14




---



##### Table of Contents



Loans held for sale
  Deposit liabilities
  Short-term borrowings
  Long-term debt
  Commitments to extend credit and letters of credit
   September 30, 2009
    
    December 31, 2008Carrying
    
    Fair
    
    Carrying
    
    FairIn thousands
    
    Value
    
    Value
    
    Value
    
    ValueFinancial assetsCash and other short-term
investments
    
    $
    23,437
    
    
    $
    23,437
    
    
    $
    25,813
    
    
    $
    25,813Interest-bearing deposits
with banks
    
    
    602
    
    
    
    598
    
    
    
    726
    
    
    
    719Investment securities AFS
    
    
    118,108
    
    
    
    118,108
    
    
    
    125,591
    
    
    
    125,591Investment securities HTM
    
    
    44,891
    
    
    
    46,875
    
    
    
    53,714
    
    
    
    54,537Loans
    
    
    285,207
    
    
    
    278,883
    
    
    
    271,906
    
    
    
    259,226Loans held for sale
    
    
    121
    
    
    
    121
    
    
    
    267
    
    
    
    267Financial liabilitiesDeposits
    
    
    394,756
    
    
    
    384,699
    
    
    
    407,117
    
    
    
    396,503Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    1,850
    
    
    
    1,850Long-term debt
    
    
    49,100
    
    
    
    50,038
    
    
    
    51,600
    
    
    
    51,692
        15




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##### Table of Contents



Item 2
 Managements Discussion and Analysis of Financial Condition and Results of Operations
  Cautionary statement concerning forward-looking statements
  Executive summary
   Financial Condition
           16




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##### Table of Contents



Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,(Dollars in thousands)
    
    2009
    
    2008
    
    2009
    
    2008Balance at beginning of period
    
    $
    4,500
    
    
    $
    3,350
    
    
    $
    3,800
    
    
    $
    3,000Provision for loan losses
    
    
    1,674
    
    
    
    189
    
    
    
    2,611
    
    
    
    622Recoveries of previous charge-offs
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    66,174
    
    
    
    3,539
    
    
    
    6,426
    
    
    
    3,628Less: Charge-offs
    
    
    174
    
    
    
    189
    
    
    
    426
    
    
    
    278Balance at end of period
    
    $
    6,000
    
    
    $
    3,350
    
    
    $
    6,000
    
    
    $
    3,350
   September 30,
    
    June 30,
    
    December 31,2009
    
    2009
    
    2008Allowance for loan losses as a percentage ofTotal loans
    
    
    2.10
    %
    
    
    1.61
    %
    
    
    1.40
    %Total nonperforming loans
    
    
    33.45
    %
    
    
    36.36
    %
    
    
    44.13
    %Total nonperforming assets
(nonperforming loans and OREO)
    
    
    29.39
    %
    
    
    31.33
    %
    
    
    37.67
    %Net charge-offs as a percentage
of average loans (year-to-date)
    
    
    .15
    %
    
    
    .10
    %
    
    
    .31
    %
  17




---



##### Table of Contents



September 30,
    
    June 30,
    
    December,(Dollars in thousands)
    
    2009
    
    2009
    
    2008Loans past due 90 days
or more and still accruingCommercial
    
    $
    7
    
    
    $
    
    
    
    $
    Real estate
    
    
    4,153
    
    
    
    3,294
    
    
    
    376Installment
    
    
    17
    
    
    
    17
    
    
    
    8Total
    
    
    4,177
    
    
    
    3,311
    
    
    
    384Nonaccrual loansCommercial
    
    
    2,071
    
    
    
    1,901
    
    
    
    1,864Real estate
    
    
    11,683
    
    
    
    7,160
    
    
    
    6,356Installment
    
    
    7
    
    
    
    5
    
    
    
    7Total
    
    
    13,761
    
    
    
    9,066
    
    
    
    8,227Total nonperforming loans
    
    
    17,938
    
    
    
    12,377
    
    
    
    8,611Other real estate owned
    
    
    2,474
    
    
    
    1,985
    
    
    
    1,547Total nonperforming assets
    
    $
    20,412
    
    
    $
    14,362
    
    
    $
    10,158
         18




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##### Table of Contents



19




---



##### Table of Contents



Results of Operations
                 20




---



##### Table of Contents



Liquidity
    
  Quantitative and Qualitative Disclosures about Market Risk
      
 PART II Other information
 
 Item 1.
    
