- Proxy Statement - Merger or Acquistion (definitive) (DEFM14A)
05 November 2010 - 1:31PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
14A/A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT
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FILED BY A PARTY OTHER THAN THE REGISTRANT
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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CNB FINANCIAL SERVICES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing.
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Amount Previously Paid: $71.67
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Form, Schedule or Registration Statement No.: Schedule 13E-3
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Filing Party: CNB Financial Services, Inc.
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Date Filed: July 6, 2010
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November 5, 2010
Dear Shareholders of CNB Financial Services, Inc.:
The Board of Directors of CNB Financial Services, Inc. (the Company) is pleased to announce that
it has approved a corporate reorganization that will allow those Company shareholders who hold, in
the aggregate, less than 150 CNB Common Stock shares to exchange their existing CNB Common Stock
shares for newly created Class A Common Stock shares. Those Company shareholders who hold, in the
aggregate, 150 or more CNB Common Stock shares will continue to hold their existing CNB Common
Stock without change. This reorganization, which is known as a going private transaction, will
result in the Company having less than 300 shareholders owning the Companys existing CNB Common
Stock and less than 500 shareholders owning the newly created Class A Common Stock. As a result of
this going private transaction, the Company will be able to terminate and suspend its SEC reporting
obligations, which will allow the Company to save approximately $143,000 annually.
In technical terms, the Company will effect the reorganization by amending its Articles of
Incorporation and immediately thereafter engage in a merger transaction with a newly created
corporation whose sole purpose is to facilitate the going private transaction. The Amendment to
the Articles of Incorporation will authorize Class A Common Stock shares and Class B Common Stock
shares and the merger transaction will convert the CNB Common Stock held by shareholders who hold,
in the aggregate on the effective date of the Merger, less than 150 CNB Common Stock shares into the right to receive Class A Common
Stock shares on a one-share-for-one-share exchange basis. No Class B Common Stock shares will be
issued in connection with the reorganization.
To effect this transaction, the shareholders must vote on and approve an Amendment to the Companys
Articles of Incorporation and the Agreement of Merger. Therefore, we are calling a Special Meeting
of Shareholders to be held on December 9, 2010 to ask you to vote and approve the Amendment and
the Agreement of Merger. In conjunction with the meeting, you and all other shareholders are
receiving the enclosed proxy materials which describe the transaction and a Proxy upon which to
cast your vote.
After careful consideration, the Board of Directors of the Company unanimously recommends that you
vote in favor of the Amendment to the Companys Articles of Incorporation and the Agreement of
Merger.
Sincerely,
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/s/ Thomas F. Rokisky
Thomas F. Rokisky
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President and Chief Executive Officer
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CNB FINANCIAL SERVICES, INC.
101 South Washington Street
P.O. Box 130
Berkeley Springs, West Virginia 25411
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 9, 2010
TO OUR SHAREHOLDERS:
A Special Meeting of Shareholders of CNB Financial Services, Inc., a West Virginia corporation
(CNB or Company), will be held at CNB executive offices at 101 South Washington Street, Berkeley Springs, West Virginia 25411 at 2:00
p.m., local time, on December 9, 2010, for the following purposes:
(1) To approve an Amendment to CNBs Articles of Incorporation which provides for the
authorization of 5,000,000 shares of Class A Common Stock and 5,000,000 shares of Class B Common
Stock;
(2) To approve an Agreement of Merger by and between CNB and CNB Merger Corp., a West
Virginia corporation, (Merger Corp.), pursuant to which Merger Corp. will merge with and into CNB
with CNB being the surviving corporation (the Merger), which will reclassify all CNB Common Stock
held by any shareholder who holds, in the aggregate on the effective date of the Merger, less than 150 shares into the right to receive
CNB Class A Common Stock on a one-share-for-one-share exchange basis; and
(3) To transact such other business as may properly come before the meeting or any
adjournments thereof.
Only holders of record of CNB Common Stock, par value $1.00 per share, at the close of
business on October 15, 2010 are entitled to notice of the Special Meeting and to vote at the
Special Meeting. As of October 7, 2010, there were 441,348 shares of CNB Common Stock outstanding.
The accompanying Proxy Statement is dated November 5, 2010, and is being first mailed to
shareholders on or about November 5, 2010.
Shareholders are cordially invited to attend the meeting in person. Whether planning to
attend the meeting or not, shareholders are urged to complete, date and sign the enclosed Proxy and
to return it promptly. Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted at the Special Meeting. Proxies may be revoked by
delivering to Rebecca Stotler, 101 South Washington Street, P.O. Box
130, Berkeley Springs, West
Virginia 25411, a written notice of revocation bearing a later date than the Proxy, by duly
executing and delivering to the Company at such address a subsequently dated Proxy relating to the
same shares or by attending the Special Meeting and voting in person (although attendance at the
Special Meeting will not in and of itself constitute revocation of a Proxy). The enclosed,
addressed envelope requires no postage if mailed in the United States.
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By order of the Board of Directors,
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November 5, 2010
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/s/ Thomas F. Rokisky
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Thomas F. Rokisky
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President and Chief Executive Officer
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL
MEETING OF STOCKHOLDERS TO BE HELD ON
DECEMBER 9, 2010
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THE PROXY STATEMENT, 2009 ANNUAL REPORT AND FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010 ARE AVAILABLE AT
www.cnbwv.com/pdf/special proxy 2010.pdf
and
www.cnbwv.com/pdf/200910k.pdf
REVOCABLE PROXY
CNB FINANCIAL SERVICES, INC.
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 9, 2010
PLEASE RETURN YOUR PROPERLY COMPLETED PROXY TO THE COMPANY IN THE
ENCLOSED ENVELOPE PRIOR TO THE SPECIAL MEETING
The undersigned appoints Andrew E. Orebaugh and Thomas W. Brown, or either of them, with full
powers of substitution, to act as proxy for the undersigned and to vote all shares of CNB Common
Stock of CNB Financial Services, Inc.(Company), which the undersigned is entitled to vote at the
Special Meeting of Shareholders (Special Meeting), to be held at 101 South Washington Street, Berkeley Springs,
West Virginia
25411, on
December 9, 2010 at 2:00 p.m. local time, and at any and all adjournments, as follows:
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL
MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 9, 2010.
THE CNB Financial
Services, Inc. Notice of Special Meeting, Proxy Statement,
Annual Report to Shareholders and Form 10-Q for the Quarter Ended June 30, 2010, are available at
www.cnbwv.com/pdf/special proxy2010.pdf
and
www.cnbwv.com/pdf/2009 10k.pdf
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1.
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The approval of the Amendment to the Companys Articles of
Incorporation (the Amendment) pursuant to which the Companys
Articles of Incorporation will be amended to authorize 5,000,000
shares of Class A Common Stock and 5,000,000 shares of Class B Common
Stock. The Companys currently authorized 5,000,000 shares of CNB
Common Stock will remain unchanged as a result of the Amendment. In
accordance with the Amendment, the Class A Common Stock and Class B
Common Stock will bear rights and privileges that are separate and
distinct from the existing CNB Common Stock and each other.
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VOTE YOUR COMMON SHARES:
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For the Amendment
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Against the Amendment
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Abstain
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2.
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The approval of the Agreement of Merger (the Merger Agreement)
between the Company and CNB Merger Corp., a West Virginia corporation
(Merger Corp.) pursuant to which the Company will be merged with
Merger Corp. (the Merger) with the Company surviving the Merger. In
accordance with the Merger Agreement, at the effective time of the
transaction, all CNB Common Stock shares held by any shareholder who
holds, in the aggregate on the effective date of the Merger, 150 or more Company Common Stock shares will
remain CNB Common Stock shareholders. All CNB Common Stock shares
held by any shareholder who holds, in the aggregate, less than 150 CNB
Common Stock shares will be converted into the right to receive
Company Class A Common Stock on a one-share-for-one-share exchange
basis. Company shareholders are entitled to assert dissenters rights
under applicable provisions of West Virginia Business Corporation Act,
Section 31D-13-1301
et seq.
(a copy of which is attached to the proxy
statement as Annex D) in connection with the Merger.
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VOTE YOUR COMMON SHARES:
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For the Merger Agreement
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Against the Merger Agreement
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Abstain
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This Proxy will be voted as directed. If no instructions are specified, this
proxy, if properly executed, will be voted
FOR
the propositions stated.
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3.
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In accordance with their discretion, upon all other matters that may
properly come before the Special Meeting and any adjournments or
postponements thereof. At the present time, the Board of Directors
knows of no other business to be presented at the meeting.
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This proxy is solicited by the Board of Directors.
The undersigned acknowledges receipt from the
Company, prior to the execution of this Proxy, of a Notice of the Special Meeting and a Proxy
Statement dated November 5, 2010.
Dated:
, 2010
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Print Name of Shareholder
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Print Name of Shareholder
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Signature of Shareholder
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Signature of Shareholder
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Please mark, sign, date and mail the proxy card promptly using the enclosed envelope. When signing
as attorney, executor, administrator, trustee or guardian, please give your full title. If shares
are held jointly, each holder should sign.
Please complete, date, sign, and mail this proxy in the enclosed postage-prepaid envelope.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 9, 2010
CNB FINANCIAL SERVICES, INC.
BERKELEY SPRINGS, WEST VIRGINIA
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THIS TRANSACTION; PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION; OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
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PAGE
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9
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PAGE
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48
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48
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48
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Annex A
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Annex B
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Annex C
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Annex D
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Annex E
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CERTAIN DEFINITIONS
As used in this proxy statement, CNB, we, our, ours, us and the Company refer to CNB
Financial Services, Inc. and all of its subsidiaries. Merger Corp. refers to CNB Merger Corp.,
amendment refers to the Amendment of the Companys Articles of Incorporation, and merger
agreement refers to the Agreement of Merger between CNB and Merger Corp. CNB Common Stock
refers to the Companys existing Common Stock, par value $1.00.
SUMMARY TERM SHEET
THE FOLLOWING SUMMARY TERM SHEET, TOGETHER WITH THE QUESTIONS AND ANSWERS ABOUT THE MEETING,
QUESTIONS AND ANSWERS ABOUT THE AMENDMENT, AND QUESTIONS AND ANSWERS ABOUT THE MERGER FOLLOWING
THIS SUMMARY TERM SHEET HIGHLIGHT SELECTED INFORMATION FROM THE PROXY STATEMENT ABOUT OUR PROPOSED
AMENDMENT, PROPOSED MERGER AND THE SPECIAL MEETING. THIS SUMMARY TERM SHEET AND THE QUESTION AND
ANSWER SECTIONS MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO BETTER
UNDERSTAND AND FOR A MORE COMPLETE DESCRIPTION OF THE MERGER AND THE OTHER MATTERS ON WHICH YOU
WILL VOTE, YOU SHOULD CAREFULLY READ THIS ENTIRE DOCUMENT AND ALL OF ITS ANNEXES BEFORE YOU
VOTE. FOR YOUR CONVENIENCE, WE HAVE DIRECTED YOUR ATTENTION IN PARENTHESES TO THE LOCATION IN THIS
PROXY STATEMENT WHERE YOU CAN FIND A MORE COMPLETE DISCUSSION OF EACH ITEM LISTED BELOW.
THE AMENDMENT
THE AMENDMENT TO THE ARTICLES OF INCORPORATION
(Page 36)
On June 10, 2010, CNBs Board of Directors adopted an amendment to the Companys Articles of
Incorporation which provides for the authorization of 5,000,000 shares of Class A Common Stock and
5,000,000 shares of Class B Common Stock. The amendment is set forth in its entirety as Annex
A. The amendment has not yet become effective. The amendment will become effective following
shareholder approval and filing with the West Virginia Secretary of State.
According to the terms of the amendment, if the amendment is approved:
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Article VI of the Companys Articles of Incorporation will be
amended to authorize 5,000,000 shares of Class A Common Stock
(Class A Common Stock), which will enjoy rights and privileges
separate and distinct from the rights and privileges of the
existing Common Stock and the Class B Common Stock.
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Article VI of the Companys Articles of Incorporation will be also
amended to authorize 5,000,000 shares of Class B Common Stock
(Class B Common Stock), which will enjoy rights and privileges
separate and distinct from the existing Common Stock and the Class
A Common Stock.
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The number of authorized Common Stock shares will remain at its
current number of 5,000,000. The existing Common Stock will
continue to enjoy all the rights and privileges it currently
enjoys, without change.
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The filing of the amendment will not result in any issuance of Class A Common Stock or Class B
Common Stock shares. The amendment will only serve to amend the Companys Articles of
Incorporation to provide authorized Class A Common Stock and Class B Common Stock shares.
1
EFFECTS OF THE AMENDMENT
(Page 14)
As a result of the amendment:
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CNBs Articles of Incorporation will be
amended to authorize 5,000,000 shares of
Class A Common Stock and 5,000,000 shares of
Class B Common Stock; and
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The Companys currently authorized 5,000,000 shares of CNB Common Stock will be unchanged.
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EXISTING COMMON STOCK RIGHTS AND PRIVILEGES
(Page 36)
Following the effective time of the amendment, the Companys existing CNB Common Stock will
continue to enjoy the same rights and privileges that are currently associated with the CNB Common
Stock. These rights and privileges include:
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VOTING RIGHTS The Companys existing CNB Common Stock has full
voting rights. All CNB Common Stock shareholders are entitled to
vote on any and all matters that may come before a vote of the
Companys shareholders. This includes the right to participate in
the annual election of directors.
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DIVIDENDS The Companys existing CNB Common Stock is entitled to
receive dividends as may be declared from time to time by the
Companys Board of Directors. The Companys existing CNB Common
Stock does not cumulate dividends, and there is no obligation on
behalf of the Companys Board of Directors to pay dividends on the
CNB Common Stock.
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CONVERSION Not applicable. The CNB Common Stock is not
convertible to any other class of Company stock.
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REDEMPTION The Companys existing CNB Common Stock has no redemption features.
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RIGHT OF FIRST REFUSAL The Companys existing CNB Common Stock
has no right of first refusal. The foregoing does not limit any
Company shareholders from individually contracting such rights.
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LIQUIDATION PREFERENCE The Companys existing CNB Common Stock
does not have a liquidation preference because there is currently
only one class of common stock. Following the transaction, the
existing CNB Common Stock will have last preference in Company
liquidation rights.
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CLASS A COMMON STOCK RIGHTS AND PRIVILEGES
(Page 37)
The amendment provides the Class A Common Stock will have rights and privileges separate and
distinct from the existing Common Stock and the Class B Common Stock. The Class A Common Stock
will enjoy the following rights and privileges:
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VOTING RIGHTS The Class A Common Stock will be allowed voting
rights only if the shareholders are being asked to approve a
merger, consolidation, conversion, sale of assets other than in
the regular course of business, voluntary dissolution of the
Company, or as required by law. The Class A Common Stock will not
enjoy general voting rights, including the right to participate in
the annual election of directors.
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DIVIDENDS If the Company declares dividends, dividends must be
paid on the Class A Common Stock before dividends may be paid on
the CNB Common Stock. However, the Company shall be under no
obligation to pay dividends, and dividends are not cumulative. If
dividends are paid, the dividends paid on the Class A Common Stock
will enjoy a 10% premium over and above what is paid on the CNB
Common Stock.
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CONVERSION In the event the Company is party to a merger, share
exchange, sale of assets other than in the regular course of
business, voluntary dissolution of the Company, or other change in
control which will result in the merger, sale, dissolution or
effective dissolution of the Company, the Class A Common Stock
will be converted into Common Stock shares and will be treated
equally in all respects with the existing Common Stock.
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REDEMPTION The Class A Common Stock will have no redemption rights.
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RIGHT OF FIRST REFUSAL The Class A Common Stock has
a right of first refusal in favor of the
Company. Generally, this right of first refusal
requires a Class A Common Stock shareholder to notify
the Company in writing of the terms of any transfer
or sale of the Class A Common Stock. Following
receipt of the written notice, the Company has five
(5) business days to either request additional
information regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of Class A Common Stock that are subject to
the proposed transfer or sale upon the same terms as
the proposed transfer or sale. If the transfer is to
be made without consideration (i.e., a gift), the
Company shall have the right to purchase the shares
for an amount determined by the Board to be the fair
value of the shares. The Company retains the right
to not exercise its right of first refusal, which
will allow the Class A Common Stock shareholder to
sell or transfer the shares in accordance with the
terms of the proposed transfer or offer. Any Class A
Common Stock shares transferred in violation of the
right of first refusal is void and of no effect and
will not be recognized by the Company.
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LIQUIDATION PREFERENCE The Class A Common Stock will have a
liquidation preference over the existing Common Stock and the
Class B Common Stock. In the event of a liquidation, the Class A
Common Stock shareholders will be entitled to receive liquidation
assets equal to those assets received by the Common Stock
shareholders or the book value of the Companys Common Stock,
whichever is greater.
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CLASS B COMMON STOCK RIGHTS AND PRIVILEGES
(Page 38)
The amendment provides the Class B Common Stock will have rights and privileges separate and
distinct from the existing Common Stock and the Class A Common Stock. The Class B Common Stock
will enjoy the following rights and privileges:
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VOTING RIGHTS The Class B Common Stock will be allowed voting
rights only if the shareholders are being asked to approve a
merger, consolidation, conversion, sale of assets other than in
the regular course of business, voluntary dissolution of the
Company, or as required by law. The Class B Common Stock will not
enjoy general voting rights, including the right to participate in
the annual election of directors.
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DIVIDENDS If the Company declares dividends, dividends must be
paid on the Class B Common Stock after dividends are paid on the
Class A Common Stock, but before dividends may be paid on the
existing Common Stock. However, there shall be no obligation to
pay dividends and dividends shall not be cumulative. If dividends
are paid, the dividends paid on the Class B Common Stock will
enjoy a 20% premium over and above what is paid on the Common
Stock.
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CONVERSION In the event the Company is party to a merger, share
exchange, sale of assets other than in the regular course of
business, voluntary dissolution of the Company, or other change in
control which will result in the merger, sale, dissolution or
effective dissolution of the Company, the Class B Common Stock
will be converted into Common Stock shares and will be treated
equally in all respects with the existing Common Stock.
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REDEMPTION The Class B Common Stock will have no redemption rights.
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RIGHT OF FIRST REFUSAL The Class B Common Stock has a right of
first refusal in favor of the Company. Generally, this right of
first refusal requires a Class B Common Stock shareholder to
notify the Company in writing of the terms of any transfer or sale
of the Class B Common Stock. Following receipt of the written
notice, the Company has five (5) business days to either request
additional information
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regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of
Class B Common Stock that are subject to the proposed transfer or
sale upon the same terms as the proposed transfer or sale. If the
transfer is to be made without consideration (i.e., a gift), the
Company shall have the right to purchase the shares for an amount
determined by the Board to be the fair value of the shares. The
Company retains the right to not exercise its right of first
refusal, which will allow the Class B Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the
proposed transfer or offer. Any Class B Common Stock shares
transferred in violation of the right of first refusal will be
void and of no effect and will not be recognized by the Company.
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LIQUIDATION PREFERENCE The Class B Common Stock
will have a liquidation preference superior to the
existing Common Stock, but after the Class A Common
Stock.
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CNB Financial Services, Inc.
Stock Comparison Chart
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Characteristic
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Common
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Common A
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Common B
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Voting Rights
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|
Full voting rights
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|
As required by law and
for a merger/share
exchange
|
|
As required by law
and for a
merger/share
exchange
|
|
|
|
|
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|
Dividends
|
|
As declared
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|
10% premium over CNB
Common Stock dividends
with payment before all
other shares
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|
20% premium over
CNB Common Stock
dividends with
payment before CNB
Common Stock but
after Class A
Common Stock
|
|
|
|
|
|
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Liquidation Preference
|
|
Last Preference
|
|
Priority over all others
Distribution same as
CNB Common Stock or
book value of CNB
Common Stock, whichever
is greater
|
|
After Class A
Common Stock but
before CNB Common
Stock
|
|
|
|
|
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|
Conversion to Common
Stock
|
|
N/A
|
|
Conversion to CNB
Common Stock at change
in control
|
|
Conversion to CNB
Common Stock at
change in control
|
|
|
|
|
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|
Transfer Restrictions
|
|
No
|
|
Yes Holding Company
has right of first
refusal
|
|
Yes Holding
Company has right
of first refusal
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|
|
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Redemption
|
|
None
|
|
None
|
|
None
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THE MERGER
THE MERGER AGREEMENT
(Page 46)
On June 10, 2010, the Companys Board of Directors adopted an Agreement of Merger between CNB
Financial Services, Inc. and CNB Merger Corp., a to-be-formed West Virginia corporation formed at
the direction of the Companys Board of Directors and for the sole purpose of facilitating the
going private transaction, which calls for Merger Corp. to be merged with and into CNB (the
merger). The merger agreement has not yet become effective. The merger agreement will become
effective following shareholder approval and the filing of Articles of Merger with the West
Virginia Secretary of State.
4
Under the terms of the merger agreement, if the merger is completed:
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|
|
All CNB Common Stock shares held by any shareholder who holds, in
the aggregate, 150 or more CNB Common Stock shares as of the
effective date of the merger, will remain CNB Common Stock shares.
|
|
|
|
|
All CNB Common Stock shares held by any CNB shareholder who holds,
in the aggregate, less than 150 CNB Common Stock shares as of the
effective date of the merger will be converted into the right to
receive Class A Common Stock shares on a one-share-for-one-share
exchange basis.
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|
|
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|
No shares of the newly authorized Class B Common Stock will be issued as a result of the merger.
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|
|
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|
The officers and directors of CNB at the effective time of the
merger will be the officers and directors of CNB immediately after
the merger.
|
EFFECTS OF THE MERGER
(Page 17)
As a result of the merger:
|
|
|
All CNB Common Stock held by any shareholder who holds, in the
aggregate, 150 or more CNB Common Stock shares as of the effective
date of the merger, will remain CNB Common Stock shares.
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|
|
|
|
The existing CNB Common Stock will retain all of the rights and
privileges currently afforded to the CNB Common Stock.
|
|
|
|
|
All CNB Common Stock shares held by any shareholder who holds, in
the aggregate, less than 150 CNB Common Stock shares as of
the effective date of the merger will be converted into the right
to receive Class A Common Stock shares on a
one-share-for-one-share exchange basis.
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|
|
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|
The holders of the Class A Common Stock will enjoy all the rights
and privileges associated with the newly created Class A Common
Stock, which differ from the rights and privileges of the existing
CNB Common Stock (See Class A Common Stock Characteristics on page
15 for more information).
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|
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|
It is expected the Company will have less than 300 shareholders
owning its existing CNB Common Stock and less than 500
shareholders owning its newly created Class A Common Stock, which
will allow the Company to terminate its Section 12(g) SEC
reporting obligations in accordance with Rule 12g-4 of the
Securities and Exchange Commission (SEC) Rules and Regulations
and suspend its Section 15(d) reporting obligations in accordance
with Rule 12h-3.
|
|
|
|
|
The percentage of ownership of CNB Common Stock beneficially held
by the current officers and directors of the Company as a group
will increase from 15.96% to approximately 16.50%.
|
|
|
|
|
All shareholders will have the right to dissent from the merger
and exercise their dissenters rights of appraisal rights pursuant
to Section 31D-13-1301
et seq.
of West Virginia Business
Corporation Act.
|
|
|
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|
The aggregate shareholders equity of CNB as of
June 30, 2010,
which was reported as approximately $26,703,619, will remain
unchanged, except for any change caused by shareholders who may
choose to dissent from the transaction.
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THE PARTIES
(Page 40)
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|
CNB is a West Virginia corporation and registered bank holding company.
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|
Merger Corp. is a to-be-formed West Virginia corporation
organized for the sole purpose of the merger.
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5
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|
The principal executive offices of both CNB and Merger Corp. are
located at 101 South Washington Street, Berkeley Springs, West
Virginia 25411.
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|
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|
The telephone number for both CNB and Merger Corp. is (304) 258-1520.
|
VOTING OF SHARES
(Page 30)
In accordance with the applicable provisions of West Virginia Business Corporation Act, approval of
the amendment and the merger agreement requires approval of the holders of at least a majority of
the shares of CNB entitled to vote on the matter.
REASONS FOR THE AMENDMENT
(Page 36)
The primary reason for the amendment is to authorize two new classes of common stock. The newly
authorized Class A Common Stock will be exchanged for certain shares of the Companys existing CNB
Common Stock on a one-share-for-one-share exchange basis following the effective date of the
merger. No shares of the newly created Class B Common Stock will be issued as a result of the
amendment or merger.
REASONS FOR THE MERGER
(Pages 41)
The primary reason for the merger is to reduce the number of shareholders owning the Companys
existing CNB Common Stock to below 300, and the number of shareholders owning the Companys newly
created Class A Common Stock to less than 500, which will allow the Company to terminate and
suspend its SEC reporting obligations. The termination of the Companys SEC reporting obligations
will allow the Company to avoid the costs and time associated with being an SEC reporting
company.
BACKGROUND OF THE AMENDMENT AND MERGER PROPOSAL
(Page 13)
The Companys Board of Directors has considered effecting the going private transaction for some
time. The Board decided to pursue the transaction at this time, as compared to some other time in
the Companys history, to eliminate the increasing costs associated with SEC reporting and
Sarbanes-Oxley compliance. Specifically,
Companys
Board of Directors felt pursuing the transaction at this time was proper because it would
allow Company employees to focus their efforts on income producing activities.
In contemplating how to best accomplish the Companys goal of going private, the Board
considered, in addition to the proposed transaction, a voluntary stock repurchase program and a
cash out merger transaction in which a certain number of the shareholders would have received cash
in exchange for their shares as opposed to Class A Common Stock. The Board chose not to pursue a
voluntary stock repurchase program because such a transaction would not assure the desired result
of reducing the number of CNB Common Stock shareholders to below 300. The Board of Directors did
not pursue a cash out merger transaction because the Board thought each shareholder should be able
to retain an equity interest in the Company and CNB Bank, Inc. would be better served by retaining
its existing capital.
U.S. FEDERAL INCOME TAX CONSEQUENCES
(Page 19)
Those shareholders who hold the requisite number of shares to maintain their existing CNB Common
Stock will not have a taxable event for Federal income tax purposes. Those shareholders receiving
Class A Common Stock in exchange for their existing CNB Common Stock will not have a taxable event
for Federal income tax purposes. Any shareholders who may choose to exercise their dissenters
rights and dissent from the merger agreement and instead receive the fair value for their shares in
cash, will have a taxable event for Federal income tax purposes.
6
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES TO YOU OF THE AMENDMENT AND MERGER WILL
DEPEND ON YOUR OWN SITUATION. TO REVIEW THE MATERIAL TAX CONSEQUENCES IN GREATER DETAIL, PLEASE
READ THE DISCUSSION UNDER SPECIAL FACTORS CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
DISSENTERS RIGHTS OF APPRAISAL
(Page 42)
Under West Virginia law, you are entitled to dissent from the merger agreement. To exercise your
appraisal rights, you must comply with all procedural requirements of West Virginia law. A
description of the relevant sections of West Virginia law is provided in Dissenters and
Appraisal Rights on page 42, and the full text of the sections is attached as Annex D to this
document. FAILURE TO TAKE ANY STEPS REQUIRED BY WEST VIRGINIA LAW MAY RESULT IN A TERMINATION OR
WAIVER OF YOUR APPRAISAL RIGHTS.
OPINION OF FINANCIAL ADVISOR
(Page 23)
CNB engaged Howe Barnes Hoefer & Arnett (Howe Barnes) to issue a fairness opinion in connection
with the merger. Howe Barnes is a full service brokerage firm that specializes in preparing and
issuing fairness reports. The Company engaged Howe Barnes following a review of multiple proposals
for the engagement based on their reputation and prior experience in evaluating similar
transactions. Howe Barnes fee for preparing and issuing the opinion was approximately $16,000.
On June 24, 2010, Howe Barnes rendered to the CNB Board of Directors its written fairness opinion,
dated June 29, 2010 (Fairness Opinion). Howe Barnes fairness opinion indicated that the merger
agreement and the actions related thereto were fair, from a financial point of view, to the
Companys shareholders.
The full text of the written opinion of Howe Barnes dated June 29, 2010, which sets forth the
assumptions made, matters considered and limitations of the review undertaken, is attached as Annex
C hereto and is incorporated herein by reference. Howe Barnes opinion is directed to the Board,
addresses only the fairness from a financial point of view of the transaction, and does not
constitute a recommendation to any shareholder as to how such shareholder should vote. The
Companys Board of Directors expressly adopts the Fairness Opinion as its own.
As described in its opinion, Howe Barnes assumed and relied upon, without independent verification,
the accuracy, completeness and fairness of the information furnished to or otherwise reviewed by
Howe Barnes for purposes of their opinion. With respect to the information relating to the
prospects of CNB, Howe Barnes assumed that such information reflected the best currently available
judgments and estimates of the management of CNB as to the likely future financial performance of
CNB. Howe Barnes did not verify through independent inspection or examination the specific assets
or liabilities of CNB. Howe Barnes did not make nor were they provided with an independent
evaluation or appraisal of the assets or liabilities of CNB.
In addition to the Fairness Opinion, Howe Barnes provided the Company a fairness report.
RECOMMENDATION OF THE BOARD OF DIRECTORS
(Page 20)
The Board of Directors of CNB believes the amendment and merger agreement are fair to and in the
best interests of CNB and its shareholders, including both affiliated and unaffiliated
shareholders, and unanimously recommends that shareholders of CNB vote For the approval of the
amendment and merger agreement. As used in this proxy statement, the term affiliated shareholder
means any person that directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with CNB. The term unaffiliated shareholder means any
shareholder other than an affiliated shareholder.
7
EFFECTS ON SHAREHOLDERS
(Page 41)
If approved at the Special Meeting, the merger agreement will affect CNB shareholders as follows
after completion:
|
|
|
Shareholder as of Effective Time
|
|
Net Effect After Merger
|
Shareholders holding, in the aggregate,
150 or more shares of CNB Common Stock
|
|
Shares of CNB Common Stock will
continue to be outstanding.
|
|
|
|
Shareholders holding, in the aggregate,
less than 150 shares of CNB Common Stock
|
|
Shares of CNB Common Stock will
be converted into the right to
receive newly created Class A
Common Stock on a
one-share-for-one-share
exchange basis.
|
SHAREHOLDER RIGHTS TO PURCHASE ADDITIONAL STOCK
(Page 40)
All Company shareholders have the right to purchase additional shares of CNB Common Stock which
are already issued and outstanding to increase their share ownership to 150 or more shares and
retain their existing CNB Common Stock. Any shareholders wishing to purchase such shares so they
may retain their common stock are encouraged to complete such a purchase prior to the Special
Meeting of Shareholders to ensure their share purchase will be recorded on the Companys transfer
book prior to the effective time of the transaction. Shareholders purchasing additional Company
shares after the Special Meeting of Shareholders are not assured such purchases will be recorded on
the Companys stock transfer books prior to the effective time of the transaction. The number of
shares attributable to each shareholder will be determined by the Companys transfer book at the
effective time of the transaction.
ESTABLISHING SHARE OWNERSHIP
(Page 40)
According to the terms of the merger agreement, CNB has the right to assume those shareholders
owning fewer than 150 record shares hold, in the aggregate, less than 150 shares total. However,
shareholders have the right to prove to the Company that the shareholders total share ownership,
aggregating both record shares and shares held in another capacity (such as in a trust, IRA or
objecting beneficial owner account) equals or exceeds 150 shares. Company shareholders seeking to
establish ownership of shares held in a capacity other than record ownership must prove their share
ownership to the Companys satisfaction by providing customary business records that establish the
shareholders ownership of the non-record shares. These customary business records could include,
but are not limited to, trust documents, IRA documents, a letter from a broker/dealer indicating
share ownership or otherwise. These documents should be provided to the Company following the
shareholders receipt of the Letter of Transmittal.
THE SPECIAL MEETING
The Special Meeting of Shareholders of CNB will be held at CNB executive offices at 101 South Washington Street, Berkeley Springs, West Virginia
25411 at 2:00 p.m., local time, on December 9,
2010. At the Special Meeting, you will be asked to consider the following proposal:
|
(1)
|
|
Approval of an amendment to the Companys Articles of Incorporation
which authorizes 5,000,000 shares of Class A Common Stock and
5,000,000 shares of Class B Common Stock;
|
|
|
(2)
|
|
Approval of the merger agreement pursuant to
which Merger Corp. will merge with and into CNB
with CNB being the surviving corporation, which
will reclassify all CNB Common Stock held by any
shareholder who holds, in the aggregate, less
than 150 shares into the right to receive CNB
Class A Common Stock on a one-share-for-one-share
exchange basis; and
|
|
|
(3)
|
|
To transact such other business as may properly come before the meeting or any
adjournments thereof.
|
8
QUESTIONS AND ANSWERS ABOUT THE MEETING
Q: WHY DID YOU SEND ME THIS PROXY STATEMENT?
A:
|
|
We sent you this proxy statement and the enclosed proxy because our
Board of Directors is soliciting your votes for use at a Special
Meeting of Shareholders.
|
This proxy statement summarizes information that you need to know in order to cast an informed vote
at the meeting. However, you do not need to attend the meeting to vote your shares. Instead, you
may simply complete, sign and return the enclosed proxy.
We will begin sending this proxy statement, Notice of Special Meeting and the enclosed proxy on or
about November 5, 2010 to all shareholders entitled to vote. Holders of our CNB Common Stock are
entitled to vote at the Special Meeting. The record date for those entitled to vote is
October 15, 2010. On October 7, 2010, there were 441,348 shares of CNB Common Stock
outstanding. Shareholders are entitled to one vote for each share of CNB Common Stock held as of
the record date.
Q:
|
|
WHAT IS THE TIME AND PLACE OF THE SPECIAL MEETING?
|
A:
|
|
The Special Meeting will be held at CNB executive offices at 101 South Washington Street, Berkeley Springs, West
Virginia 25411 at 2:00 p.m., local time, on December 9, 2010.
|
Q:
|
|
WHAT AM I BEING ASKED TO VOTE ON?
|
A:
|
|
You are being asked to vote on the approval of an amendment to the
Companys Articles of Incorporation which will authorize 5,000,000
shares of Class A Common Stock and 5,000,000 shares of Class B Common
Stock. You are also being asked to vote on the approval of the merger
agreement, pursuant to which Merger Corp. will merge with and into
CNB. Assuming the merger is completed, all CNB Common Stock shares
held by any shareholder who holds, in the aggregate, less than 150
shares of CNB Common Stock as of the effective date of the merger will
be converted into the right to receive shares of Class A Common Stock
on a one-share-for-one-share exchange basis. All CNB Common Stock
held by any shareholder who holds, in the aggregate, 150 or more CNB
Common Stock shares as of the effective date of the merger will remain
CNB Common Stock. After the merger, CNB intends to go private and
terminate and suspend its reporting obligations with the SEC.
|
Q:
|
|
WHO MAY BE PRESENT AT THE SPECIAL MEETING AND WHO MAY VOTE?
|
A:
|
|
All holders of our CNB Common Stock and other interested persons may
attend the Special Meeting in person. However, only holders of our
CNB Common Stock of record as of October 15, 2010 may cast their
votes in person or by proxy at the Special Meeting.
|
|
Q:
|
|
WHAT IS THE VOTE REQUIRED?
|
A:
|
|
The vote required for the proposal is as follows:
|
|
|
|
THE AMENDMENT TO THE ARTICLES OF INCORPORATION. The proposal to
approve the amendment to the Companys Articles of Incorporation
must receive the affirmative vote of the holders of at least a
majority of the shares entitled to vote at the Special Meeting of
Shareholders. If you do not vote your shares or if you abstain
from voting on this matter, your shares will have the same effect
as a vote against the amendment.
|
|
|
|
|
THE MERGER AGREEMENT. The proposal to approve the merger
agreement must receive the affirmative vote of the holders of at
least a majority of the shares entitled to vote at the Special
Meeting of Shareholders. If you do not vote your shares or if you
abstain from voting on this matter, your shares will have the same
effect as a vote against the merger agreement.
|
9
Q:
|
|
WHO IS SOLICITING MY PROXY?
|
|
A:
|
|
The Board of Directors of CNB.
|
|
Q:
|
|
WHAT IS THE RECOMMENDATION OF OUR BOARD OF DIRECTORS REGARDING THE
PROPOSALS?
|
|
A:
|
|
Our Board of Directors has determined that the amendment and the
merger agreement are advisable and in the best interests of CNB and
its shareholders. Our Board of Directors has, therefore, unanimously
approved the amendment and the merger agreement and recommends that
you vote FOR approval of these matters at the Special Meeting.
|
|
Q:
|
|
WHAT DO I NEED TO DO NOW?
|
|
A:
|
|
Please sign, date and complete your proxy and promptly return it in
the enclosed, self addressed, prepaid envelope so that your shares can
be represented at the Special Meeting.
|
|
Q:
|
|
IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
|
|
A:
|
|
Your broker will vote your shares for you ONLY if you instruct your
broker how to vote for you. Your broker should mail information to
you that will explain how to give these instructions.
|
|
Q:
|
|
CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
|
|
A:
|
|
Yes. Just send by mail a written revocation or a later-dated,
completed and signed proxy before the Special Meeting or simply attend
the Special Meeting and vote in person. You may not change your vote
by facsimile or telephone.
|
|
Q:
|
|
WHAT IF I DONT SEND BACK A PROXY CARD OR VOTE MY SHARES IN PERSON AT
THE SPECIAL MEETING?
|
|
A:
|
|
Failing to return your proxy card or vote your shares in person at
the Special Meeting, has the same effect as voting against the
transaction, since the approval of a majority of the shares entitled
to vote at the Special Meeting is required.
|
|
Q:
|
|
SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
|
|
A:
|
|
No. After the merger is completed, if you are a shareholder owning
common shares that have been converted into the right to receive Class
A Common Stock shares, we will send instructions on how to exchange
your CNB Common Stock share certificates for newly created Class A
Common Stock share certificates.
|
|
Q:
|
|
WHAT WILL I RECEIVE IN THE MERGER?
|
|
A:
|
|
All CNB Common Stock shares held by any shareholder who holds, in the
aggregate, 150 or more CNB Common Stock shares on the effective date
of the merger will remain CNB Common Stock shares following the
effective date of the merger. All CNB Common Stock shares held by any
shareholder who holds, in the aggregate, less than 150 Common Stock shares on the effective date of the Merger will be converted into the
right to receive newly created Class A Common Stock shares on a
one-share-for-one-share exchange basis at the effective time of the
merger.
|
10
|
|
CNB has the right to reclassify any shares for which the shareholder
cannot prove to the Companys satisfaction are held by a shareholder
owning, in the aggregate, 150 or more CNB Common Stock shares on the
effective date of the merger. The merger agreement has specific
provisions regarding the treatment of shares held in street
name. Please read the discussion under PROPOSAL TWO The Agreement
of Merger Conversion of Shares in the Merger for a description of
these provisions as well as the terms of the merger agreement
generally.
|
|
Q:
|
|
DO THE CLASS A COMMON STOCK SHARES HAVE THE SAME RIGHTS AND PRIVILEGES
AS THE EXISTING COMMON STOCK SHARES?
|
|
A:
|
|
No. The Class A Common Stock shares enjoy rights and privileges that
are separate and distinct from the existing CNB Common Stock shares. The rights and privileges of the Class A Common Stock shares
are explained at Class A Common Stock Characteristics on page 15.
|
|
Q:
|
|
WHAT IF I HOLD SHARES IN STREET NAME?
|
|
A:
|
|
Any shares you hold in street name (beneficial shares) will be added
to the number of any shares you may hold directly in record name in
determining the number of shares you hold, provided you can prove to
the Companys satisfaction the record shares and the beneficial shares
are held by the same owner. You will be entitled to exchange your
existing CNB Common Stock share certificate for a new share
certificate representing ownership of CNBs Class A Common Stock
following the merger only if you certify to CNB that the total number
of shares you hold (whether of record or in street name) is less than
150. The merger agreement has detailed provisions regarding the
treatment of shares held in street name. Please read the discussion
under PROPOSAL TWO The Agreement of Merger Conversion of Shares
in the Merger for a description of these provisions as well as the
terms of the merger agreement generally.
|
|
Q:
|
|
HOW WILL CNB BE OPERATED AFTER THE MERGER?
|
|
A:
|
|
Following the merger, it is expected CNB will be able to terminate its
SEC reporting obligations. CNB expects its business and operations to
continue as they are currently being conducted and, except as
disclosed in this proxy statement, the merger is not anticipated to
have any effect upon the conduct of such business. The CNB Board
believes the going-private transaction is consistent with CNBs vision
of maintaining an independent banking strategy.
|
|
Q:
|
|
IS IT POSSIBLE THE COMPANY MAY LOSE ITS REPORTING TERMINATION AND BE
REQUIRED TO FILE SEC REPORTS IN THE FUTURE?
|
|
A:
|
|
Yes. According to current SEC Rules and Regulations, the Company will
lose its reporting termination and will be required to register under
the Securities Exchange Act of 1934, as amended (1934 Act) and
resume filing certain SEC required filings if the number of
shareholders owning CNBs Common Stock exceeds 500 or the number
of shareholders owning the Companys Class A Common Stock exceeds 500
on January 1 of any year. The Company intends to monitor the number
of shareholders owning its existing Common Stock and newly created
Class A Common Stock in an effort to avoid the requirement to register
under the 1934 Act and begin filing 1934 Act reports.
|
|
Q:
|
|
WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
|
|
A:
|
|
We are working toward completing the merger as quickly as possible and
we expect the merger to be completed shortly after the Special
Meeting.
|
11
Q:
|
|
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?
|
|
A:
|
|
Those shareholders who retain their existing CNB Common Stock shares
and those shareholders who exchange their existing CNB Common Stock
shares for Class A Common Stock shares will not have a taxable event
for Federal income tax purposes. Shareholders who receive cash in the
merger through the exercise of their dissenters rights will have a
taxable event. To review the material tax consequences in greater
detail, please read the discussion under SPECIAL FACTORS Certain
U.S. Federal Income Tax Consequences.
|
(THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
12
SPECIAL FACTORS
BACKGROUND AND PURPOSE OF THE AMENDMENT AND MERGER PROPOSAL
The Company is required to file periodic reporting documents with the SEC pursuant to Section 12(g)
of the 1934 Act. As of October 7, 2010, the Company had 441,348 shares held by approximately 653
holders of record. The Board and CNBs management are of the view that the recurring expense and
burden of maintaining the Companys reporting obligations is not cost efficient for CNB.
Accordingly, the Board and CNBs management believes it is in the Company and shareholders best
interests to reclassify the CNB Common Stock shares owned by the approximately 416 shareholders who
individually own, in the aggregate, less than 150 shares, into the right to receive shares of a
newly created Class A Common Stock, which will have rights and privileges distinct from the CNB
Common Stock so that it will be viewed as a separate class of securities under SEC guidelines.
This reclassification will reduce the number of Company shareholders owning the Companys existing
CNB Common Stock to below 300 and restricting the number of shareholders owning the Companys
existing Class A Common Stock to below 500, which will allow the Company to terminate its Section
12(g) SEC reporting obligations in accordance with Rule 12g-4 and suspend its SEC reporting
obligations in accordance with Rule 12h-3. Additionally, CNB believes that there is a very limited
market for the shares of CNBs Common Stock and that CNBs shareholders derive little benefit from
CNBs status as a public reporting corporation.
The Companys Board of Directors has considered a going private transaction for some time. The
Companys Board has decided to pursue the transaction at this
time to allow
Company employees to focus their efforts on income producing activities, as opposed to non-value
enhancing SEC reporting compliance.