    Legal Proceedings
  Item 1a. Risk Factors
  21




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##### Table of Contents



The Bank is subject to a Formal Agreement with the Comptroller of the Currency
  FDIC Special Assessment
    
 Item 6.
    
    Exhibits
 (a)
    
    Exhibits
 (3
    )(a)
    
    The Corporations Restated Articles of Incorporation (incorporated herein by
reference to Exhibit (3)(d) of the Corporations Current Report on Form 8-K dated
July 28, 1992).(3
    )(b)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series A (incorporated
herein by reference to Exhibit (3)(b) of the Corporations Annual Report on Form
10-K for the year ended December 31, 1995).(3
    )(c)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series B (incorporated
herein by reference to Exhibit (3)(c) of the Corporations Annual Report on Form
10-K for the year ended December 31, 1995).(3
    )(d)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series C (incorporated
herein by reference to Exhibit (3(i) to the Corporations Annual Report on Form
10-K for the year ended December 31, 1996).(3
    )(e)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series D (incorporated
herein by reference to Exhibit (3)(i) filed with the Corporations Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).(3
    )(f)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations Non-cumulative Perpetual Preferred Stock, Series E (incorporated
herein by reference to Exhibit (3)(i) filed with the Corporations Quarterly
Report on Form 10-Q filed on March 4, 2005).(3
    )(g)
    
    Amendments to the Corporations Articles of Incorporation establishing the
Corporations MultiMode Series F Non-cumulative Redeemable Preferred Stock
(incorporated herein by reference to Exhibit (3)(f) to the Corporations
Quarterly Report on Form 10-Q for the quarter ended September 30, 2005).(3
    )(h)
    
    Amendment to the Corporations Articles of Incorporation establishing the Fixed
Rate Cumulative Perpetual Preferred Stock, Series G (incorporated herein by
reference to Exhibit 3.1 to the Corporations Current Report on Form 8-K dated
April 10, 2009).(3
    )(i)
    
    Amendment to the Corporations Articles of Incorporation reallocating unissued
Series B, Series C and Series E Preferred Stock to unallocated and unissued
preferred stock (incorporated herein by reference to Exhibit 3.2 to the
Corporations Current Report on Form 8-K dated April 10, 2009).
 22




---



##### Table of Contents



(3
    )(j)
    
    The amendment to the By-Laws of the Corporation (incorporated herein by
reference to Exhibit (3)(b) of the Corporations Annual Report on Form 10-K for
the year ended December 31, 1991).(3
    )(k)
    
    The By-Laws of the Corporation (incorporated herein by reference to Exhibit
(3)(b) of the Corporations Annual Report on Form 10-K for the year ended
December 31, 1988).(10
    )(a)
    
    The Employees Profit Sharing Plan of City National Bank of New Jersey
(incorporated herein by reference to Exhibit (10) of the Corporations Annual
Report on Form 10-K for the year ended December 31, 1988).(10
    )(b)
    
    The Employment Agreement among the Corporation, the Bank and Louis E. Prezeau
dated May 26, 2006 (incorporated herein by reference to Exhibit (10.1) to the
Corporations Current Report on Form 8-K dated December 4, 2006).(10
    )(d)
    
    Amended and Restated Asset Purchase and Sale Agreement between the Bank and
Carver Federal Savings Bank dated as of February 27, 2001 (incorporated by
reference to Exhibit 10(d) to the Corporations Annual Report on Form 10-K for
the year ended December 31, 2000).(10
    )(f)
    
    Loan Agreement dated December 28, 2001 by and between the Corporation and
National Community Investment Fund (incorporated by reference to Exhibit 10(f) to
the Corporations Annual Report on Form 10-K for the year ended December 31,
2001).(10
    )(g)
    
    Pledge Agreement dated December 28, 2001 by and between the Corporation and
National Community Investment Fund (incorporated by reference to Exhibit (g) to
the Corporations Annual Report on Form 10-K for the year ended December 31,
2001).(10
    )(h)
    
    Asset Purchase and Sale Agreement between City National Bank of New Jersey and
Carver Federal Savings Bank dated as of January 26, 1998 (incorporated by
reference to Exhibit 10(h) to the Corporations Annual Report on Form 10-K for
the year ended December 31, 1998).(10
    )(i)
    