In making the determination to engage in this transaction, the Board of Directors considered other
means of achieving the same result but rejected these alternatives because the Board believed that
the merger proposal would be simpler and less costly. These alternatives were:
|
|
|
A TENDER OFFER AT A FAIR PURCHASE PRICE. This alternative would
have allowed the Companys shareholders to voluntarily tender or
sell their CNB Common Stock to the Company for a stated price
determined by the Company. The Board was uncertain as to whether
this alternative would result in shares being tendered by a
sufficient number of record shareholders so as to accomplish the
going private objective and reducing recurring costs. The Board
felt the cost of the transaction could not be justified based on
the uncertainty regarding the reporting requirements. The Board
also believed the Company and the Companys shareholders would be
best served by preserving the Companys existing capital, instead
of paying out the capital to repurchase CNB Common Stock shares.
|
|
|
|
|
CASH-OUT MERGER. This alternative would accomplish the objective
of reducing the number of record shareholders, assuming approval
of the cash-out merger by CNBs shareholders. In a cash-out
merger, CNB would engage in a merger-type transaction similar to
the Companys proposed transaction with CNB Merger Corporation.
However, a cash-out merger would require shareholders owning less
than a certain number of shares to receive cash for their shares
instead of the newly created Class A Common Stock. The Board of
Directors did not choose to engage in a cash-out merger for a
number of reasons, including:
|
|
|
|
The Board of Directors belief that the existing Common Stock
shareholders should be afforded the benefit of retaining an equity
interest in the corporation;
|
|
|
|
|
Preservation of the Companys capital resources
outweighed any advantages offered by a cash-out
merger; and
|
|
|
|
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The terms of the reorganization as proposed are fair, both
procedurally and from a financial point of view, to the Company
and the Companys shareholders.
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13
The transaction is being structured as an amendment followed by a merger because the Board believes
this structure provides the shareholders the benefit of retaining an equity interest in the Company
and preserving existing Company capital while also accomplishing the Boards objective of reducing
the number of shareholders holding the Companys Common Stock to below 300 and having no more than
500 shareholders holding any other class of Company Stock, which will allow the Company to
terminate and suspend its SEC reporting requirements.
The amendment and merger proposals are being made at this time because the sooner the proposals can
be implemented, the sooner CNB will cease to incur the expenses and burdens of complying with SEC
reporting obligations.
After consideration of the various alternatives described above, the Board determined that the
amendment and merger proposals were the best choice for the shareholders and CNB.
EFFECTS OF THE AMENDMENT
EFFECTS ON CNBS ARTICLES OF INCORPORATION
. Assuming the amendment to the Companys Articles of
Incorporation is approved, the Companys articles will be amended to authorize two new classes of
Common Stock. The Companys existing CNB Common Stock will also remain following the effective
time of the amendment.
CLASS A COMMON STOCK
. The amendment will authorize 5,000,000 shares of newly created Class A
Common Stock. The newly created Class A Common Stock will have rights and privileges that are
different than the rights and privileges of the existing Common Stock. These rights and privileges
are discussed below.
CLASS B COMMON STOCK
. The amendment will authorize 5,000,000 shares of Class B Common Stock. The
newly created Class B Common Stock will have rights and privileges that are different than the
rights and privileges of the existing CNB Common Stock and the newly created Class A Common Stock.
These rights and privileges are discussed below.
No shares of Class B Common Stock will be issued in connection with this reorganization. The Board
of Directors recommends the creation of the Class B Common Stock to allow the Company to have an
authorized additional class of shares in the event the Companys Board of Directors determines the
Company needs to sell or convert additional shares in the future.
EXISTING COMMON STOCK RIGHTS AND PRIVILEGES
Following the effective time of the amendment, the Companys existing CNB Common Stock will
continue to enjoy the same rights and privileges that are currently associated with CNB Common
Stock. These rights and privileges include:
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VOTING RIGHTS The Companys existing CNB Common Stock has full
voting rights. All CNB Common Stock shareholders are entitled to
vote on any and all matters that may come before a vote of the
Companys shareholders. This includes the right to participate in
the annual election of directors.
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DIVIDENDS The Companys existing CNB Common Stock is entitled
to receive dividends as may be declared from time to time by the
Companys Board of Directors. The Companys existing CNB Common
Stock does not cumulate dividends, and there is no obligation on
behalf of the Companys Board of Directors to pay dividends on the
CNB Common Stock.
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CONVERSION Not applicable. The Companys CNB Common Stock is
not convertible to any other class of Company stock.
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REDEMPTION The Companys existing CNB Common Stock has no redemption features.
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RIGHT OF FIRST REFUSAL The Companys existing Common Stock has
no right of first refusal. The foregoing does not limit any
Company shareholders from individually contracting such rights.
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LIQUIDATION PREFERENCE The Companys existing CNB Common Stock
does not have a liquidation preference. Following the
transaction, the existing CNB Common Stock will have last
preference in Company liquidation rights.
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CLASS A COMMON STOCK CHARACTERISTICS
. The newly created Class A Common Stock will have rights and
privileges that are different than the rights and privileges of the existing CNB Common Stock. The
following discusses the rights and privileges of the Class A Common Stock.
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VOTING RIGHTS The Class A Common Stock will be allowed voting
rights only if the shareholders are being asked to approve a
merger, consolidation, conversion, sale of assets other than in
the regular course of business, voluntary dissolution of the
Company, or as required by law. The Class A Common Stock will not
enjoy general voting rights, including the right to participate in
the annual election of directors.
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DIVIDENDS If the Company declares dividends, dividends must be
paid on the Class A Common Stock before dividends may be paid on
the existing CNB Common Stock. However, the Company shall be
under no obligation to pay dividends, and dividends are not
cumulative. If dividends are paid, the dividends paid on the
Class A Common Stock will enjoy a 10% premium over and above what
is paid on the CNB Common Stock.
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CONVERSION In the event the Company is party to a merger, share
exchange, sale of assets other than in the regular course of
business, voluntary dissolution of the Company, or other change in
control which will result in the merger, sale, dissolution or
effective dissolution of the Company, the Class A Common Stock
will be converted into Common Stock shares and will be treated
equally in all respects with the existing CNB Common Stock.
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REDEMPTION The Class A Common Stock will have no redemption rights.
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RIGHT OF FIRST REFUSAL The Class A Common Stock has a right of
first refusal in favor of the Company. Generally, this right of
first refusal requires a Class A Common Stock shareholder to
notify the Company in writing of the terms of any transfer or sale
of the Class A Common Stock. Following receipt of the written
notice, the Company has five (5) business days to either request
additional information regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of
Class A Common Stock that are subject to the proposed transfer or
sale upon the same terms as the proposed transfer or sale. If the
transfer is to be made without consideration (i.e., a gift), the
Company shall have the right to purchase the shares for an amount
determined by the Board to be the fair value of the shares. The
Company retains the right to not exercise its right of first
refusal, which will allow the Class A Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the
proposed transfer or offer. Any Class A Common Stock shares
transferred in violation of the right of first refusal is void and
of no effect and will not be recognized by the Company.
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LIQUIDATION PREFERENCE The Class A Common Stock will have a
liquidation preference over the existing CNB Common Stock and the
Class B Common Stock. In the event of a liquidation, the Class A
Common Stock shareholders will be entitled to receive liquidation
assets equal to those assets received by the Common Stock
shareholders or the book value of the Companys Common Stock,
whichever is greater.
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CLASS B COMMON STOCK CHARACTERISTICS
. The newly created Class B Common Stock will have rights and
privileges that are different than the rights and privileges of the existing CNB Common Stock and
the newly created Class A Common Stock. The following discusses the rights and privileges of the
Class B Common Stock.
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VOTING RIGHTS The Class B Common Stock will be allowed voting
rights only if the shareholders are being asked to approve a
merger, consolidation, conversion, sale of assets other than in
the regular course of business, voluntary dissolution of the
corporation, or as required by law. The Class B Common Stock will
not enjoy general voting rights, including the right to
participate in the annual election of directors.
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DIVIDENDS If the Company declares dividends, dividends must be
paid on the Class B Common Stock after dividends are paid on the
Class A Common Stock, but before dividends may be paid on the
existing CNB Common Stock. However, there shall be no obligation
to pay dividends and dividends shall not be cumulative. If
dividends are paid, the dividends paid on the Class B Common Stock
will enjoy a 20% premium over and above what is paid on the CNB
Common Stock.
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CONVERSION In the event the Company is party to a merger, share
exchange, sale of assets other than in the regular course of
business, voluntary dissolution of the Company, or other change in
control which will result in the merger, sale, dissolution or
effective dissolution of the Company, the Class B Common Stock
will be converted into CNB Common Stock shares and will be treated
equally in all respects with the existing CNB Common Stock.
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REDEMPTION The Class B Common Stock will have no redemption rights.
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RIGHT OF FIRST REFUSAL The Class B Common Stock has a right of
first refusal in favor of the Company. Generally, this right of
first refusal requires a Class B Common Stock shareholder to
notify the Company in writing of the terms of any transfer or sale
of the Class B Common Stock. Following receipt of the written
notice, the Company has five (5) business days to either request
additional information regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of
Class B Common Stock that are subject to the proposed transfer or
sale upon the same terms as the proposed transfer or sale. If the
transfer is to be made without consideration (i.e., a gift), the
Company shall have the right to purchase the shares for an amount
determined by the Board to be the fair value of the shares. The
Company retains the right to not exercise its right of first
refusal, which will allow the Class B Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the
proposed transfer or offer. Any Class B Common Stock shares
transferred in violation of the right of first refusal will be
void and of no effect and will not be recognized by the Company.
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LIQUIDATION PREFERENCE The Class B Common Stock will have a
liquidation preference superior to the existing CNB Common Stock,
but after the Class A Common Stock.
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CNB Financial Services, Inc.
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Stock Comparison Chart
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Characteristic
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Common
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Common A
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Common B
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Voting Rights
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Full voting rights
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As required by law and
for a Merger/Share
Exchange
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As required by law
and for a
Merger/Share
Exchange
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Dividends
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As declared
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10% premium over CNB
Common Stock dividends
with payment before all
other shares
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20% premium over
CNB Common Stock
dividends
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Liquidation Preference
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Last Preference
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Priority over all others
Distribution same as
CNB Common Stock or
book value of common,
whichever is greater
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After Class A
Common Stock but
before CNB Common
Stock
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Conversion to Common
Stock
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N/A
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Conversion to CNB
Common Stock at change
in control
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Conversion to CNB
Common Stock at
change in control
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Transfer Restrictions
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No
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Yes Holding Company
has right of first
refusal
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Yes Holding
Company has right
of first refusal
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Redemption
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None
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None
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None
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EFFECTS OF THE MERGER
EFFECTS ON CNB
. The merger will have various effects on CNB, as described below.
REDUCTION IN THE NUMBER OF COMMON STOCK SHAREHOLDERS AND COMMON STOCK SHARES OUTSTANDING
. CNB
believes the merger will reduce the number of shareholders owning the Companys existing CNB Common
Stock from approximately 653 to approximately 237. Accordingly, the number of outstanding shares
of Common Stock held by current Company shareholders will decrease from approximately 441,348 to
approximately 426,208.
INCREASE IN THE NUMBER OF SHAREHOLDERS OWNING CLASS A COMMON STOCK SHARES
. The Company currently
has no issued or outstanding Class A Common Stock shares. CNB believes the merger will result in
the issuance of approximately 15,140 Class A Common Stock shares to approximately 416 shareholders.
NO CHANGE TO COMPANY CAPITAL
. It is not expected the merger will change the Companys consolidated
capital. The merger is simply a reorganization that will result in certain shares of the Companys
existing CNB Common Stock being reclassified into the right to receive the newly created Class A
Common Stock on a one-share-for-one-share exchange basis. The Company may experience a reduction
in capital if Company shareholders exercise their right to dissent from the transaction.
TERMINATION OF EXCHANGE ACT REGISTRATION
. The Company is currently required to comply with SEC
reporting requirements pursuant to Section 12(g) of the 1934 Act. According to Rule 12g-4, Section
12(g)
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filers may terminate their obligation to comply with SEC reporting requirements if the number
of shareholders owning the class of stock subject to the SEC reporting requirements is reduced to
below 300 and no other class of stock is owned by more than 500 shareholders. Termination of the
Companys reporting requirements under the
1934 Act would substantially reduce the information required to be furnished by CNB to its
shareholders and to the SEC and would make certain provisions of the 1934 Act no longer applicable
to CNB. Accordingly, CNB estimates it will eliminate the cost and expenses associated with
complying with SEC reporting requirements. CNB estimates these costs to be approximately $143,000
annually. CNB intends to apply for such termination as soon as practicable following completion of
the merger.
EFFECT ON MARKET FOR SHARES
. CNBs Common Stock is not traded on the Over-the-Counter Bulletin
Board or any exchange. Any trades are conducted through privately negotiated transactions.
The rights and privileges of the Class A Common Stock provide the Company a right of first refusal
to purchase the shares in the event of a transfer of ownership. The Company expects, but is not
required, to repurchase the Class A Common Stock shares in the event of a transfer of ownership.
Therefore, it is not expected there will be a material trading market for the newly created Class A
Common Stock shares. Instead, it is expected the Company will act as the market maker for these
shares.
EFFECTS ON AFFILIATES
. As a result of the merger, Merger Corp. will cease to exist. All
affiliated shareholders will be treated in the same manner as all unaffiliated shareholders.
Affiliated shareholders will not receive preferential treatment in any manner in this transaction.
Therefore, the transactions effects on affiliates will be the same as the effects on unaffiliated
shareholders. As used in this proxy statement, the term affiliated shareholder means any person
that directly or indirectly through one or more intermediaries controls, is controlled by, or is
under common control with CNB. The term unaffiliated shareholder means any shareholder other
than an affiliated shareholder.
INCREASED SHARE OWNERSHIP OF OFFICERS AND DIRECTORS
. As a result of the merger, CNB expects that
the percentage of ownership of CNB Common Stock held by current officers and directors of CNB as a
group will increase from 15.96% to approximately 16.50%.
EFFECTS ON SHAREHOLDERS
. The merger will have various effects on the Companys shareholders, as
described below. As noted above, these effects will not vary based on whether the shareholder is
an affiliated or unaffiliated shareholder. Affiliated and unaffiliated shareholders will be
treated the same in this transaction. The effects of the merger to a shareholder will vary based
on whether the shareholders shares will be exchanged for newly created Class A Common Stock shares
as a result of the merger. The determination of whether any particular shares of CNB Common Stock
will be exchanged for newly created Class A Common Stock Shares as a result of the merger will be
based on whether the holder of those shares holds, in the aggregate, fewer than 150 shares at the
effective time of the merger.
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SHAREHOLDERS RECEIVING CLASS A COMMON STOCK. Shareholders owning,
in the aggregate, less than 150 shares of CNB Common Stock at the
effective time of the merger will, upon consummation of the
merger:
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have each CNB Common Stock share be converted into the right to
receive newly created Class A Common Stock shares on a
one-share-for-one-share exchange basis; and
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enjoy all the rights and privileges associated with the newly created Class A Common Stock.
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SHAREHOLDERS RETAINING COMMON STOCK SHARES. Shareholders owning,
in the aggregate, 150 or more CNB Common Stock shares immediately
prior to the effective time of the merger will, upon consummation
of the merger, retain their CNB Common Stock shares without
change.
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Potential effects on all shareholders, including both affiliated
and unaffiliated shareholders, following the merger transaction
include:
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DECREASED ACCESS TO INFORMATION. If the merger is effected, CNB
intends to terminate the reporting requirements of its Common
Stock under the 1934 Act. As a result, CNB will no longer be
subject to the periodic reporting requirements of the 1934 Act.
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DIVIDENDS. CNB currently intends to continue to declare and pay
cash dividends on its CNB Common Stock in the foreseeable future.
You should read the discussion under PROPOSAL TWO Dividend
Policies for more information regarding CNBs dividend policies
and the effects of the merger on CNBs payment of dividends.
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
Summarized below are the material federal income tax consequences to CNB and its shareholders
resulting from the merger. This summary is based on existing U.S. federal income tax law, which
may change, even retroactively. This summary does not discuss all aspects of federal income
taxation which may be important to you in light of your individual circumstances. Many
shareholders (such as financial institutions, insurance companies, broker-dealers, tax-exempt
organizations, and foreign persons) may be subject to special tax rules. Other shareholders may
also be subject to special tax rules, including but not limited to shareholders who received CNB
Common Stock as compensation for services. In addition, this summary does not discuss any state,
local, foreign, or other tax considerations.
This summary assumes that you are one of the following: (1) a citizen or resident of the United
States; (2) a corporation or other entity taxable as a corporation created or organized under U.S.
law (federal or state); (3) an estate the income of which is subject to U.S. federal income
taxation regardless of its sources; (4) a trust if a U.S. court is able to exercise primary
supervision over administration of the trust and one or more U.S. persons have authority to control
all substantial decisions of the trust; or (5) any other person whose worldwide income and gain is
otherwise subject to U.S. federal income taxation on a net basis. This summary also assumes that
you have held and will continue to hold your shares as capital assets for investment purposes under
the Internal Revenue Code of 1986, as amended.
For federal income tax purposes, it is intended that neither CNB nor Merger Corp. will recognize
gain or loss for federal or state income tax purposes as a result of the merger.
SHAREHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISOR AS TO THE PARTICULAR FEDERAL, STATE,
LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES, IN LIGHT OF THEIR SPECIFIC CIRCUMSTANCES.
FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS WHO HOLD, IN THE AGGREGATE, 150 OR MORE COMMON
STOCK SHARES OF COMPANY STOCK AT THE EFFECTIVE TIME OF THE TRANSACTION
If you (1) hold, in the aggregate, 150 or more CNB Common Stock shares at the effective time of the
merger, (2) continue to hold CNB Common Stock immediately after the merger, and (3) receive no cash
as a result of your dissent from the merger, you will not recognize any gain or loss in the merger
and you will have the same adjusted tax basis and holding period in your CNB Common Stock as you
had in such stock immediately prior to the merger.
FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS WHO HOLD, IN THE AGGREGATE, LESS THAN 150 COMMON
STOCK SHARES OF COMPANY STOCK AT THE EFFECTIVE TIME OF TRANSACTION
If you (1) hold, in the aggregate, less than 150 shares of CNB Common Stock at the effective time
of the merger, (2) have your existing CNB Common Stock converted into the right to receive Class A
Common Stock, (3) exchange your existing CNB Common Stock for shares of newly created Class A
Common Stock on a one-
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share-for-one-share exchange basis, and (4) do not receive cash as a result of your dissent from the merger, you
will not recognize any gain or loss in the merger and you will have the same adjusted tax basis and
holding period in your CNB Common Stock as you had in such stock immediately prior to the merger.
FEDERAL INCOME TAX CONSEQUENCES TO ANY SHAREHOLDER WHO DISSENTS FROM THE TRANSACTION
Any shareholder who dissents from the transaction and receives in cash the fair value of their
shares will have a taxable event. These shareholders should consult their individual tax advisor
to determine whether the shares qualify for capital gains treatment and the other specific
information related to their situation.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN, AND
OTHER TAX CONSEQUENCES OF THE TRANSACTION, IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.
CAPITAL GAIN AND LOSS
For those individuals who may choose to dissent from the transaction and instead receive the fair
value in cash for their CNB Common Stock shares, net capital gain (defined generally as your total
capital gains in excess of capital losses for the year) recognized upon the sale of capital assets
that have been held for more than 12 months generally will be subject to tax at a rate not to
exceed 20%. Net capital gain recognized from the sale of capital assets that have been held for 12
months or less will continue to be subject to tax at ordinary income tax rates. In addition,
capital gain recognized by a corporate taxpayer will continue to be subject to tax at the ordinary
income tax rates applicable to corporations. There are limitations on the deductibility of capital
losses.
BACKUP WITHHOLDING
Shareholders who dissent from the transaction and instead receive in cash the fair value for their
shares and those shareholders who exchange their CNB Common Stock shares for Class A Common Stock
may be required to provide their social security or other taxpayer identification numbers (or, in
some instances, additional information) in connection with the merger to avoid backup withholding
requirements that might otherwise apply. The letter of transmittal that is used to submit CNB
Common Stock share certificates will require each shareholder to deliver such information when the
CNB Common Stock certificates are surrendered following the effective date of the merger. Failure
to provide such information may result in backup withholding.
AS EXPLAINED ABOVE, ANY AMOUNTS PAID TO YOU AS A RESULT OF THE MERGER MAY RESULT IN CAPITAL GAIN
INCOME, DEPENDING ON YOUR INDIVIDUAL CIRCUMSTANCES. THE U.S. FEDERAL INCOME TAX DISCUSSION SET
FORTH ABOVE IS BASED UPON PRESENT LAW, WHICH IS SUBJECT TO CHANGE POSSIBLY WITH RETROACTIVE EFFECT.
YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER
TAX CONSEQUENCES OF THE TRANSACTION, IN LIGHT OF YOUR SPECIFIC CIRCUMSTANCES.
RECOMMENDATION OF THE BOARD OF DIRECTORS; FAIRNESS OF THE AMENDMENT AND MERGER PROPOSAL
The Board believes the amendment and the merger agreement, taken as a whole, is fair to, and in the
best interests of, CNB and its shareholders, including unaffiliated shareholders. The Board
believes the transaction is fair to those shareholders who will retain their CNB Common Stock
shares, and to those shareholders whose CNB Common Stock shares will be converted into the right to
receive Class A Common Stock shares on a one-for-one share basis. The Board also believes that the
process by which the transaction is to be approved is fair.
The Board recommends that the shareholders vote for approval and adoption of the amendment and the
merger agreement as described in this document. Each member of the Board and each officer of CNB
who owns shares of CNB Common Stock has advised CNB that he intends to vote his shares in favor of
the amendment and merger agreement. As of October 7, 2010, the directors and officers of CNB
beneficially owned a total of 70,439 shares of CNB Common stock, or approximately 15.96% of the
total shares entitled to vote at the Special Meeting.
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The Board has retained for itself the absolute authority to reject (and not implement) the
amendment and the merger agreement (even after approval thereof by shareholders) if it determines
subsequently that the amendment and/or the merger agreement is not then in the best interests of
CNB and its shareholders. A Board decision to terminate the transaction would occur only after the
occurrence of some material event after the mailing of these proxy materials and would be based
upon full Board deliberation regarding the benefits and detriments of both completing and
terminating the transaction in light of such an event. The Boards deliberations would include
discussions as to the effects on all shareholders, including affiliated and unaffiliated
shareholders, of abandoning the transaction. Such a termination would occur only by a majority
vote of the Board of Directors. If the Board chose to terminate the transaction following
shareholder approval, all shareholders would be notified by a Company letter describing the reasons
for the termination and the Companys filing of a Form 8-K with the SEC. It is not expected the
Board will choose to terminate the transaction following shareholder approval.
The Board unanimously approved the amendment and the merger agreement.
The Board considered a number of factors in determining whether to approve the merger agreement.
CNBs primary reason for adopting the amendment and the merger agreement is that, following the
effective time of the transaction, the Company will be able to terminate its SEC reporting
requirements. The Board considered the views of management relating to cost savings to be achieved
by terminating the registration requirements of the CNB Common Stock under the 1934 Act. CNBs
management determined that cost savings of approximately $143,000 per year could be achieved if CNB
terminated its SEC reporting obligations imposed by the 1934 Act, including indirect savings
resulting from reductions in the time and effort currently required of management to comply with
the reporting and other requirements associated with continued reporting of the CNB Common Stock
under the 1934 Act. The Board also considered the effect that terminating the reporting
requirements of the CNB Common Stock would have on the market for the CNB Common Stock and the
ability of shareholders to buy and sell shares, as well as the market for the newly created Class A
Common Stock. The Board determined that, even as a publicly-traded corporation, there is a limited
market for the shares of the CNB Common Stock, especially for sales of large blocks of such shares,
and that CNBs shareholders derive little benefit from CNBs status as an SEC reporting company.
The Board determined that the cost savings and reduced burden on management to be achieved by
terminating the Companys reporting requirements on the CNB Common Stock under the 1934 Act
outweighed any potential detriment from terminating such reporting requirements.
The Board considered numerous factors, discussed below, in reaching its conclusion as to the
fairness of the amendment and merger agreement to our shareholders, including both affiliated and
unaffiliated shareholders. The Board also engaged the services of a financial adviser to provide
an opinion as to the fairness of the transaction, from a financial point of view, to the Companys
shareholders who will retain their CNB Common Stock, and the Companys shareholders who will
exchange their CNB Common Stock for newly created Class A Common Stock on a one-share-for-one-share
exchange basis. The Board did not assign any specific weights to the factors listed below.
Moreover, in their considerations, individual directors may have given differing weights to
different factors.
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BURDEN OF SEC REPORTING REQUIREMENTS The Board considered the
time and expense involved in preparing and filing the documents
the Company is required to file with the SEC pursuant to Section
12(g) of the Exchange Act. In considering this burden, the Board
considered both the actual money expended on the preparation and
filing of the documents, as well as the time Company officers and
directors spent in preparing the required documentation.
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LACK OF PERCEIVED BENEFIT FROM REPORTING COMPANY STATUS The
Board considered the benefits afforded to the Company by reason of
its reporting Company status. The directors considered both the
information that was made publicly available through the SEC
filings, as well as what information would be available to
shareholders following the termination of the SEC reporting
requirements, which include quarterly call reports for CNBs
subsidiary bank and biannual bank holding company financial
reports for the Company. Following the termination of the
Companys SEC reporting requirements, the Companys obligation to
file these quarterly and biannual financial reports will continue
under Federal banking laws. In addition, the Companys Board of
Directors has indicated the Company will continue to produce an
annual report to shareholders, which will contain information
similar to the information currently disclosed in the Companys
quarterly and annual SEC reports. Based on this review, the Board
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felt the cost and time associated with preparing the SEC filings
was not justified, based on the Company information that would
still be publicly available following the suspension of the
reporting requirements.
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RIGHTS AND PRIVILEGES OF NEWLY CREATED CLASS A COMMON STOCK The
Board considered the rights and privileges of the newly created
Class A Common Stock. The Board considered the voting rights,
dividend preferences, conversion rights, redemption rights, right
of first refusal in favor of the Company, and the liquidation
preference of the newly created Class A Common Stock and the Class
B Common Stock. After reviewing the rights and privileges of the
newly created classes, the Board felt the rights and privileges of
the Class A Common Stock and Class B Common Stock presented rights
and privileges that were commensurate with the rights and
privileges of the existing CNB Common Stock.
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FAIRNESS TO ALL SHAREHOLDERS The Board considered the overall
fairness of the transaction to both those shareholders retaining
their existing CNB Common Stock and those shareholders who will
have their CNB Common Stock converted into the right to receive
Class A Common Stock on a one-share-for-one-share exchange basis.
The Board also considered the fairness of the transaction
procedure.
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OPINION OF FINANCIAL ADVISOR. The Board considered the opinion of
Howe Barnes Hoefer & Arnett rendered to the Board on June 24, 2010
to the effect of, as of the date of such opinion and based upon
and subject to certain matters stated therein, the terms of the
merger agreement providing for certain Company shareholders to
retain their CNB Common Stock shares and certain Company
shareholders to exchange their CNB Common Stock shares for newly
created Class A Common Stock shares, was fair, from a financial
point of view, to CNBs shareholders, including affiliated and
unaffiliated shareholders.
|
In connection with its deliberations, the Board did not consider CNBs current market prices,
historical market prices, net book value, going concern value or liquidation value. The Board did
not view the Companys current or historical stock prices or book, going concern or liquidation
values to be material to the determination of fairness to the shareholders because the terms of the
merger agreement provide each Company shareholder the ability retain an ongoing equity interest in
Company. The Companys Board of Directors recognized those shareholders exchanging their Common
Shares would be doing so for other equity securities, as opposed to cash. Thus, the various cash
values described above were not deemed to be material to the determination of fairness.
In accordance with the West Virginia Business Corporation Act, the amendment and the merger agreement
require the approval at least a majority of the shares entitled to vote at the Special Meeting of
Shareholders. Neither the amendment nor the merger agreement requires a separate majority approval
from the unaffiliated shareholders. This separate majority approval is not required because the West
Virginia Business Corporation Act does not require such a separate approval and the Companys
directors do not believe such a separate approval is required to make the transaction procedurally
fair. The Companys Board of Directors believes the transaction to be procedurally fair to all
shareholders based on the compliance of the transaction with the West Virginia Business Corporation Act
and the ability for each shareholder to dissent from the transaction.
The Companys directors unanimously approved the amendment and the merger agreement. Accordingly,
a majority of the Companys directors who are not employees of the Company voted in favor of the
transaction. The Company directors who are not Company employees have not retained an unaffiliated
representative to act solely on behalf of the unaffiliated security holders for purposes of
negotiating the amendment or merger agreement and/or preparing a report concerning the fairness of
the transaction. An unaffiliated representative to act solely on behalf of the unaffiliated
shareholders was not appointed because the West Virginia Business Corporation Act does not require such
an appointment and the Companys directors do not believe such a representative is required to make
the transaction procedurally fair. The Companys Board of Directors believes the transaction to be
procedurally fair to all shareholders based on the compliance of the transaction with the West Virginia
Business Corporation Act and the ability for each shareholder to dissent from the transaction.
Affiliated security holders will have access to the Companys corporate files only as allowed by
applicable West Virginia law. Further, unaffiliated shareholders shall not have the right to
obtain counsel or appraisal services at the Companys expense.
22
No firm offers, other than in conjunction with the merger, of which the Board is aware have been
made by an unaffiliated person during the preceding two years for (i) the merger or consolidation
of CNB into or with such person, (ii) the sale or other transfer of all or any substantial part of
the assets of CNB, or (iii) the purchase of a number of shares of CNB Common Stock that would
enable the holder thereof to exercise control of CNB.
After consideration of all this information, the Board determined that the amendment and the merger
agreement, which provides for the shares held by those shareholders who hold, in the aggregate, 150
or more CNB Common Stock shares to remain as existing CNB Common Stock shares, and those shares
held by any shareholder who holds, in the aggregate, less than 150 shares to be converted into the
right to receive the newly created Class A Common Stock on a one-share-for-one-share exchange basis
to be fair to and in the best interest of the Companys shareholders.
OPINION OF FINANCIAL ADVISOR
CNB engaged Howe Barnes Hoefer & Arnett (Howe Barnes) to issue a fairness opinion in connection
with the merger. The Companys Board of Directors engaged Howe Barnes to determine whether the
exchange of the Companys Class A Common Stock, the terms of which were set by the Board of
Directors prior to the engagement of Howe Barnes, were fair, from a financial point of view, to the
Companys shareholders. Howe Barnes is a full service brokerage firm that specializes in preparing
and issuing fairness opinions. The Company engaged Howe Barnes following a review of multiple
proposals for the engagement based on their reputation and prior experience in evaluating similar
transactions. Howe Barnes fee for preparing and issuing the opinion was approximately $16,000.
Howe Barnes fairness opinion sets forth the terms of the transaction, including the rights and
privileges of the newly created Class A Common Stock, discloses the various items Howe Barnes
relied upon in forming the fairness opinion, which include discussions with Company
representatives, the merger agreement, audited and unaudited Company financial statements, Company
financial forecasts and projections, (including the 2010 budget, securities portfolio report,
listing of OREO and fixed assets, loan watch list and assumed asset growth and profitability
rates), historical Company stock activity and financial performance, similar transactions and other
relevant information, and indicates the merger agreement and the actions related thereto are fair,
from a financial point of view, to all Company shareholders. The report will be available to the
Companys shareholders and any shareholder representative who has been so designated in writing for
inspection and copying at the Companys principal executive offices during its regular business
hours up to the time of the Companys special meeting of shareholders.
As described in its opinion, Howe Barnes assumed and relied upon, without independent verification,
the accuracy, completeness and fairness of the information furnished to or otherwise reviewed by
Howe Barnes for purposes of their opinion. With respect to the information relating to the
prospects of CNB, Howe Barnes assumed that such information reflected the best currently available
judgments and estimates of the management of CNB as to the likely future financial performance of
CNB. Howe Barnes did not verify through independent inspection or examination the specific assets
or liabilities of CNB. Howe Barnes did not make nor were they provided with an independent
evaluation or appraisal of the assets or liabilities of CNB.
The full text of the written opinion of Howe Barnes dated June 29, 2010, which set forth the
assumptions made, matters considered and limitations of the review undertaken, is attached as Annex
C hereto and is incorporated herein by reference. Howe Barnes opinion is directed to the Board,
addresses only the fairness from a financial point of view of the transaction, and does not
constitute a recommendation to any shareholder as to how such shareholder should vote. The
Companys Board of Directors expressly adopts the fairness opinion as its own.
In rendering its fairness opinion, Howe Barnes presented to the Companys Board of Directors a
Documentation Report Relating to the Fairness of the Proposed Merger of CNB Financial Services,
Inc. With and Into CNB Merger Corp. (Fairness Report). This report contains a description of the
assignment, which explains the Company engaged Howe Barnes to determine whether the terms of the
proposed merger of the Company with and into CNB Merger Corp. with the Company being the surviving
corporation pursuant to the merger agreement are fair to the shareholders of CNB from a financial
point of view.
23
The Fairness Report also discusses the terms of the transaction, which provide all CNB Common Stock
shares held by any shareholder who holds, in the aggregate 150 or more CNB Common Stock shares will
remain CNB Common Stock shares and CNB Common Stock shares held by any shareholder who holds, in
the aggregate, less than 150 CNB Common Stock shares will be converted into the right to receive
CNB Class A Common Stock on a one-share-for-one-share exchange basis and discusses the Class A
Common Stock rights and privileges, which were set by the Companys Board of Directors, not Howe
Barnes.
The Fairness Report details 20 selected going private transactions (the Guideline Transactions)
announced from June 30, 2005 to June 18, 2010 involving U.S. banking organizations. Howe Barnes
reviewed the terms of the transactions and the characteristics of the new classes of common stock
and preferred stocks for those transactions and compared them with the terms of the merger and the
newly created Class A Common Stock. The Fairness Report finds the dividend premium for the new
classifications of common and preferred stocks from the 20 Guideline Transactions ranged from 0 to
10%. In this transaction, the Class A Common Stock will receive a 10% premium on the dividends
paid to holders of Class A Common Stock, which falls within the range of values in the Guidelines
Transactions, which, according to the Fairness Report, supports the fairness of the transaction.
In addition to reviewing the Guideline Transactions, the fairness opinion includes an analysis of
the Companys historical financial performance for the years 2006 through 2009 and through March
31, 2010.
In forming the fairness opinion, Howe Barnes reviewed and relied upon a number of Company
documents, reports, budgets, growth assumptions, and other similar information. The information
requested by and provided to Howe Barnes is described below.
|
|
|
Howe Barnes requested a list of all shareholders owning more than
5% of the Companys outstanding common shares. The Company has
two shareholders that own more than 5% of the Companys
outstanding common shares.
|
|
|
|
|
Howe Barnes requested and was provided with a copy of the
Companys December 31, 2009 holding company Y-9 report. Howe
Barnes also requested and was provided with a copy of the Banks
March 31, 2010 Report of Condition and Income (Bank Call
Report). Both of these reports are available online at
www.ffiec.gov
.
|
|
|
|
|
Howe Barnes requested and was provided with a copy of the
Companys 2009 Annual Report. Copies of the Companys 2009 Annual
Report were previously provided to Company shareholders and are
available online at
www.sec.gov
.
|
|
|
|
|
Howe Barnes requested and was provided with a copy of the
Companys 2010 budget prepared by the Companys officers for the
Companys Board of Directors. The budget was originally approved
by the Companys Board of Directors on February 18, 2010
and updated in July, 2010.
|
|
|
|
|
Howe Barnes requested and was provided a copy of the Companys
security portfolio schedule showing the book value and fair market
values and maturity for each of the Companys securities as of
March 31, 2010. This information is summarized in the Companys
Call Report as of the same date.
|
|
|
|
|
Howe Barnes requested and was provided a listing of the stated
book value and fair market or assessed value of the Companys
fixed assets and other real estate owned as of March 31, 2010.
|
|
|
|
|
Howe Barnes requested and was provided a copy of the Companys
loan watch list as of March 31, 2010.
|
|
|
|
|
Howe Barnes requested and was provided a copy of the Companys
loan loss reserve adequacy calculation as of March 31, 2010.
|
|
|
|
|
Howe Barnes requested information relating to the Companys
expected asset growth rate, return on assets, and cash dividend
payout rate for the years 2010 through 2014. The information
provided to Howe Barnes in response to such request is set forth
below.
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Growth Rate
|
|
Return on Assets
|
|
Cash Dividend Payout Rate
|
2010
|
|
|
2.20
|
%
|
|
|
0.75
|
%
|
|
|
30.00
|
%
|
2011
|
|
|
5.00
|
%
|
|
|
0.80
|
%
|
|
|
30.00
|
%
|
2012
|
|
|
5.00
|
%
|
|
|
0.85
|
%
|
|
|
30.00
|
%
|
2013
|
|
|
7.00
|
%
|
|
|
0.95
|
%
|
|
|
30.00
|
%
|
2014
|
|
|
7.00
|
%
|
|
|
1.00
|
%
|
|
|
30.00
|
%
|
The information below presents projected financial information for CNB for 2010, including the
projected Balance Sheet and Income Statement, as per CNBs budget.
BALANCE SHEET
|
|
|
|
|
|
|
December 2010 Budget
|
|
ASSETS
|
|
|
|
|
Total Cash
|
|
$
|
1,918,268
|
|
Total Cash Items
|
|
|
1,155
|
|
Total Due from Banks
|
|
|
2,469,775
|
|
Total Cash/Due from Banks
|
|
|
4,389,198
|
|
Total Investments
|
|
|
81,007,908
|
|
Total Real Estate Loans
|
|
|
123,504,407
|
|
Total Commercial Real Estate Loans
|
|
|
42,269,949
|
|
Total Consumer Loans
|
|
|
15,305,207
|
|
Total Commercial Loans
|
|
|
8,187,730
|
|
Total Loans in Process
|
|
|
418,859
|
|
Total Net Deferred Fees
|
|
|
398,867
|
|
Gross Loans
|
|
|
190,085,019
|
|
Allowance for Loan Losses
|
|
|
(5,077,094
|
)
|
Net Loans
|
|
|
185,007,925
|
|
Total Premises and Equipment
|
|
|
5,722,026
|
|
Other Real Estate Owned
|
|
|
391,667
|
|
Total Interest Receivable Investment
|
|
|
578,693
|
|
Total Interest Receivable Loan
|
|
|
791,327
|
|
Total Taxes Receivable
|
|
|
(6,015
|
)
|
Total Deferred Fees
|
|
|
1,897,637
|
|
Total Prepaids
|
|
|
1,320,185
|
|
Other Assets
|
|
|
1,575,500
|
|
Total Other Assets
|
|
|
6,157,327
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
282,676,051
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Total Deposits
|
|
$
|
249,401,018
|
|
Borrowed Funds
|
|
|
|
|
Total Interest Payable
|
|
|
1,057,550
|
|
Total Taxes Payable
|
|
|
205,604
|
|
Total Payroll Taxes Payable
|
|
|
413
|
|
Total Miscellaneous Payable
|
|
|
353,573
|
|
Total Other Payable Loans
|
|
|
91,628
|
|
Total Other Payables Employees
|
|
|
4,399,391
|
|
Total Other Liabilities
|
|
|
6,108,159
|
|
Total Equity Capital
|
|
|
27,166,874
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
282,676,051
|
|
|
|
|
|
INCOME STATEMENT
|
|
|
|
|
|
|
December 2010 Budget
|
|
INTEREST INCOME
|
|
|
|
|
Total Investment Income
|
|
$
|
2,967,897
|
|
Total Real Estate Loan Income
|
|
|
7,801,215
|
|
Total Commercial Real Estate Loan Income
|
|
|
2,439,728
|
|
Total Consumer Loan Income
|
|
|
1,385,663
|
|
Total Commercial Loan Income
|
|
|
282,692
|
|
Total Loan Income
|
|
|
11,909,298
|
|
|
|
|
|
TOTAL INTEREST INCOME
|
|
$
|
14,877,195
|
|
|
|
|
|
|
INTEREST EXPENSE
|
|
|
|
|
Total Deposit Expense
|
|
$
|
4,800,721
|
|
Total Borrowed Funds Expense
|
|
|
30,402
|
|
|
|
|
|
TOTAL INTEREST EXPENSE
|
|
$
|
4,831,123
|
|
|
|
|
|
|
NET INTEREST INCOME
|
|
$
|
10,046,072
|
|
|
|
|
|
TOTAL NON-INTEREST INCOME
|
|
$
|
2,240,655
|
|
TOTAL NON-INTEREST EXPENSE
|
|
$
|
8,606,593
|
|
PROVISION FOR LOAN LOSSES
|
|
$
|
1,820,000
|
|
|
|
|
|
INCOME BEFORE TAX
|
|
$
|
1,860,134
|
|
NET TAXES AND ADJUSTMENTS
|
|
|
285,030
|
|
|
|
|
|
NET INCOME
|
|
$
|
1,575,104
|
|
|
|
|
|
The original 2010 budget was completed in early January 2010. In July 2010, a revised second half
2010 budget was developed to incorporate new business and economic trends in CNBs market area.
Earnings projections for the last six months of 2010 are expected to be impacted by the continued
slowing in CNBs loan demand and poor economic conditions. CNB is anticipating an additional
expense of approximately $990,000 to the provision for loan losses for the last six months of 2010
due to the continued foreclosure activity, increased number of impaired loans and loans with
weaknesses. Another significant factor affecting the 2010 net income are increased expenses
related to the FDIC insurance regular assessment. The Federal Reserve amended Regulation E to
require financial institutions to obtain a specific opt-in consent from customers in order for the
institution to be able to pay into overdraft and charge an overdraft fee whenever a customers ATM
transactions and one-time debit card transactions, such as point of sale transactions, cause an
account to go into overdraft. This amendment will have an impact on CNBs overdraft fee income in
2010. The passage of the interchange act by Congress in July 2010 will have an impact on CNBs ATM
and debit card interchange fee income in 2010.
In conducting its review and arriving at its opinion, Howe Barnes relied upon and assumed the
accuracy and completeness of the financial and other information provided to it, or made publicly
available, and has not assumed any responsibility for independent verification of the same. In
performing the fairness opinion, Howe Barnes relied upon the management of CNB as to the
reasonableness of the financial and operating forecast and projections (and the assumption and
bases therefor) provided. Howe Barnes has assumed that such forecasts and projections reflect the
best currently available estimates and judgment of the management of CNB. Howe Barnes did not make
or obtain any evaluations or appraisals of the assets or liabilities of CNB.
Based on the projected cost savings from terminating SEC reporting obligations, which are assumed
to be approximately $143,000 annually, the comparative analysis with the Guideline Transactions
and, assuming the accuracy and completeness of the information and data provided to Howe Barnes by
CNB, Howe Barnes is of the opinion that, as of the date of the fairness opinion, the terms of the
proposed transactions are fair to the shareholders of CNB, from a financial point of view. The
Companys Board of Directors expressly adopts the fairness opinion as its own.
YOU ARE ENCOURAGED TO READ THE HOWE BARNES FAIRNESS OPINION AND FAIRNESS REPORT IN THEIR
ENTIRETY. THE FULL TEXT OF THE HOWE BARNES OPINION AND REPORT ARE ATTACHED AS ANNEX C TO THIS
PROXY STATEMENT.