    Promissory Note dated May 6, 2002 payable to United Negro College Fund, Inc.,
in the principal amount of $200,000 (incorporated by reference to Exhibit 10(i)
to the Corporations Quarterly Report on Form 10-Q for quarter ended March 31,
2002).(10
    )(l)
    
    Purchase and Assumption Agreement dated as of March 31, 2004, by and among The
Prudential Savings Bank, F.S.B., The Prudential Bank and Trust Company and City
National Bank of New Jersey (incorporated herein by reference to Exhibit 10(l) to
the Corporations Quarterly Report on Form 10-Q for the quarter ended March 31,
2004).(10
    )(m)
    
    Guarantee Agreement dated March 17, 2004 from the Corporation in favor of U.S.
Bank, N.A., as trustee for holders of securities issued by City National Bank of
New Jersey Capital Statutory Trust II (incorporated herein by reference to
Exhibit (10)(m) to the Corporations Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004).(10
    )(n)
    
    Purchase Agreement dated September 27, 2005 by and between Sandler ONeil &
Partners, L.P., and the Corporation with respect to issue and sale of 7,000
shares of the Corporations MultiMode Series F Non-cumulative Redeemable
Preferred Stock (incorporated herein by reference to Exhibit (10)(n) to the
Corporations Quarterly Report on Form 10-Q for the quarter ended September 30,
2005).(10
    )(o)
    
    Credit Agreement dated February 21, 2007 by and between The Prudential
Insurance Company of America and the Corporation with respect to a $5,000,000
loan to the Corporation (incorporated by reference to Exhibit 10.1 to the
Corporations Current Report on Form 8-K dated February 23, 2007).(10
    )(p)
    
    Branch Purchase and Assumption Agreement, dated as of November 1, 2006, by and
between City National Bank of New Jersey (CNB) and Sun National Bank (Sun),
as amended by Amendment to Branch Purchase and Assumption Agreement, dated as of
March 8, 2007, by and between CNB and Sun (incorporated by reference to Exhibit
10.1 to the Corporations Current Report on Form 8-K dated March 14, 2007).
 23




---



##### Table of Contents



(10
    )(q)
    
    Letter Agreement, dated April 10, 2009, including the Securities Purchase Agreement
 Standard Terms incorporated by reference therein (collectively, the Purchase
Agreement), between the Corporation and the United States Department of the Treasury
(the Treasury Department) (incorporated herein by reference to Exhibit 10.1 to the
Corporations Current Report on Form 8-K dated April 10, 2009).(10
    )(r)
    
    Side Letter Agreement, dated April 10, 2009, between the Corporation and the
Treasury Department pertaining to the American Recovery and Reinvestment Act of 2009
(incorporated herein by reference to Exhibit 10.2 to the Corporations Current Report
on Form 8-K dated April 10, 2009).(10
    )(s)
    
    Side Letter Agreement, dated April 10, 2009, between the Corporation and the
Treasury Department pertaining to the amendment of certain provisions of the Purchase
Agreement (incorporated herein by reference to Exhibit 10.3 to the Corporations
Current Report on Form 8-K dated April 10, 2009).(10
    )(t)
    
    Side Letter Agreement, dated April 10, 2009, between the Corporation and the
Treasury Department pertaining to the amendment of certain provisions of the Purchase
Agreement relating to CDFI Exemption (incorporated herein by reference to Exhibit 10.3
to the Corporations Current Report on Form 8-K dated April 10, 2009).(10
    )(u)
    
    Form of Waiver, executed by each of Louis E. Prezeau, Edward R. Wright, Stanley M.
Weeks and Raul L. Oseguera (incorporated herein by reference to Exhibit 10.3 to the
Corporations Current Report on Form 8-K dated April 10, 2009).(10
    )(v)
    
    Agreement, dated June 29, 2009, by and between the City National Bank of New Jersey
and the Comptroller of the Currency (incorporated herein by reference to Exhibit 10.1
to the Corporations Current Report on Form 8-K dated June 29, 2009).(11
    )
    
    Statement regarding computation of per share earnings. The required
information is included on page 19.(31
    )
    
    Certifications of Principal Executive Officer and Principal Financial
Officer (Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)).(32
    )
    
    Certifications of Principal Executive Officer and Principal Financial
Officer under 18 U.S.C.Section 1350 (Section 906 of the Sarbanes-Oxley Act of
2002 (filed herewith)).
 
   
 November 10, 2009
    
    /s/ Edward R. Wright

Edward R. WrightSenior Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)
 24