25
SUMMARY
FINANCIAL INFORMATION
SUMMARY HISTORICAL FINANCIAL INFORMATION OF CNB
The following summary historical consolidated financial data for CNB for the fiscal years ended December 31, 2007, 2008 and 2009, was
derived from the audited consolidated financial statements of CNB. The unaudited historical consolidated financial data of CNB as of and for
the six months ended June 30, 2009 and 2010 was derived from CNBs unaudited interim consolidated financial statements which, in the
opinion of management of CNB, have been prepared on the same basis as the audited consolidated financial statements and include all adjustments
(consisting of only normal recurring adjustments) necessary for a fair presentation of the financial data for such periods. The income statement data
for the six months ended June 30, 2010 is not necessarily indicative of results for a full year. This financial information is only a summary and should
be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements
of CNB and the notes thereto included in our 2009 Annual Report to Shareholders and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010,
and the Selected Historical Financial Data included elsewhere in this proxy statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR ENDED
|
|
SIX MONTHS ENDED
|
|
|
DECEMBER 31,
|
|
JUNE 30,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2010
|
|
2009
|
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
CONSOLIDATED
INCOME STATEMENT DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income
|
|
$
|
15,642
|
|
|
$
|
16,996
|
|
|
$
|
17,201
|
|
|
$
|
7,504
|
|
|
$
|
7,870
|
|
Total interest expense
|
|
|
5,412
|
|
|
|
6,307
|
|
|
|
7,725
|
|
|
|
2,458
|
|
|
|
2,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
10,230
|
|
|
|
10,688
|
|
|
|
9,476
|
|
|
|
5,046
|
|
|
|
5,181
|
|
Income before income taxes
|
|
|
2,715
|
|
|
|
4,022
|
|
|
|
3,695
|
|
|
|
991
|
|
|
|
1,615
|
|
Income tax expense
|
|
|
566
|
|
|
|
1,307
|
|
|
|
1,191
|
|
|
|
142
|
|
|
|
470
|
|
Net Income
|
|
|
2,150
|
|
|
|
2,715
|
|
|
|
2,504
|
|
|
|
850
|
|
|
|
1,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
4.82
|
|
|
|
6.01
|
|
|
|
5.48
|
|
|
|
1.92
|
|
|
|
2.56
|
|
Cash Dividends
|
|
|
1.55
|
|
|
|
1.90
|
|
|
|
1.69
|
|
|
|
.53
|
|
|
|
.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
289,498
|
|
|
$
|
282,257
|
|
|
$
|
290,415
|
|
|
$
|
282,821
|
|
|
$
|
289,498
|
|
Shareholders equity
|
|
|
25,630
|
|
|
|
23,218
|
|
|
|
22,821
|
|
|
|
26,704
|
|
|
|
25,630
|
|
Tier 1 capital
|
|
|
8.8
|
%
|
|
|
8.6
|
%
|
|
|
7.7
|
%
|
|
|
9.3
|
%
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RATIO OF
EARNINGS TO FIXED CHARGES*:
|
|
|
1.60
|
|
|
|
1.64
|
|
|
|
1.48
|
|
|
|
1.40
|
|
|
|
1.50
|
|
|
|
|
|
*
|
|
(Net income before taxes + interest expense) / interest
expense
|
|
PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
The CNB Common Stock is not listed on an exchange and is not heavily traded. The trades that have
occurred are those that, to managements knowledge, have been individually arranged. The prices
listed below are based upon information available to management through discussions with
shareholders, and to managements knowledge, represent the amount at which its stock was traded
during the periods indicated. Prices reflect amounts paid by purchasers of the stock and
therefore, may include commissions or fees. The amounts of such commissions or fees, if any, are
not known to management. No attempt was made by management to ascertain the prices for every sale
made during these periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIGH
|
|
LOW
|
|
CASH
|
|
|
TRADE
|
|
TRADE
|
|
DIVIDENDS
|
|
|
PRICE
|
|
PRICE
|
|
DECLARED
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
80.00
|
|
|
$
|
65.00
|
|
|
$
|
|
|
Second Quarter
|
|
|
67.00
|
|
|
|
65.50
|
|
|
|
0.53
|
|
Third Quarter
|
|
|
63.50
|
|
|
|
63.50
|
|
|
|
|
|
Fourth Quarter
|
|
|
63.85
|
|
|
|
49.40
|
|
|
|
1.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
66.00
|
|
|
$
|
47.00
|
|
|
$
|
|
|
Second Quarter
|
|
|
60.00
|
|
|
|
44.50
|
|
|
|
0.53
|
|
Third Quarter
|
|
|
46.70
|
|
|
|
46.70
|
|
|
|
|
|
Fourth Quarter
|
|
|
46.60
|
|
|
|
45.25
|
|
|
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
47.00
|
|
|
|
47.00
|
|
|
|
0.00
|
|
Second Quarter
|
|
|
51.50
|
|
|
|
49.50
|
|
|
|
0.53
|
|
|
26
As of
October 7, 2010, the Company had approximately 653 shareholders, including registered
holders and beneficial owners of shares held in street name.
As a bank holding company, the Companys ability to pay dividends will depend upon the dividends it
receives from CNB Bank, Inc. (Bank), the holding companys sole subsidiary. Also, the ability of
the Company to pay dividends depends on the extent of any Company obligations, such as debt service
and whether the Company is current with any debt service obligations and not in default with the
terms of any loan agreement. The Companys ability to pay dividends is also restricted by federal
and state banking regulations and, in particular, the Companys obligation to act as a source of
strength to its wholly owned subsidiary bank.
As the sole Bank shareholder, the Company is entitled to dividends as may be declared by the
Board of Directors of the Bank out of funds legally available for dividends. The future dividend
policies of the Bank, however, are subject to the discretion of the Board of Directors of the Bank
and will depend upon such factors as future earnings, financial condition, cash needs, capital
adequacy, compliance with applicable statutory and regulatory requirements and general business
conditions. West Virginia state law allows a banks board of directors to declare a dividend of so
much of the Banks net profits as they shall judge expedient, except that until the surplus fund of
such banking institution equals its common stock, no dividends shall be declared unless there has
been carried to the surplus fund not less than 10% of the Banks net profits of the preceding half
year in the case of quarterly or semi-annual dividends, or not less than 10% of the Banks net
profits of the preceding two consecutive half-years in the case of annual dividends. Further, West
Virginia state law requires approval of the State Banking Commissioner before a bank may declare
dividends which exceed the total of its net profits of that year, combined with its retained net
profits of the preceding two years. As of January 1, 2010, CNB had $5,744,000 available for
dividends.
On August 23, 2007, the Board of Directors approved a stock repurchase
program to repurchase issued shares of common stock of CNB. Management is
authorized to repurchase up to 45,504 shares or 10% of the outstanding shares
of CNBs Common Stock at the prevailing fair market value. Below is a listing
of the shares repurchased during the past two years (by quarter) and
information relating to the repurchase price of those shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
|
|
Period
|
|
Shares Purchased
|
|
Range of Prices
|
|
Average Purchase Price
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
3,900
|
|
|
$
|
65.50 $66.00
|
|
|
$
|
65.87
|
|
Third Quarter
|
|
|
820
|
|
|
|
63.50 63.85
|
|
|
|
63.64
|
|
Fourth Quarter
|
|
|
1,078
|
|
|
|
49.40 50.00
|
|
|
|
49.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
1,753
|
|
|
$
|
47.00 $50.00
|
|
|
$
|
47.34
|
|
Second Quarter
|
|
|
1,550
|
|
|
|
44.50 48.50
|
|
|
|
45.56
|
|
Third Quarter
|
|
|
400
|
|
|
|
46.70
|
|
|
|
46.70
|
|
Fourth Quarter
|
|
|
1,800
|
|
|
|
45.25 46.60
|
|
|
|
45.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
844
|
|
|
|
$47.00
|
|
|
$
|
47.00
|
|
Second Quarter
|
|
|
1,456
|
|
|
|
49.50 51.50
|
|
|
|
50.25
|
|
|
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
FORWARD LOOKING STATEMENTS ARE THOSE STATEMENTS THAT DESCRIBE MANAGEMENTS BELIEFS AND
EXPECTATIONS ABOUT THE FUTURE. WE HAVE IDENTIFIED FORWARD-LOOKING STATEMENTS BY USING WORDS SUCH
AS ANTICIPATE, BELIEVE, COULD, ESTIMATE, MAY, EXPECT, AND INTEND. ALTHOUGH WE BELIEVE
THESE EXPECTATIONS ARE REASONABLE, OUR OPERATIONS INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES,
INCLUDING THOSE DESCRIBED IN THIS PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. THEREFORE, THESE TYPES OF STATEMENTS MAY PROVE TO BE INCORRECT.
INTRODUCTION
GENERAL
The accompanying Proxy is solicited by and on behalf of the Board of Directors of CNB for use at
the Special Meeting of Shareholders to be held on December 9, 2010, at the time and place and
for the purposes set forth in the accompanying Notice and at any recess or adjournments thereof.
The original solicitation will be made by mail. The total expense of such solicitation will be
borne by CNB and will include reimbursement paid to brokerage firms and other custodians, nominees
and fiduciaries for their reasonable expenses incurred in forwarding solicitation material
regarding the meeting to beneficial owners. Further solicitation of Proxies may be made
personally, electronically or by telephone following the original solicitation. All further
solicitation will be by regular employees of CNB.
Any Proxy given pursuant to this solicitation may be revoked by the person giving it at any time
before it is voted at the Special Meeting. Proxies may be revoked by delivering to Rebecca
Stotler, CNB Bank, Inc., 101 South Washington Street, P. O. Box 130, Berkeley Springs, West Virginia
25411, a written notice of revocation bearing a later date than the Proxy, by duly executing and
delivering a subsequently dated Proxy relating to the same shares or by attending the Special
Meeting and voting in person (although attendance at the Special Meeting will not in and of itself
constitute revocation of a Proxy).
All shares entitled to vote represented by a properly executed and unrevoked Proxy received in time
for the meeting will be voted at the meeting in accordance with the instructions given, but in the
absence of instructions to the contrary, such shares will be voted FOR the proposal to approve the
merger agreement. Persons empowered as Proxies will also be empowered to vote in their discretion
upon such other matters as may properly come before the meeting or any adjournment thereof, except
that discretionary authority on the part of the Proxies will be limited to matters of which we did
not have notice a reasonable time before our mailing of this Proxy Statement and the Proxy. The
Proxy Statement and Proxy are being mailed to shareholders on or about November 5, 2010.
ANNUAL REPORT AND QUARTERLY REPORT
CNBs Annual Report to Shareholders and 10-K for the fiscal year ended December 31, 2009, and its
Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 are available on
www.sec.gov
and
upon request from CNB.
27
VOTING OF SHARES
Holders of record of CNB Common Stock at the close of business on October 15, 2010, the record
date for those entitled to notice of the meeting, will be entitled to vote at the Special Meeting.
The proposal to approve the amendment to the Companys Articles of Incorporation and the proposal
to approve the merger agreement must receive the affirmative vote of at least a majority of the
shares of CNB entitled to vote at the special meeting of shareholders. With respect to any matter
other than the approval of the merger agreement, the vote of the holders of a majority of the
shares present or represented by proxy at the meeting and entitled to vote shall be the act of the
shareholders, unless the vote of a different number is required by the West Virginia Business
Corporation Act or Bylaws of CNB. As of October 7, 2010, there were 441,348 issued and outstanding
shares of CNB Common Stock held of record by 653 shareholders.
The officers and directors of CNB together beneficially own approximately 15.96% of the outstanding
CNB Common Stock. Each share of CNB Common Stock is entitled to one vote on the matters presented
at the meeting. In accordance with the Companys Articles of Incorporation, no cumulative voting
shall be allowed.
QUORUM
A quorum for the transaction of business at the Special Meeting consists of holders of a majority
of the outstanding shares of CNBs Common Stock, present in person or by proxy. In the event that
less than a majority of the outstanding shares are present at the Special Meeting, either in person
or by proxy, a majority of the shares so represented may vote to adjourn the Special Meeting from
time to time without further notice, until a quorum shall be present or represented. Any proxies
received that vote Against the amendment or the merger agreement will not be voted in favor of an
adjournment.
Abstentions and broker non-votes (shares held by broker or nominee as to which a broker or nominee
indicates on the proxy that it does not have the authority, either express or discretionary, to
vote on a particular matter) are counted for the purpose of determining the presence or absence of
a quorum at the Special Meeting. For all other matters, an abstention from voting and broker
non-votes, since they are not affirmative votes, will have the same practical effect as a vote
against the respective matters.
PROXIES
Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing.
Proxies with rubber stamped facsimile signatures may be used and unexecuted proxies may be counted
upon receipt of a photographic, photo-static, facsimile or similar reproduction of an executed
proxy from the shareholder. Proxies meeting these requirements submitted at any time prior to the
votes being taken during the Special Meeting will be accepted.
COMPANY OFFICERS AND DIRECTORS
Set forth in the table below are the (i) name, (ii) address, (iii) current principal occupation or
employment, and the name, principal business and address of any corporation or other organization
in which the employment or occupation is conducted, and (iv) material occupations, positions,
offices or employment during the past five years, and the name, principal business and address of
any corporation or other organization in which the occupation, position, office or employment was
carried on, of each of the Companys directors and executive officers. None of the listed
individuals was convicted in a criminal proceeding in the past five years (excluding traffic
violations or similar misdemeanors) and was not a party to any judicial or administrative
proceeding that resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities laws, or a finding
of any violation of federal or state securities laws. Each person identified below is a United States citizen. Unless otherwise noted, the principal business address of each person
identified below is 101 South Washington Street, P. O. Box 130, Berkeley Springs, West Virginia 25411.
28
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Principal Occupation for Past Five Years
|
Name
|
|
Age
|
|
Since
|
|
and Position Held with CNB
|
Jay E. Dick
|
|
57
|
|
1983
|
|
Retired Manager Hunters Hardware, Inc.,
|
29 Pendle Court
|
|
|
|
|
|
155 Independence Street, Berkeley Springs, WV 25411
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerald McGraw
|
|
63
|
|
1988
|
|
Insurance Smith Nadenbousch Insurance Agency,
|
PO Box 495
|
|
|
|
|
|
28 North Washington Street, Berkeley Springs, WV 25411
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas F. Rokisky
|
|
63
|
|
1993
|
|
President and Chief Executive Officer, CNB and CNB Bank, Inc.
|
|
|
|
|
|
|
|
Arlie R. Yost
|
|
62
|
|
1988
|
|
Licensed Residential Appraiser Appraisal Services,
|
250 Spring Valley Drive
|
|
|
|
|
|
1809 Valley Road, Berkeley Springs, WV 25411
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Robert Ayers
|
|
80
|
|
1974
|
|
Retired President, Citizens National Bank (predecessor to
|
1187
Winchester Grade Road
|
|
|
|
|
|
CNB Bank, Inc.),
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
101 South Washington Street, Berkeley Springs, WV 25411
|
|
|
|
|
|
|
|
John E. Barker
|
|
81
|
|
1972
|
|
Auto Sales-Service Barkers Auto Sales,
|
820 Fairview Drive
|
|
|
|
|
|
347 North Washington Street, Berkeley Springs, WV 25411
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Herbert L. Eppinger
|
|
77
|
|
1979
|
|
Retired Agriculture Executive Director, Agricultural
|
40 Rockwell Court
|
|
|
|
|
|
Stabilization and Conservation Service, Farm Service Agency,
|
Berkeley
Springs, WV 25411
|
|
|
|
|
|
1450-5 Edwin Miller Boulevard, Martinsburg, WV 25401
|
|
|
|
|
|
|
|
J. Philip Kesecker
|
|
80
|
|
1965
|
|
Real Estate Development JPK, Inc.,
|
78 Fairfax Lane
|
|
|
|
|
|
PO Box 400, Berkeley Springs, WV 25411
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth W. Apple
|
|
53
|
|
2003
|
|
Certified Public Accountant Kenneth Apple, CPA,
|
71 Mohican Way
|
|
|
|
|
|
105 South Tennessee Avenue, Martinsburg, WV 25401
|
Falling Waters, WV 25419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margaret S. Bartles
|
|
55
|
|
2002
|
|
Realtor Long and Foster of West Virginia,
|
348 Miranda Court
|
|
|
|
|
|
976 Foxcroft Avenue, Martinsburg, WV 25401
|
Martinsburg, WV 25401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha H. Quarantillo
|
|
50
|
|
1999
|
|
Pharmacist Reeds Pharmacy,
|
94 Ironwood Drive
|
|
|
|
|
|
343 North Pennsylvania Avenue, Hancock, MD 21750
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Trump IV
|
|
49
|
|
1986
|
|
Attorney at Law Trump and Trump, LC,
|
491 Cacapon Road
|
|
|
|
|
|
171 South Washington Street, Berkeley Springs, WV 25411
|
Berkeley Springs, WV
25411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFILIATED PARTY BUSINESS RELATIONSHIPS
Management personnel of CNB have had and expect to continue to have banking transactions with CNB
Bank, Inc. in the ordinary course of business. Extensions of credit to such persons are made in
the ordinary course of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with other persons. It is
the opinion of management that these transactions do not involve more than a normal risk of
collectability or present other unfavorable features.
29
As of September 30, 2010, outstanding loan balances to related parties totaled $2,512,310 or 9.1% of
equity capital with unused lines of credit of $240,561 or .9% of the equity capital of CNB
outstanding to these parties.
Other than loans originated in the normal course of business by the Bank, none of the directors,
executive officers, five percent or more beneficial stockholders or their immediate family members
have an interest or are involved in any transactions with CNB or the Bank in which the amount
involved exceeds $120,000, or was not subject to the usual terms or conditions, or was not
determined by competitive bids. Information related to loans granted to related parties in excess
of $120,000 are set forth below. Similarly, no director, executive officer or five percent or more
beneficial stockholder has an equity interest in excess of 10 percent in a business or professional
entity that has made payments to or received payments from CNB or the Bank in 2009 for property or
services which exceeds five percent of either partys gross revenue.
As of June 8, 2010, the Companys Directors have the following transactions with CNB Bank, Inc.:
Trump and Trump, in which Director Charles S. Trump, IV is a partner, performed legal services for
CNB and the Bank. Fees paid by CNB and the Bank to that law firm were $73,071 for year-to-date
2010 and $67,367 during 2009.
CONDUCT OF CNBS BUSINESS AFTER THE MERGER
CNB expects its business and operations to continue as they are currently being conducted and,
except as disclosed below, the amendment and merger agreement are not anticipated to have any
effect upon the conduct of such business. The CNB Board believes the going-private transaction is
consistent with CNBs vision of maintaining an independent banking strategy. If the merger is
consummated, those shares held by any shareholder who holds, in the aggregate, 150 or more CNB
Common Stock shares will remain as existing CNB Common Stock, and those shares held by any
shareholder who holds, in the aggregate, less than 150 CNB Common Stock shares will have their
shares converted into the right to receive the newly created Class A Common Stock on a
one-share-for-one-share exchange basis. All shareholders (except those shareholders who may choose
to dissent from the transaction) will retain an equity interest in, and will be shareholders of,
CNB, and will participate in its future potential or earnings and growth, subject to the rights and
privileges of each class of stock.
If the amendment and the merger agreement are effected, CNB believes that, based on CNBs
shareholder records, approximately 237 record shareholders will remain as CNB Common Stock
shareholders, and approximately 416 record shareholders will have their shares converted into the
right to receive the newly created Class A Common Stock. In addition, individuals who are
currently members of the Board of Directors and of management of CNB now owning approximately
15.96% of the CNB Common Stock will own approximately 16.50% of the CNB Common Stock after the
merger.
CNB plans, as a result of the merger, to terminate its SEC reporting obligations by filing the
appropriate forms and documents with the Securities and Exchange Commission. Because the CNB
Common Stock will no longer be subject to public company reporting requirements, CNB will be
relieved of the obligation to file certain quarterly and annual documents required by the SEC. You
should read the discussion under The Effects of the Merger for more discussion regarding the
effects of CNB terminating its SEC reporting obligations. CNB estimates that termination of the
Companys reporting obligations under the 1934 Act will save CNB approximately $143,000 per year in
legal, accounting and other expenses.
As stated throughout this Proxy Statement, CNB believes there are significant advantages in
effecting the amendment and the merger agreement and the going private transaction. CNB plans to
avail itself of any opportunities it may hereafter have as a non-SEC reporting company, including,
but not limited to, making itself a more viable candidate with respect to and entering into a
merger or acquisition transaction, making any public or private offering for its shares, or
entering into any other arrangement or transaction as it may deem appropriate. Although management
does not presently have an intent to enter into any such transaction nor is management currently in
negotiations with respect to any such transaction, there is always a possibility that CNB may enter
into such an arrangement or transaction in the future and the shareholders of CNB may receive
payment for their shares in any such transaction. Such consideration may be lower than, equal to
or in excess of any consideration that may be paid to shareholders in connection with the merger.
30
Other than as described in this Proxy Statement, neither CNB nor its management has any current
plans or proposals to effect any extraordinary corporate transaction, such as a merger,
reorganization or liquidation; to sell or transfer any material amount of its assets; to change its
Board of Directors or management; to change materially its indebtedness or capitalization; or
otherwise to effect any material change in its corporate structure or business.
OPINION OF FINANCIAL ADVISOR
CNB engaged Howe Barnes Hoefer & Arnett (Howe Barnes) to issue a fairness opinion in connection
with the merger. The Companys Board of Directors engaged Howe Barnes to determine whether the
exchange of the Companys Class A Common Stock, the terms of which were set by the Board of
Directors prior to the engagement of Howe Barnes, were fair, from a financial point of view, to the
Companys shareholders. Howe Barnes is a full service brokerage firm that specializes in preparing
and issuing fairness reports. The Company engaged Howe Barnes following a review of multiple
proposals for the engagement based on their reputation and prior experience in evaluating similar
transactions. Howe Barnes fee for preparing and issuing the opinion was approximately $16,000.
Howe Barnes fairness opinion sets forth the terms of the transaction, including the rights and
privileges of the newly created Class A Common Stock, discloses the various items Howe Barnes
relied upon in forming the fairness opinion, which include discussions with Company
representatives, the merger agreement, audited and unaudited Company financial statements, Company
financial forecasts and projections, (including the 2009 budget, securities portfolio report,
listing of OREO and fixed assets, loan watch list and assumed asset growth and profitability rates)
historical Company stock activity and financial performance, similar transactions and other
relevant information, and indicates the merger agreement and the actions related thereto are fair,
from a financial point of view, to all Company shareholders. In rendering its fairness opinion,
Howe Barnes presented to the Companys Board of Directors a Documentation Report relating to the
Fairness of the Proposed Merger of CNB Financial Services, Inc. With and Into CNB Merger
Corp.(Fairness Report). This report contains a description of the assignment, which explains the
Company engaged Howe Barnes to determine whether the terms of the proposed merger of the Company
with and into CNB Merger Corp. with the Company being the surviving corporation pursuant to the
merger agreement, are fair to the shareholders of CNB from a financial point of view.
As described in its opinion, Howe Barnes assumed and relied upon, without independent verification,
the accuracy, completeness and fairness of the information furnished to or otherwise reviewed by
Howe Barnes for purposes of their opinion. With respect to the information relating to the
prospects of CNB, Howe Barnes assumed that such information reflected the best currently available
judgments and estimates of the management of CNB as to the likely future financial performance of
CNB. Howe Barnes did not verify through independent inspection or examination the specific assets
or liabilities of CNB. Howe Barnes did not make nor were they provided with an independent
evaluation or appraisal of the assets or liabilities of CNB.
The full text of the written opinion of Howe Barnes dated June 29, 2010, which set forth the
assumptions made, matters considered and limitations of the review undertaken, is attached as Annex
C hereto and is incorporated herein by reference. Howe Barnes opinion is directed to the Board,
addresses only the fairness from a financial point of view of the transaction, and does not
constitute a recommendation to any shareholder as to how such shareholder should vote. The
Companys Board of Directors expressly adopts the Fairness Opinion as its own.
The Fairness Report also discusses the terms of the transaction, which provide all CNB Common Stock
shares held by any shareholder who holds, in the aggregate 150 or more CNB Common Stock shares will
remain CNB Common Stock shares and CNB Common Stock shares held by any shareholder who holds, in
the aggregate, less than 150 CNB Common Stock shares will be converted into the right to receive
CNB Class A Common Stock on a one-share-for-one-share exchange basis and discusses the Class A
Common Stock rights and privileges, which were set by the Companys Board of Directors, not Howe
Barnes.
31
The Fairness Report details 20 selected going private transactions (the Guideline Transactions)
announced from June 30, 2005 to June 18, 2010 involving U.S. banking organizations. Howe Barnes
reviewed the terms of the transactions and the characteristics of the new classes of common stock
and preferred stocks for those transactions and compared them with the terms of the merger and the
newly created Class A Common Stock. The Report finds the dividend premium for the new
classifications of common and preferred stocks from the 20 Guideline Transactions ranged from 0 to
10%. In this transaction, the Class A Common Stock will receive a 10% premium on the dividends
paid to holders of Class A Common Stock, which falls within the range of values in the Guidelines
Transactions, which, according to the Fairness Report, supports the fairness of the transaction.
In addition to reviewing the Guideline Transactions, the fairness opinion includes an analysis of
the Companys historical financial performance for the years 2006 through 2009 and through March
31, 2010.
|
|
|
Howe Barnes requested a list of all shareholders owning more than
5% of the Companys outstanding common shares. The Company has
two shareholders that own more than 5% of the Companys
outstanding common shares.
|
|
|
|
|
Howe Barnes requested and was provided with a copy of the
Companys 2009 Annual Report. Copies of the Companys 2009 Annual
Report were previously provided to Company shareholders and are
available online at
www.sec.gov
and a copy is enclosed herewith.
|
|
|
|
|
Howe Barnes requested and was provided with a copy of the
Companys 2010 budget prepared by the Companys officers for the
Companys Board of Directors. The budget was originally approved
by the Companys Board of Directors on February 18, 2010.
|
|
|
|
|
Howe Barnes requested and was provided a copy of the Companys
security portfolio schedule showing the book value and fair market
values and maturity for each of the Companys securities as of
March 31, 2010. This information is summarized in the
Companys Call Report as of the same date.
|
|
|
|
|
Howe Barnes requested and was provided a listing of the stated
book value and fair market or assessed value of the Companys
fixed assets and other real estate owned as of March 31, 2010.
|
|
|
|
|
Howe Barnes requested and was provided a copy of the Companys
loan watch list as of March 31, 2010.
|
|
|
|
|
Howe Barnes requested and was provided a copy of the Companys
loan loss reserve adequacy calculation as of March 31, 2010.
|
|
|
|
|
Howe Barnes requested information relating to the Companys
expected asset growth rate, return on assets, and cash dividend
payout rate for the years 2010 through 2014. The information
provided to Howe Barnes in response to such request is set forth
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Growth Rate
|
|
Return on Assets
|
|
Cash Dividend Payout Rate
|
2010
|
|
|
2.20
|
%
|
|
|
0.75
|
%
|
|
|
30.00
|
%
|
2011
|
|
|
5.00
|
%
|
|
|
0.80
|
%
|
|
|
30.00
|
%
|
2012
|
|
|
5.00
|
%
|
|
|
0.85
|
%
|
|
|
30.00
|
%
|
2013
|
|
|
7.00
|
%
|
|
|
0.95
|
%
|
|
|
30.00
|
%
|
2014
|
|
|
7.00
|
%
|
|
|
1.00
|
%
|
|
|
30.00
|
%
|
In conducting its review and arriving at its opinion, Howe Barnes relied upon and assumed the
accuracy and completeness of the financial and other information provided to it, or made publicly
available, and has not assumed any responsibility for independent verification of the same. In
performing the Fairness Opinion, Howe Barnes relied upon the management of CNB as to the
reasonableness of the financial and operating forecast and projections (and the assumption and
bases therefor) provided. Howe Barnes has assumed that such forecasts and projections reflect the
best currently available estimates and judgment of the management of CNB. Howe Barnes did not make
or obtain any evaluations or appraisals of the assets or liabilities of CNB.
32
Based on the projected cost savings from terminating SEC reporting obligations, which are assumed
to be approximately $143,000 annually, the comparative analysis with the Guideline Transactions
and, assuming the accuracy and completeness of the information and data provided to Howe Barnes by
CNB, Howe Barnes is of the opinion that, as of the date of the Fairness Report, the terms of the
proposed transactions are fair to the shareholders of CNB, from a financial point of view. The
Companys Board of Directors expressly adopts the Fairness Report as its own.
YOU ARE ENCOURAGED TO READ THE HOWE BARNES FAIRNESS OPINION AND FAIRNESS REPORT IN THEIR ENTIRETY.
THE FULL TEXT OF THE HOWE BARNES FAIRNESS OPINION AND REPORT ARE ATTACHED AS ANNEX C TO THIS PROXY
STATEMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Based upon information received by CNB upon request from the persons concerned, each person known
by CNB to be the beneficial owner of more than five percent of CNBs Common Stock, each director,
named executive officer and all directors and executive officers of CNB as a group, owned
beneficially as of October 7, 2010, the number and percentage of outstanding shares indicated in the
following table:
|
|
|
|
|
|
|
|
|
Name and Address
|
|
Number of Shares
|
|
Percent of Class
(1)
|
Kenneth W. Apple
(2)(14)
|
|
|
1,850
|
|
|
|
*0.42
|
|
J. Robert Ayers
(3)(14)
|
|
|
1,415
|
|
|
|
*0.32
|
|
John E. Barker
(4)(14)
|
|
|
18,394
|
|
|
|
4.17
|
|
Margaret S. Bartles
(5)(14)
|
|
|
300
|
|
|
|
*0.07
|
|
Jay E. Dick
(6)(14)
|
|
|
15,691
|
|
|
|
3.56
|
|
Herbert L. Eppinger
(7)(14)
|
|
|
2,870
|
|
|
|
0.65
|
|
J. Philip Kesecker
(8)(14)
|
|
|
13,146
|
|
|
|
2.98
|
|
Jerald McGraw
(9)(14)
|
|
|
1,454
|
|
|
|
*0.33
|
|
Martha H. Quarantillo
(14)
|
|
|
400
|
|
|
|
*0.09
|
|
Thomas F. Rokisky
(10)(14)
|
|
|
1,580
|
|
|
|
*0.36
|
|
Charles S. Trump IV
(11)(14)
|
|
|
10,910
|
|
|
|
2.47
|
|
Arlie R. Yost
(12)(14)
|
|
|
2,230
|
|
|
|
*0.51
|
|
Rebecca S. Stotler
(13)(14)
|
|
|
199
|
|
|
|
*0.05
|
|
All directors and executive officers as a group (13 persons)
(14)
|
|
|
70,439
|
|
|
|
15.96
|
|
Deborah
Dhayer, 3077 Valley Road, Berkeley Springs, WV 25411
|
|
|
44,810
|
|
|
|
10.15
|
|
Mary Lou
Trump, 298 Grove Heights, Berkeley Springs, WV 25411
|
|
|
53,470
|
|
|
|
12.12
|
|
|
|
|
*
|
|
Indicates holdings of less than 1%.
|
|
(1)
|
|
Includes shares of CNB Common Stock held by the named individual as of October 7, 2010.
|
|
(2)
|
|
Includes 1,200 shares held in an Individual Retirement Account.
|
|
(3)
|
|
Includes 1,265 shares held jointly with spouse.
|
|
(4)
|
|
Includes 14,300 shares held jointly with spouse and 3,794 shares held jointly with children.
|
|
(5)
|
|
Includes 100 shares held jointly with spouse.
|
|
(6)
|
|
Includes 15,541 shares held jointly with spouse.
|
|
(7)
|
|
Includes 2,670 shares held jointly with spouse.
|
|
(8)
|
|
Includes 3,098 shares held by spouse and 1,724 shares held jointly with spouse.
|
|
(9)
|
|
Includes 150 shares held by spouse and 864 shares held jointly with spouse.
|
|
(10)
|
|
Includes 1,425 shares held in an Individual Retirement Account.
|
|
(11)
|
|
Includes 200 shares held in an Individual Retirement Account, 842 shares held by spouse and 250 shares held as custodian
for children.
|
|
(12)
|
|
Includes 1,770 shares held jointly with spouse.
|
|
(13)
|
|
Includes 199 shares held jointly with spouse.
|
|
(14)
|
|
Unless otherwise indicated, shares are not pledged as security.
|
33
PROPOSAL ONE
APPROVAL OF THE AMENDMENT TO THE ARTICLES OF INCORPORATION
SUMMARY
The Board of Directors of CNB adopted the amendment to the Companys Articles of Incorporation on
June 10, 2010. A copy of the amendment to the Articles of Incorporation is attached to this proxy
statement as Annex A. It is expected the amendment to the Companys Articles of Incorporation will
be filed and will become effective shortly after shareholder approval of the amendment is obtained.
Upon filing of the amendment, the Companys Articles of Incorporation will be amended to authorize
5,000,000 shares of Class A Common Stock and 5,000,000 shares of Class B Common Stock. The
Companys existing 5,000,000 authorized shares of CNB Common Stock will remain unchanged. Both the
Class A Common Stock and the Class B Common Stock will have distinct rights and privileges, which
will allow the existing CNB Common Stock, the Class A Common Stock, and the Class B Common Stock to
be viewed as separate classes of securities for SEC purposes. The amendment to the Articles of
Incorporation requires the approval of the holders of at least a majority of shares entitled to
vote at the special meeting.
REASONS FOR THE AMENDMENT
The primary reason for the amendment to the Articles of Incorporation is to authorize a Class A
Common Stock which the Company can exchange for its existing CNB Common Stock following the
effective date of the merger agreement. The Companys Articles of Incorporation currently do not
provide the Company with authorized Class A Common Stock shares that it could use to exchange for
CNB Common Stock shares.
The amendment provides for the creation of a new Class B Common Stock so the Company will have the
ability to sell or convert shares in the future, in the event the Companys Board of Directors
determines such a sale to be in the Companys best interest. Authorizing the Class B Common Stock
will allow the Company to have authorized but not issued a distinct class of securities which, if
sold, would not result in the loss of the termination of the reporting obligations unless such
class was held by more than 500 shareholders on January 1 of any year. No Class B Common Stock
shares will be issued in connection with the transaction.
EFFECT ON SHAREHOLDERS
The amendment to the Articles of Incorporation will not have an immediate effect on the
shareholders. The amendment will only serve to amend the Companys Articles of Incorporation to
provide for Class A Common Stock and Class B Common Stock. The amendment to the Articles of
Incorporation will not change the number of authorized CNB Common Stock shares, which will remain
at its current level of 5,000,000 shares.
EXISTING COMMON STOCK RIGHTS AND PRIVILEGES
Following the Effective Time of the amendment, the Companys existing CNB Common Stock will
continue to enjoy the same rights and privileges that are currently associated with the CNB Common
Stock. These rights and privileges include:
|
|
|
VOTING RIGHTS The Companys existing CNB Common Stock has full
voting rights. All CNB Common Stock shareholders are entitled to
vote on any and all matters that may come before a vote of the
Companys shareholders. This includes the right to participate in
the annual election of directors.
|
|
|
|
|
DIVIDENDS The companys existing CNB Common Stock is entitled
to receive dividends as may be declared from time to time by the
Companys Board of Directors. The Companys existing CNB Common
Stock does not cumulate dividends, and there is no obligation on
behalf of the Companys Board of Directors to pay dividends on the
CNB Common Stock.
|
|
|
|
|
CONVERSION Not applicable. The CNB Common Stock is not convertible to any
other class of Company stock.
|
34
|
|
|
REDEMPTION The Companys existing CNB Common Stock has no redemption features.
|
|
|
|
|
RIGHT OF FIRST REFUSAL The Companys existing CNB Common Stock
has no right of first refusals. The foregoing does not limit any
Company shareholders from individually contracting such rights.
|
|
|
|
|
LIQUIDATION PREFERENCE The Companys existing CNB Common Stock
does not have a liquidation preference because there is currently
only one class of Company Stock. Following the transaction, the
existing CNB Common Stock will have last preference in Company
liquidation rights.
|
CLASS A COMMON STOCK RIGHTS AND PRIVILEGES
The amendment provides the Class A Common Stock will have rights and privileges separate and
distinct from the existing CNB Common Stock and the Class B Common Stock. The Class A Common Stock
will enjoy the following rights and privileges:
|
|
|
VOTING RIGHTS The Class A Common Stock will
be allowed voting rights only if the
shareholders are being asked to approve a
merger, consolidation, conversion, sale of
assets other than in the regular course of
business, voluntary dissolution of the
corporation, or as required by law. The Class
A Common Stock will not enjoy general voting
rights, including the right to participate in
the annual election of directors.
|
|
|
|
|
DIVIDENDS If the Company declares dividends, dividends must be
paid on the Class A Common Stock before dividends may be paid on
the existing CNB Common Stock. However, the Company shall be
under no obligation to pay dividends, and dividends are not
cumulative. If dividends are paid, the dividends paid on the
Class A Common Stock will enjoy a 10% premium over and above what
is paid on the CNB Common Stock.
|
|
|
|
|
CONVERSION In the event the Company is party to a merger, share
exchange, sale of assets other than in the regular course of
business, voluntary dissolution of the Company, or other change in
control which will result in the merger, sale, dissolution or
effective dissolution of the Company, the Class A Common Stock
will be converted into CNB Common Stock shares and will be treated
equally in all respects with the existing CNB Common Stock.
|
|
|
|
|
REDEMPTION The Class A Common Stock will have no redemption rights.
|
|
|
|
|
RIGHT OF FIRST REFUSAL The Class A Common Stock has a right of
first refusal in favor of the Company. Generally, this right of
first refusal requires a Class A Common Stock shareholder to
notify the Company in writing of the terms of any transfer or sale
of the Class A Common Stock. Following receipt of the written
notice, the Company has five (5) business days to either request
additional information regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of
Class A Common Stock that are subject to the proposed transfer or
sale upon the same terms as the proposed transfer or sale. If the
transfer is to be made without consideration (i.e., a gift), the
Company shall have the right to purchase the shares for an amount
determined by the Board to be the fair value of the shares. The
Company retains the right to not exercise its right of first
refusal, which will allow the Class A Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the
proposed transfer or offer. Any Class A Common Stock shares
transferred in violation of the right of first refusal is void and
of no effect and will not be recognized by the Company.
|
|
|
|
|
LIQUIDATION PREFERENCE The Class A Common Stock will have a
liquidation preference over the existing CNB Common Stock and the
Class B Common Stock. In the event of a liquidation, the Class A
Common Stock shareholders will be entitled to receive liquidation
assets equal to those assets received by the CNB Common Stock
shareholders or the book value of CNBs Common Stock, whichever is
greater.
|
35
CLASS B COMMON STOCK RIGHTS AND PRIVILEGES
The amendment provides the Class B Common Stock will have rights and privileges separate and
distinct from the existing CNB Common Stock and the Class A Common Stock. The Class B Common Stock
will enjoy the following rights and privileges:
|
|
|
VOTING RIGHTS The Class B Common Stock will be allowed voting
rights only if the shareholders are being asked to approve a
merger, consolidation, conversion, sale of assets other than in
the regular course of business, voluntary dissolution of the
Company, or as required by law. The Class B Common Stock will not
enjoy general voting rights, including the right to participate in
the annual election of directors.
|
|
|
|
|
DIVIDENDS If the Company declares dividends, dividends must be
paid on the Class B Common Stock after dividends are paid on the
Class A Common Stock, but before dividends may be paid on the
existing CNB Common Stock. However, there shall be no obligation
to pay dividends and dividends shall not be cumulative. If
dividends are paid, the dividends paid on the Class B Common Stock
will enjoy a 20% premium over and above what is paid on the CNB
Common Stock.
|
|
|
|
|
CONVERSION In the event the Company is party to a
merger, share exchange, sale of assets other than in
the regular course of business, voluntary dissolution
of the corporation, or other change in control which
will result in the merger, sale, dissolution or
effective dissolution of the corporation, the Class B
Common Stock will be converted into CNB Common Stock
shares and will be treated equally in all respects
with the existing CNB Common Stock.
|
|
|
|
|
REDEMPTION The Class B Common Stock will have no redemption rights.
|
|
|
|
|
RIGHT OF FIRST REFUSAL The Class B Common Stock has a right of
first refusal in favor of the Company. Generally, this right of
first refusal requires a Class B Common Stock shareholder to
notify the Company in writing of the terms of any transfer or sale
of the Class B Common Stock. Following receipt of the written
notice, the Company has five (5) business days to either request
additional information regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of
Class B Common Stock that are subject to the proposed transfer or
sale upon the same terms as the proposed transfer or sale. If the
transfer is to be made without consideration (i.e. a gift), the
Company shall have the right to purchase the shares for an amount
determined by the Board to be the fair value of the shares. The
Company retains the right to not exercise its right of first
refusal, which will allow the Class B Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the
proposed transfer or offer. Any Class B Common Stock shares
transferred in violation of the right of first refusal will be
void and of no effect and will not be recognized by the Company.
|
|
|
|
|
LIQUIDATION PREFERENCE The Class B Common Stock will have a
liquidation preference superior to the existing CNB Common Stock,
but after the Class A Common Stock.
|
36
|
|
|
|
|
|
|
CNB Financial Services, Inc.
Stock Comparison Chart
|
Characteristic
|
|
Common
|
|
Common A
|
|
Common B
|
Voting Rights
|
|
Full voting rights
|
|
As required by law and for a Merger/Share Exchange
|
|
As required by law and for a Merger/Share Exchange
|
|
|
|
|
|
|
|
Dividends
|
|
As declared
|
|
10% premium over CNB Common Stock dividends with payment before all other shares
|
|
20% premium over CNB Common Stock dividends
|
|
|
|
|
|
|
|
Liquidation Preference
|
|
Last Preference
|
|
Priority over all others Distribution same as common or book value of CNB Common Stock, whichever is greater
|
|
After Class A Common Stock but before CNB Common Stock
|
|
|
|
|
|
|
|
Conversion to CNB Common Stock
|
|
N/A
|
|
Conversion to CNB Common Stock at change in control
|
|
Conversion to CNB Common Stock at change in control
|
|
|
|
|
|
|
|
Transfer Restrictions
|
|
No
|
|
Yes Holding Company has right of first refusal
|
|
Yes Holding Company has right of first refusal
|
|
|
|
|
|
|
|
Redemption
|
|
None
|
|
None
|
|
None
|
PROPOSAL TWO
APPROVAL OF THE AGREEMENT OF MERGER
SUMMARY
The Board of Directors of CNB adopted the Agreement of Merger with CNB Merger Corp. on June 10,
2010. CNB Merger Corp.s Board of Directors adopted the Agreement of Merger on June 10, 2010. A
copy of the merger agreement as adopted is attached to this proxy statement as Annex B. Both CNB
and Merger Corp. will execute the merger agreement and file it, along with Articles of Merger, with
the West Virginia Secretary of State, shortly after the merger agreement is approved by CNB
shareholders (Effective Time). At the Effective Time, CNBs Common Stock held by any shareholder
who holds, in the aggregate, 150 or more CNB Common Stock shares of CNB Common Stock will retain
its status as CNB Common Stock. At the Effective Time, all shares held by any shareholder who
holds, in the aggregate, less than 150 shares of CNB Common Stock will be converted into the right
to receive newly created Class A Common Stock on a one-share-for-one-share exchange basis. The
merger agreement requires the approval of the holders of at least a majority of the shares entitled
to vote at the Special Meeting. All shareholders have the right to dissent from the transaction in
accordance with the West Virginia Business Corporation Act. See Dissenters and Appraisal Rights
on page 42.
37
SHAREHOLDER RIGHTS TO PURCHASE ADDITIONAL SHARES
All Company shareholders have the right to purchase additional shares of the Company Stock which
are already issued and outstanding to increase their share ownership to more than 150 shares and
retain their existing CNB Common Stock. Any shareholders wishing to purchase such shares so they
may retain their common stock are encouraged to complete such a purchase prior to the Special
Meeting of Shareholders to ensure their share purchase will be recorded on the Companys transfer
book prior to the effective time of the transaction. Shareholders purchasing additional Company
shares after the Special Meeting of Shareholders are not assured such purchases will be recorded on
the Companys stock transfer books prior to the Effective Time. The number of shares attributable
to each shareholder will be determined by the Companys transfer book at the effective time of the
transaction.
ESTABLISHING SHARE OWNERSHIP
According to the terms of the merger agreement, CNB has the right to assume those shareholders
owning fewer than 150 record shares hold, in the aggregate, less than 150 shares total. However,
shareholders have the right to prove to the Company that the shareholders total share ownership,
aggregating both record shares and shares held in another capacity (such as in a trust, IRA or
objecting beneficial owner account) exceeds 150 shares. Company shareholders seeking to establish
ownership of shares held in a capacity other than record ownership must prove their share ownership
to the Companys satisfaction by providing customary business records that establish the
shareholders ownership of the non-record shares. These customary business records could include,
but are not limited to, trust documents, IRA documents, a letter from a broker/dealer indicating
share ownership or otherwise. These documents should be provided to the Company following the
shareholders receipt of the Letter of Transmittal.
REASONS FOR THE MERGER
The primary reason for the merger is to terminate the Companys reporting obligations imposed by
Section 12(g) of the Exchange Act of 1934. CNBs Board of Directors and management are of the view
that the cost associated with maintaining the Companys SEC reporting status is not justified by
the benefits received from its status as an SEC reporting company. CNB also believes there is a
very limited market for the shares of CNBs Common Stock, especially for sales of large blocks of
such shares, and that CNBs shareholders derive little benefit from CNBs status as a publicly-held
corporation.
THE PARTIES
|
|
|
CNB is a West Virginia corporation and registered bank holding company.
|
|
|
|
|
CNB Merger Corp. is a recently-formed West Virginia corporation organized for the
sole purpose of the merger.
|
|
|
|
|
Charles S. Trump IV is Chairman of the Board of both CNB Financial and the Bank.
|
|
|
|
|
Thomas F. Rokisky is the President and Chief Executive Officer of both CNB and
Merger Corp.
|
|
|
|
|
The principal executive offices of both CNB and Merger Corp. are located at 101 S.
Washington Street, P.O. Box 130, Berkeley Springs, West Virginia 25411.
|
|
|
|
|
The telephone number for both CNB and CNB Merger Corp. is (304) 258-1520.
|
38
EFFECT ON SHAREHOLDERS
If approved at the Special Meeting, the merger agreement will affect CNB shareholders as follows
after completion:
|
|
|
Shareholder as of Effective Time
|
|
Net Effect After Merger
|
Shareholders holding, in the aggregate,
150 or more shares of CNB Common Stock
|
|
Shares of CNB Common Stock will
continue to be outstanding.
|
|
|
|
Shareholders holding, in the aggregate,
less than 150 shares of CNB Common Stock
|
|
Shares of CNB Common Stock will
be converted into the right to
receive newly created Class A
Common Stock on a
one-share-for-one-share
exchange basis.
|
As described below under The Merger AgreementConversion of Shares in the Merger, the
merger agreement contains specific provisions regarding the treatment of shares held in nominee
form, or street name. In determining the number of shares held beneficially in street name by
any shareholder, CNB may, in its discretion, rely on no objection lists provided by any nominee
holder. Further, after the Effective Time, CNB will deliver to each shareholder who would appear
to be entitled to exchange their existing CNB Common Stock for newly created Class A shares on a
one-share-for-one-share exchange basis, a letter of transmittal requesting certain information from
such shareholder and requiring the shareholder to certify as to the number of shares actually held,
whether in registered form or in street name. Letters of transmittal will be delivered to any
shareholder who (a) holds of record fewer than 150 shares, and (b) according to records made
available to CNB from the nominee holder for any shares held in street name, holds fewer than 150
shares in street name or holds shares in street name which CNB is not provided by the nominee
holder the number of shares so held.
REASONS FOR THE MERGER
CNBs reason for the merger is to reduce the number of shareholders owning its existing CNB Common
Stock to below 300 and restricting the number of shareholders owning its newly created Class A
Common Stock to below 500, which will allow the Company to terminate its SEC reporting obligations
under the Exchange Act of 1934.
The Board believes that the disadvantages of having CNB continue to be a reporting company outweigh
any advantages. The Board has no present intention to acquire other business entities using stock
as the consideration for any such acquisition. Accordingly, CNB is not likely to make use of any
advantage that CNBs status as a public company may offer.
CNB incurs direct and indirect costs associated with compliance with the SECs filing and reporting
requirements imposed on public companies. CNB also incurs substantial indirect costs as a result
of, among other things, the executive time expended to prepare and review such filings. Since CNB
has relatively few executive personnel, these indirect costs can be substantial. CNBs direct and
indirect costs related to being a reporting company are estimated to approximate $143,000 annually
as follows:
|
|
|
|
|
|
|
Approximate
|
|
|
|
Annual Costs
|
|
Independent Auditors
|
|
$
|
85,276
|
|
SEC Counsel
|
|
|
13,094
|
|
Printing and Mailing
|
|
|
11,483
|
|
Internal Costs
|
|
|
15,385
|
|
Other
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
142,718
|
|
|
|
|
|
In light of these disproportionate costs, the Board believes that it is in the best interests of
CNB and its shareholders as a whole to eliminate the administrative burden and costs associated
with being a reporting company.
39
The Board has determined that the Agreement of Merger is the most expeditious and economical way of
reducing the number of shareholders owning the CNBs Common Stock to below 300 and having no other
class of stock with more than 500 owners, which will allow the Company to terminate its SEC
reporting obligations. You should read the discussion under Special Factors Recommendation of
the Board of Directors; Fairness of the Merger Proposal for more information regarding the Boards
reasons for the merger proposal.
The merger is structured to be a going private transaction as defined in Rule 13e-3 promulgated
under the Exchange Act because it is intended to, and, if completed, will likely terminate CNBs
reporting requirements under Section 12(g) of the Exchange Act and will likely suspend CNBs
reporting obligations under Section 15(d) under the Exchange Act. In connection with the Merger
Proposal, CNB has filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 with the SEC.
EFFECT OF THE MERGER PROPOSAL ON CNB SHAREHOLDERS
The merger will have various effects on the Companys shareholders, as described below. The
effects of the merger to a shareholder will vary based on whether all or any portion of the
shareholders shares will be converted into the right to receive the newly created Class A Common
Stock shares as a result of the merger. The determination of whether any particular shares of CNB
Common Stock will be converted into the right to receive the newly created Class A Common Stock
Shares as a result of the merger will be based on whether the holder of those shares holds, in the
aggregate, fewer than 150 shares at the effective time of the merger.
EXCHANGE AND PAYMENT PROCEDURES
Following the Effective Time, CNB will mail to each shareholder entitled to exchange their share
certificates for newly created Class A Common Stock, a letter of transmittal and instructions
explaining how to exchange their share certificates for new share certificates. Upon surrender to
CNB of valid share certificates (or lost stock affidavit, if appropriate) and properly completed
letters of transmittal, along with such other documents as CNB may reasonably require, those
shareholders holding, in the aggregate, less than 150 shares at the Effective Time will be entitled
to receive newly created Class A Common Stock shares on a one-share-for-one-share exchange
basis. Until surrendered in this manner, each stock certificate representing shares that have been
converted into the right to receive Class A Common Stock, will represent only the right to receive
the Class A Common Stock provided as consideration in the merger. No service charges will be
payable by shareholders in connection with the exchange of certificates. All expenses will be
borne by CNB.
YOU SHOULD NOT SEND YOUR STOCK CERTIFICATES NOW. YOU SHOULD SEND THEM ONLY AFTER YOU RECEIVE A
LETTER OF TRANSMITTAL FROM CNB. LETTERS OF TRANSMITTAL WILL BE MAILED SOON AFTER THE MERGER IS
COMPLETED. A SAMPLE COPY OF THE LETTER OF TRANSMITTAL IS ATTACHED AS EXHIBIT E.
DISSENTERS AND APPRAISAL RIGHTS
CNB stockholders have the right to dissent from the merger
in accordance with
sections 31D-13-1301 et seq. of the West Virginia Business Corporation Act
(Article 13). If the statutory procedures are complied with and the merger
is consummated, dissenting holders would be entitled to receive cash equal to
the fair value of the CNB Common Stock held by them. Such fair value is
determined as of the day immediately preceding the special meeting. Any
judicial determination of the fair value of the shares could be based upon
considerations other than or in addition to the cash consideration payable in
the merger and the market value of the shares, including asset values, the
investment value of the CNB Common Stock and any other valuation considerations
generally accepted in the investment community. The value so determined for
dissenting shares could be more or less than the cash consideration payable in
the merger, and payment of such consideration would take place subsequent to
payment pursuant to the merger.
40
Article 13 provides that the statutory appraisal rights remedy provided under
Article 13 to a stockholder objecting to the merger is the exclusive remedy for
the recovery of the value of such stockholders shares or for money damages to
such stockholder with respect to the merger. If CNB complies with the
requirements of Article 13, any stockholder who fails to comply with the
requirements of that Article shall not be entitled to bring suit for the
recovery of the value of his shares or for money damages to the stockholder
with respect to the merger.
The rights of dissenting holders of shares are governed by Article 13. The
following summary of applicable provisions of Article 13 is not intended to be
a complete statement of such provisions and is qualified in its entirety by
reference to the full text of Article 13, which is included as Annex D to the
proxy statement.
A holder of CNB Common Stock as of the record date for the
Special Meeting who
files written notice of his or her intent to demand payment with CNB prior to
the vote on the merger at the Special Meeting, who has not voted in favor of
the merger agreement and who has made a demand for compensation as provided
under Article 13 is entitled under such provisions, as an alternative to
receiving the consideration offered in the merger for all of his or her CNB
Common Stock, to the fair value of his or her CNB Common Stock. The following
is a summary of the procedural steps that must be taken if the appraisal rights
are to be validly exercised.
Any stockholder of CNB may elect to exercise his or her right to dissent from
the merger by filing with CNB, at the address set forth below, prior to the
vote on the merger at the Special Meeting, a written objection to the merger,
setting out that such stockholders appraisal rights will be exercised if the
merger is effected.
Within ten (10) days of the effective date of the merger, CNB will deliver or
mail to such stockholder written notice that the merger has been effected and
supply a form that specifies the date of the first announcement of the
principle terms of the proposed corporation action and requires the dissenting
stockholder to certify (1) whether or not the dissenting stockholder held
beneficial ownership of his or her shares for which appraisal rights are
asserted prior to the date of the announcement; and (2) that the stockholder
did not vote in favor of the merger. CNBs notice also must state:
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|
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Where the form must be sent and where certificates for
certificated shares must be deposited and the date by which those
certificates must be deposited;
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|
|
A date by which CNB must receive the form which date may
not be fewer than forty (40) nor more than sixty (60) days after
the date the appraisal notice and form are sent and state that the
stockholder is deemed to have waived the right to demand appraisal
unless the form is received by CNB by the specified date;
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|
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CNBs estimate of the fair value of the shares;
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|
|
|
That, if requested in writing, CNB will provide to the
stockholder requesting, within ten (10) days after the date upon
which the Company must receive the form, the number of stockholders
who return the forms and the number of shares owned by them; and
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|
|
|
The date by which a stockholder may provide notice to
withdraw his or her request for appraisal rights.
|
CNBs notice also must be accompanied by Article 13. A dissenting stockholder
who wishes to exercise appraisal rights must certify on the form sent by CNB
whether he or she acquired beneficial ownership of the shares prior to the date
set forth in the notice, must execute and return the form and, in the case of
certificated shares, deposit his or her stock certificates in accordance with
the terms of the notice. Once a dissenting stockholder deposits his or her
certificates or, in the case of uncertificated shares, returns the executed
forms, the dissenting stockholder loses all rights as a stockholder unless he
or she withdraws the request for appraisal rights.
41
A dissenting stockholder may decline to exercise appraisal rights and withdraw
from the appraisal process by notifying CNB in writing by the date set forth in
the appraisal notice. If the dissenting stockholder fails to withdraw from the
appraisal process by the date given in the notice, he or she may not withdraw
without CNBs written consent.
Within thirty (30) days after receipt of the appraisal notice from the
dissenting stockholder, CNB shall pay in cash to those stockholders who
properly exercise their appraisal rights, the amount that CNB estimates to be
the fair value of their shares, plus interest. This payment to each dissenting
stockholder will be accompanied by:
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|
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CNB financial statements, consisting of a balance sheet as of the
end of the most recent fiscal year, an income statement for that year, a
statement of changes in shareholders equity for that year and the latest
available interim financial statements, if any;
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|
|
A statement of CNBs estimate of the fair value of the shares,
which must equal or exceed CNBs estimate given in the appraisal notice;
and
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|
|
A statement that dissenting stockholders have the right to demand
further payment and that if any dissenting stockholder does not make a
demand for further payment within the time period specified, the
dissenting stockholder is deemed to have accepted the payment in full
satisfaction of CNBs obligations under Article 13.
|
CNB may elect to withhold payment from any dissenting stockholder who does not
certify that he or she had beneficial ownership of all of the shares for which
he or she asserted appraisal rights prior to the date set forth in the
appraisal notice. If CNB elects to withhold payment, it must, within thirty
(30) days after the appraisal notice is due, provide all dissenting
stockholders holding after acquired shares:
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|
|
CNB financial statements consisting of a balance sheet as of the
end of the most recent fiscal year, an income statement for that year, a
statement of changes in shareholders equity for that year and the latest
available interim financial statements, if any;
CNBs estimate of fair value;
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|
That they may accept CNBs estimate of fair value, plus interest,
in full satisfaction of their demands or demand payment under Section
31D-13-1326 of the West Virginia Business Corporation Act;
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|
|
|
That those dissenting stockholders who wish to accept the offer
must notify CNB within thirty (30) days after receiving the offer; and
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|
|
That those dissenting stockholders who do not satisfy the
requirements for demanding appraisal under Section 31D-13-1326 of the
West Virginia Business Corporation Act are deemed to have accepted CNBs
offer. CNB will pay all stockholders who accept the offer within ten (10)
days after receiving the stockholders acceptance in full satisfaction of
the stockholders demand. Within forty (40) days after sending notice,
CNB must pay in cash the amount it offered to each dissenting stockholder
that did not qualify to demand appraisal under Section 31D-13-1326.
|
If a dissenting stockholder is dissatisfied with the amount of payment, he or
she must notify CNB in writing of the dissenting stockholders estimate of the
fair value of the shares and demand payment of that estimate plus interest less
any payment already made by CNB. A stockholder of after acquired shares who is
dissatisfied with that offer must reject the offer and demand payment of the
dissenting stockholders stated estimate of the fair value of the shares plus
interest.
42
A dissenting stockholder who fails to notify CNB in writing of the dissenting
stockholders demand to be paid his or her stated estimate of the fair value
plus interest within thirty (30) days after receiving CNBs offer of payment
waives the right to demand payment and is entitled only to the payment made or
offered by CNB. If there is still a disagreement between CNB and the dissenting
stockholder after compliance by both parties with the provisions listed above,
CNB, within sixty (60) days after receiving the payment demand from the
dissenting stockholder, shall commence proceeding and petition the court to
determine the fair value of the shares and accrued interest. If CNB does not
commence the proceeding within the sixty (60) day period, it shall pay in cash
to each dissenting stockholder the amount that the dissenting stockholder
demanded plus interest. CNB shall make all dissenting stockholders whose
demands remain unsettled parties to the proceeding and all parties must be
served with a copy of the petition.
The jurisdiction of the court in the proceeding is plenary and exclusive. The
court may appoint one or more persons as appraisers to receive evidence and
recommend a decision on the question of fair value. The stockholders demanding
appraisal rights are entitled to the same discovery rights as parties in other
civil proceedings. There is no right to a jury trial.
Each stockholder made a party to the proceeding is entitled to judgment for the
amount, if any, by which the court finds the fair value of the stockholders
shares, plus interest, exceeds the amount paid by CNB to the stockholder; or
for the fair value, plus interest, of the stockholders shares for which CNB
elected to withhold payment.
The court in an appraisal proceeding shall determine all costs of the
proceeding, including reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against CNB, except
that the court may assess costs against some or all of the stockholders
demanding appraisal, in amounts the court finds equitable to the extent the
court finds the stockholders acted arbitrarily, vexatiously or not in good
faith. The court in an appraisal proceeding may also assess the fees and
expenses of counsel and experts for the respective parties in amounts the court
finds equitable:
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|
|
Against CNB and in favor of any and all stockholders demanding
appraisal if the court finds that CNB did not substantially comply with
the requirements of Article 13; or
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|
Against either CNB or the stockholder(s) demanding appraisal, in
favor of any other party, if the court finds that the party against whom
fees and expenses are assessed acted arbitrarily, vexatiously or not in
good faith.
|
If the court finds that the services of counsel for any stockholder were of
substantial benefit to other dissenting stockholders, and that fees for those
services should not be assessed against CNB, the court may award to counsel
reasonable fees to be paid out of the amounts awarding to the dissenting
stockholders who are benefited.
To the extent CNB fails to make a required payment pursuant to Article 13, the
stockholder may sue directly for the amount owed and, to the extent successful,
the stockholder is entitled to recover from CNB all costs and expenses of that
suit including counsel fees.
A dissenting stockholders written objection to the merger and demand for
payment must be in addition to and separate from any vote against the merger.
Voting against the merger will not constitute the written notice required to be
filed by a dissenting CNB stockholder. A stockholder voting for the merger or
not voting on the merger will be deemed to have waived his dissenters rights.
Under Article 13 holders of record of CNB Common Stock are entitled to
dissenters rights as described above, and he procedures to perfect such rights
must be carried out by and in the name of holders of record. Persons who are
beneficial but not record owners of CNB Common Stock and who wish to exercise
dissenters rights with respect to the merger should consult promptly with the
record holders of their shares as to the exercise of such rights. All written
objections and demands for payment should be addressed to CNB Financial
Services, Inc.,
43
101 S. Washington Street, Berkeley Springs, West Virginia
25411, Attention: Rebecca Stotler. All written objections and demand for
payment must be received before the Special Meeting or be delivered at such
meeting prior to the vote. Demands for payment must be made as described above.
FEES AND EXPENSES
CNB estimates that the fees and expenses associated with the amendment and the merger agreement,
consisting primarily of financial advisory fees, SEC filing fees, fees and expenses of attorneys
and accountants and other related charges, will total approximately $84,072, assuming both the
amendment and merger agreement are completed. This amount consists of the following estimated
fees:
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|
|
|
|
|
Description
|
|
Amount
|
|
Advisory fees and expenses
|
|
$
|
16,000
|
|
Legal fees and expenses
|
|
|
42,000
|
|
SEC filing fee
|
|
|
72
|
|
Printing, solicitation and mailing costs
|
|
|
16,000
|
|
Miscellaneous expenses
|
|
|
10,000
|
|
|
|
|
|
Total
|
|
$
|
84,072
|
|
|
|
|
|
|
REGULATORY REQUIREMENTS
In connection with the merger, CNB will be required to make a number of filings with and obtain a
number of approvals from various federal and state governmental agencies, including:
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|
filing of articles of merger with the West Virginia Secretary of
State in accordance with the West Virginia Business Corporation
Act after the approval of the merger agreement by CNBs
shareholders; and
|
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|
|
|
complying with federal and state securities laws, including CNBs
and Merger Corp.s filing, prior to the date of this proxy
statement, of a Rule 13e-3 Transaction Statement on Schedule 13E-3
with the Securities and Exchange Commission.
|
THE MERGER AGREEMENT
This section is a summary of the material terms of the merger agreement, a copy of which is
attached as Annex B to this document. Because this is a summary, it does not include all of the
information that may be important to you. You should read the entire merger agreement and this
Proxy Statement and related annexes before deciding how to vote at the Special Meeting.
THE MERGER
CNB Merger Corp (Merger Corp), formed for the sole purpose of effecting the merger, will be
merged with and into CNB (CNB), with CNB surviving the merger. The merger will occur following
the approval of the Agreement of Merger by the CNB shareholders and the satisfaction of other
conditions to the merger.
CONVERSION OF SHARES IN THE MERGER
The Agreement of Merger provides that, at the Effective time of the merger:
|
(a)
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|
All outstanding shares of CNB Common Stock, whether Record Shares (as
hereinafter defined) or Street Shares (as hereinafter defined), held
by a Holder (as hereinafter defined) holding fewer than 150 shares
immediately prior to the Effective Time shall, without any action on
the part of the Holder thereof, be converted into the right to receive
CNB Class A Common Stock on a one share for one share exchange basis;
provided, however, that CNB may presume that all Street Shares are
held by Holders holding fewer than 150 shares immediately prior to the
Effective Time unless either CNB or a Beneficial Owner of Street
|
44
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|
|
Shares are able to demonstrate to CNBs satisfaction that such shares
are held beneficially by a Holder holding 150 or more CNB Shares
immediately prior to the Effective Time, in which event such CNB
Common Stock shall remain outstanding with all rights, privileges, and
powers existing immediately before the Effective Time.
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(b)
|
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All outstanding CNB shares, other than those described in Paragraph
(a) as being converted into the right to receive CNB Class A Common
Stock, shall remain outstanding with all rights, privileges, and
powers existing immediately before the Effective Time.
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(c)
|
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The shares of Merger Corp. shall be cancelled and of no further effect.
|
The merger agreement further provides that:
In no event shall any Holder holding, of record or beneficially, immediately prior to the Effective
Time, 150 or more CNB Common Stock shares (including any combination of Record Shares and Street
Shares), be entitled to receive CNB Class A Common Stock with respect to the shares so held. It
shall be a condition precedent to the right of any Holder to receive CNB Class A Common Stock, if
any, that such Holder certify to CNB in a Letter of Transmittal delivered by CNB that such Holder
held, of record and beneficially, immediately prior to the Effective Time, fewer than 150 shares
(including any combination of Record Shares and Street Shares) in the aggregate.
For purposes of the foregoing, the merger agreement further provides:
|
(1)
|
|
The term Record Shares shall mean shares of CNB Common Stock, other
than Street Shares, and any Record Share shall be deemed to be held by
the registered holder thereof as reflected on the books of the
Company;
|
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|
(2)
|
|
The term Street Shares shall mean CNB shares held of record in
street name, and any Street Share shall be deemed to be held by the
Beneficial Owner thereof as reflected on the books of the nominee
holder thereof;
|
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(3)
|
|
The term Holder shall mean any record holder or holders of Record
Shares who would be deemed, under Rule 12(g)5-1 promulgated under the
Securities Exchange Act of 1934, as amended, to be a person for
purposes of determining the number of record shareholders of CNB.
|
EXCHANGE OF CERTIFICATES
The merger agreement requires the Company to mail to each shareholder who held, at the effective
time of the transaction, in the aggregate, less than 150 shares of CNB Common Stock, a letter of
transmittal with instructions to effect the surrender of the certificates in exchange for the share
certificate(s) representing an equal number of Class A Common Stock shares.
TIMING OF CLOSING
If the merger agreement is approved by the CNB shareholders, the merger closing will take place as
soon as practicable after the Special Meeting, provided that all other conditions to the closing
have been satisfied or waived. On the date the merger closes, articles of merger will be filed
with the West Virginia Secretary of State. The merger will become effective when the certificate
of merger has been duly filed with the West Virginia Secretary of State.
ARTICLES OF INCORPORATION
The merger agreement provides that the Articles of Incorporation of CNB, as amended and in effect
immediately prior to the effective time of the merger, shall be the Articles of Incorporation of
CNB, as the surviving corporation, immediately after the merger.
45
AMENDMENT OF AGREEMENT OF MERGER
The merger agreement may be amended at the election of the Board of Directors of CNB or Merger
Corp., whether before or after approval of the merger agreement by the shareholders, provided that
an amendment made following shareholder approval shall not:
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Alter or change the amount or kind of shares to be received in
exchange for CNBs existing Common Stock;
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Alter or change any term of the Articles of Incorporation of the surviving corporation; or
|
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|
|
Alter or change any of the terms and conditions of the agreement
if such change or alteration would adversely affect the holders of
CNB Common Stock.
|
TERMINATION OF AGREEMENT OF MERGER
The merger agreement allows the Board of Directors of CNB or Merger Corp. the ability to terminate
and abandon the merger at the election of either Board, whether before or after shareholder
approval, if the Board determines the merger is not in the best interest of the Company, the Merger
Corp. or the Companys shareholders.
DIVIDEND POLICIES
The Company has paid the following semi-annual dividends since January 1, 2007:
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|
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|
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|
|
|
|
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Per Share
|
|
|
|
High
|
|
|
Low
|
|
|
Dividend
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
66.00
|
|
|
$
|
47.00
|
|
|
$
|
|
|
Second quarter
|
|
|
60.00
|
|
|
|
44.50
|
|
|
|
0.53
|
|
Third quarter
|
|
|
46.70
|
|
|
|
46.70
|
|
|
|
|
|
Fourth quarter
|
|
|
46.60
|
|
|
|
45.25
|
|
|
|
1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
80.00
|
|
|
$
|
65.00
|
|
|
$
|
|
|
Second quarter
|
|
|
67.00
|
|
|
|
65.50
|
|
|
|
0.53
|
|
Third quarter
|
|
|
63.50
|
|
|
|
63.50
|
|
|
|
|
|
Fourth quarter
|
|
|
63.85
|
|
|
|
49.40
|
|
|
|
1.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
80.00
|
|
|
$
|
72.00
|
|
|
$
|
|
|
Second quarter
|
|
|
80.00
|
|
|
|
70.00
|
|
|
|
0.50
|
|
Third quarter
|
|
|
72.00
|
|
|
|
71.00
|
|
|
|
|
|
Fourth quarter
|
|
|
72.00
|
|
|
|
67.00
|
|
|
|
1.19
|
|
The CNB board, in its discretion, will determine whether to declare and pay dividends in the
future. Any future declaration and payment of dividends will depend upon:
|
|
|
CNBs results of operations;
|
|
|
|
|
CNBs consolidated earnings and financial condition;
|
|
|
|
|
cash requirements;
|
|
|
|
|
future prospects;
|
46
|
|
|
applicable law and regulations; and
|
|
|
|
|
other factors deemed relevant by CNBs board of directors.
|
The rights and privileges of the newly created Class A Common Stock provide that the holders of the
Class A Common Stock have a dividend preference over the Companys existing CNB Common Stock
shareholders. Specifically, dividends must be paid on the Class A Common Stock prior to dividends
being paid on the existing CNB Common Stock. Further, the dividends paid on the Class A Common
Stock will enjoy a 10% premium over any dividends paid on CNBs Common Stock. For example, if the
Company declares a $1 dividend on its existing CNB Common Stock, the Class A shareholders will
receive $1.10 per Class A Common Stock share held, which must be paid prior to the payment of any
dividends on CNBs Common Stock.
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical consolidated financial data are derived from, and qualified by
reference to, CNBs Consolidated Financial Statements and the notes thereto included in CNBs 2009
Annual Report to Shareholders and Quarterly Report on Form 10-Q for
the quarter ended June 30,
2010, which are available to shareholders at
www.sec.gov
or upon request. You should read the
selected historical consolidated financial information in conjunction with the Consolidated
Financial Statements of CNB and the notes thereto and Managements Discussion and Analysis of
Financial Condition and Results of Operations included in CNBs 2009 Annual Report to Shareholders
and Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.
SELECTED HISTORICAL FINANCIAL DATA
FIVE YEAR SELECTED CONSOLIDATED FINANCIAL DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
In thousands except for per share data
|
|
At Period-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
282,821
|
|
|
$
|
285,655
|
|
|
$
|
289,498
|
|
|
$
|
282,257
|
|
|
$
|
290,415
|
|
|
$
|
276,069
|
|
|
$
|
258,953
|
|
Securities available for sale
|
|
|
74,136
|
|
|
|
58,727
|
|
|
|
72,273
|
|
|
|
62,605
|
|
|
|
66,017
|
|
|
|
50,873
|
|
|
|
55,194
|
|
Loans and lease, net of unearned income
|
|
|
189,827
|
|
|
|
198,584
|
|
|
|
194,707
|
|
|
|
200,752
|
|
|
|
202,669
|
|
|
|
204,319
|
|
|
|
180,207
|
|
Deposits
|
|
|
248,164
|
|
|
|
261,349
|
|
|
|
252,292
|
|
|
|
227,895
|
|
|
|
226,645
|
|
|
|
233,083
|
|
|
|
219,288
|
|
Shareholders equity
|
|
|
26,704
|
|
|
|
24,306
|
|
|
|
25,630
|
|
|
|
23,218
|
|
|
|
22,821
|
|
|
|
20,322
|
|
|
|
19,008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
0.60
|
%
|
|
|
0.70
|
%
|
|
|
0.75
|
%
|
|
|
0.96
|
%
|
|
|
0.90
|
%
|
|
|
0.92
|
%
|
|
|
1.00
|
%
|
Return on average shareholders equity
|
|
|
6.5
|
|
|
|
8.6
|
|
|
|
8.88
|
|
|
|
11.66
|
|
|
|
11.88
|
|
|
|
12.46
|
|
|
|
12.91
|
|
Net interest margin
|
|
|
3.15
|
|
|
|
3.21
|
|
|
|
3.71
|
|
|
|
3.92
|
|
|
|
3.53
|
|
|
|
3.77
|
|
|
|
4.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
7,504
|
|
|
$
|
7,870
|
|
|
$
|
15,642
|
|
|
$
|
16,995
|
|
|
$
|
17,201
|
|
|
$
|
15,989
|
|
|
$
|
13,420
|
|
Interest expense
|
|
|
2,458
|
|
|
|
2,689
|
|
|
|
5,412
|
|
|
|
6,307
|
|
|
|
7,725
|
|
|
|
6,269
|
|
|
|
3,850
|
|
Net interest income
|
|
|
5,046
|
|
|
|
5,181
|
|
|
|
10,230
|
|
|
|
10,688
|
|
|
|
9,476
|
|
|
|
9,720
|
|
|
|
9,570
|
|
Provision for loan losses
|
|
|
910
|
|
|
|
765
|
|
|
|
1,853
|
|
|
|
940
|
|
|
|
169
|
|
|
|
275
|
|
|
|
352
|
|
Net interest income after provision
for loan losses
|
|
|
4,136
|
|
|
|
4,416
|
|
|
|
8,377
|
|
|
|
9,748
|
|
|
|
9,307
|
|
|
|
9,445
|
|
|
|
9,218
|
|
Non-interest income
|
|
|
1,093
|
|
|
|
1,121
|
|
|
|
2,172
|
|
|
|
2,241
|
|
|
|
2,400
|
|
|
|
1,968
|
|
|
|
2,007
|
|
Non-interest expense
|
|
|
4,238
|
|
|
|
3,922
|
|
|
|
7,834
|
|
|
|
7,967
|
|
|
|
8,012
|
|
|
|
7,760
|
|
|
|
7,541
|
|
Income before income taxes and
discontinued operations
|
|
|
991
|
|
|
|
1,615
|
|
|
|
2,715
|
|
|
|
4,022
|
|
|
|
3,695
|
|
|
|
3,653
|
|
|
|
3,684
|
|
Income tax expense
|
|
|
142
|
|
|
|
470
|
|
|
|
565
|
|
|
|
1,307
|
|
|
|
1,191
|
|
|
|
1,308
|
|
|
|
1,238
|
|
Net income
|
|
|
850
|
|
|
|
1,145
|
|
|
|
2,150
|
|
|
|
2,715
|
|
|
|
2,504
|
|
|
|
2,469
|
|
|
|
2,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1.92
|
|
|
$
|
2.56
|
|
|
$
|
4.82
|
|
|
$
|
6.01
|
|
|
$
|
5.48
|
|
|
$
|
5.39
|
|
|
$
|
5.34
|
|
Cash dividends
|
|
|
.53
|
|
|
|
.53
|
|
|
|
1.55
|
|
|
|
1.90
|
|
|
|
1.69
|
|
|
|
1.54
|
|
|
|
1.44
|
|
Net book value
|
|
|
59.55
|
|
|
|
54.52
|
|
|
|
57.77
|
|
|
|
51.69
|
|
|
|
50.16
|
|
|
|
44.37
|
|
|
|
41.50
|
|
47
OTHER MATTERS
Management of CNB knows of no other business to be presented at the meeting, but if other matters
do properly come before the meeting, unless otherwise instructed, it is intended that the persons
named in the proxy will vote shares according to their best judgment.
WHERE YOU CAN FIND MORE INFORMATION
CNB files certain reports with the SEC. Copies of these reports are available on the SEC website
at
www.sec.gov
. Copies of these reports may also be inspected and copied at the public reference
facilities maintained by the SEC at the following location:
Securities and Exchange Commission
Office of FOIA and Privacy Act Operations
100 F Street, Northeast
Washington, DC 20549-2736
CNB has filed a Schedule 13E-3 under the Exchange Act in connection with the merger. You may
inspect and copy the Schedule 13E-3 from the SEC website or at any of the SEC locations listed
above. This document does not contain all of the information contained in the Schedule 13E-3
because certain parts have been omitted in accordance with the rules and regulations of the SEC .
Representatives of Smith Elliott Kearns & Company LLC are expected to be present at the Special Meeting and will have an opportunity to
make a statement, if they so desire. They will be available to respond to questions.
DOCUMENTS INCORPORATED BY REFERENCE
CNBs 2009 Annual Report and Form 10-Q for the Quarter Ended June 30, 2010 are incorporated by reference into this Proxy Statement.
|
|
|
By Order of the Board of Directors
|
|
|
|
|
|
/s/ Thomas F. Rokisky
Thomas F. Rokisky
|
|
|
President and Chief Executive Officer
|
|
|
Dated:
November 5, 2010
48
ANNEX A
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
CNB FINANCIAL SERVICES, INC.
Pursuant to Section 1006, Article 10, Chapter 31D of the Code of West Virginia, the
undersigned corporation adopts the following Articles of Amendment to its Articles of
Incorporation:
FIRST:
The name of the corporation is CNB Financial Services, Inc.
SECOND:
The following amendment to the Articles of Incorporation was adopted by majority vote
of the shareholders of the corporation at a meeting of shareholders duly held on notice.
THIRD:
The date of the adoption was
___, 2010.
FOURTH:
The following amendment to the Articles of Incorporation was adopted by the
shareholders of the corporation in the manner prescribed by law:
RESOLVED,
that Article VI of the Articles of Incorporation of this
corporation be, and the same hereby is, amended to read as follows:
Article VI. The amount of total authorized capital stock of the
corporation is Fifteen Million Dollars, which shall be divided into shares as follows:
(a) 5,000,000 shares of Common Stock, par value of $1.00
per share (the Common Stock). Shareholders of Common Stock shall
have unlimited voting rights and shall enjoy all other privileges
afforded Common Stock shareholders under West Virginia law.
(b) 5,000,000 shares of Class A Common Stock, par value
of $1.00 per share.
(c) 5,000,000 shares of Class B Common Stock, par value
of $1.00 per share.
(d)
Provisions Applicable Only to Class A Common Stock.
(i) Voting Rights.
1. Each outstanding share of Class A
Common Stock shall have no voting rights, except as may be
required by law, and with respect to the following matters:
|
A.
|
|
Voting on a merger or share exchange to the extent shareholder
approval is required, as described in W. Va. Code § 31D-11-1104, as in
effect at the time of the vote;
|
|
|
B.
|
|
Voting on the amendment or alteration of the Articles of
Incorporation, as amended, to authorize or create or increase the
authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares
of,
|
A-1
|
|
|
any class or series of capital stock ranking senior to the Class A
Common Stock with respect to payment of dividends and/or distribution
of assets on any liquidation, dissolution or winding up of the
Corporation as required by W. Va. Code § 31D-10-1004, as in effect at
the time of the vote.
|
|
C.
|
|
Voting on any amendment, alteration or repeal of any provision of the
Articles of Incorporation, as amended so as to adversely affect the
rights, preferences, privileges or voting powers of the Class A Common
Stock as required by W. Va. Code § 31D-10-1004, as in effect at the
time of the vote; and
|
|
|
D.
|
|
Voting in any matter for which the vote of the holders of Class A
Common Stock as a group is required by the laws of West Virginia in
effect at the time of the votes.
|
2. With respect to those matters on which
the holders of the Class A Common Stock are entitled to
vote, the holders shall have the right to one vote for each
such share. Holders of shares of Class A Common Stock and
Common Stock (and to the extent entitled to vote on such
matters, the holders of Class B Common Stock) shall be
considered as single voting groups and shall be entitled to
vote and be counted together collectively, and shall be
entitled to receive notice of any shareholders meeting held
to act upon such matters in accordance with the bylaws of
the corporation.
(ii) Dividends. Dividends shall be paid on the Class A Common Stock
before dividends may be paid on the Common Stock. However, there shall be no
requirement to pay dividends, and there shall be no cumulative dividends. If
dividends are paid on the Common Stock, the dividends payable on the Class A Common
Stock shall be equal to 10% more than is paid on the Common Stock.
(iii) Conversion. The Class A Common Stock shall convert to Common Stock
in the event the corporation is party to a merger, share exchange, sale of assets
other than in the regular course of business, voluntary dissolution of the
corporation, or other Change in Control which will result in the sale, dissolution
or effective dissolution of the corporation.
(iv) Redemption. The Class A Common Stock shall have no redemption rights.
(v) Right of First Refusal. Prior to transferring or selling shares of
Class A Common Stock, a shareholder must notify the corporation in writing of the
terms of any such proposed transfer or sale, including the terms of any proposed
transfer or offer to purchase or to sell such shares, which written notice shall
describe the name of the transferee(s) or purchaser(s), the purchase price per share
(if applicable), the proposed date of purchase or transfer and such other
information as the corporation may reasonably require. After receiving notice of
any
A-2
proposed transfer or sale of shares of Class A Common Stock, the corporation
shall have five business days, either to request additional information regarding
the transfer or sale or to immediately exercise its right of first refusal and
repurchase the shares of Class A Common Stock that are subject to the proposed
transfer or sale, upon the same terms as such proposed transfer or sale. If the
proposed transfer shall be made by gift or otherwise without consideration, the
corporation shall have the right to purchase such shares for an amount determined by
the Board to be fair value for the shares. If the corporation does not exercise its
right of first refusal within five business days after the later to occur of (i) the
receipt of written notice by the corporation or (ii) the receipt of additional
information requested by the corporation regarding the proposed transfer or sale,
the shareholder may consummate the transfer or sale of the shares of Class A Common
Stock to the proposed transferee(s) or purchaser(s), upon the terms of the proposed
transfer or offer, as described to the Corporation in the written notice. If the
proposed transfer or sale of the shares of Class A Common Stock is not consummated
within 20 business days following the expiration of the corporations right of first
refusal, the shareholder must provide a new notice to the Corporation regarding any
proposed transfer or sale, thereby providing to the corporation a new right of first
refusal and new exercise expiration period hereunder, prior to any consummation of
any proposed transfer or sale of Class A Common Stock. Any transfer or sale of
Class A Common Stock, which is not, in the sole discretion of the Corporation, made
in accordance with the provisions of this section, shall be void
ab initio
and shall
be given no effect by the corporation. Nothing herein shall be construed to
prohibit the Board from effecting share repurchases of the corporations Class A
Common Stock in accordance with any stock repurchase policy or plan of the
corporation.
(vi) Liquidation Preference. The Class A Common Stock shall have a
liquidation preference superior to the corporations Common Stock and the
Corporations Class B Common Stock.
(e)
Provisions Applicable Only to Class B Common
Stock.
(i) Voting Rights.
1. Each outstanding share of Class B
Common Stock shall have no voting rights, except as may be
required by law, and with respect to the following matters:
|
A.
|
|
Voting on a merger or share exchange to the extent shareholder
approval is required, as described in W. Va. Code § 31D-11-1102 and § 31D-11-1103, as in
effect at the time of the vote;
|
|
|
B.
|
|
Voting on the amendment or alteration of the Articles of
Incorporation, as amended, to authorize or create or increase the
authorized amount of, or any issuance of, any shares of, or any
securities convertible into or exchangeable or exercisable for shares
of, any class or series of capital stock ranking senior to the Class B
Common Stock with respect to payment of dividends and/or
|
A-3
|
|
|
distribution of assets on any liquidation, dissolution or winding up of the
corporation as required by W. Va. Code § 31D-10-1004, as in effect at
the time of the vote.
|
|
C.
|
|
Voting on any amendment, alteration or repeal of any provision of the
Articles of Incorporation, as amended so as to adversely affect the
rights, preferences, privileges or voting powers of the Class B Common
Stock as required by W. Va. Code § 31D-10-1004, as in effect at the
time of the vote; and
|
2. With respect to those matters on which
the holders of the Class B Common Stock are entitled to
vote, the holders shall have the right to one vote for each
such share. Holders of shares of Class B Common Stock and
Common Stock (and to the extent entitled to vote on such
matters, the holders of Class A Common Stock) shall be
considered as single voting groups and shall be entitled to
vote and be counted together collectively, and shall be
entitled to receive notice of any shareholders meeting held
to act upon such matters in accordance with the bylaws of
the corporation.
(ii) Dividends. Dividends shall be paid on the Class B Common Stock only
after dividends are paid on the Class A Common Stock, but before dividends may be
paid on the Common Stock. However, there shall be no requirement to pay dividends,
and there shall be no cumulative dividends. If dividends are paid on the Common
Stock, the dividends payable on the Class B Common Stock shall be equal to 20% more
than is paid on the Common Stock.
(iii) Conversion. The Class B Common Stock shall convert to Common Stock
in the event the corporation is party to a merger, share exchange, sale of assets
other than in the regular course of business, voluntary dissolution of the
corporation, or other Change in Control which will result in the sale, dissolution
or effective dissolution of the Corporation.
(iv) Redemption. The Class B Common Stock shall have no redemption rights.
(v) Right of First Refusal. Prior to transferring or selling shares of
Class B Common Stock, a shareholder must notify the corporation in writing of the
terms of any such proposed transfer or sale, including the terms of any proposed
transfer or offer to purchase or to sell such shares, which written notice shall
describe the name of the transferee(s) or purchaser(s), the purchase price per share
(if applicable), the proposed date of purchase or transfer and such other
information as the corporation may reasonably require. After receiving notice of
any proposed transfer or sale of shares of Class B Common Stock, the corporation
shall have five business days, either to request additional information regarding
the transfer or sale or to immediately exercise its right of first refusal and
repurchase the shares of Class B Common Stock that are subject to the proposed
transfer or sale, upon the same terms as such proposed transfer or sale. If the
proposed transfer shall be made by gift or otherwise without consideration, the
corporation
A-4
shall have the right to purchase such shares for an amount determined by
the Board to be fair value for the shares. If the corporation does not exercise its
right of first refusal within five business days after the later to occur of (i) the
receipt of written notice by the corporation or (ii) the receipt of additional
information requested by the corporation regarding the proposed transfer or sale,
the shareholder may consummate the transfer or sale of the shares of Class B Common
Stock to the proposed transferee(s) or purchaser(s), upon the terms of the proposed
transfer or offer, as described to the corporation in the written notice. If the
proposed transfer or sale of the shares of Class B Common Stock is not consummated
within 20 business days following the expiration of the corporations right of first
refusal, the shareholder must provide a new notice to the corporation regarding any
proposed transfer or sale, thereby providing to the corporation a new right of first
refusal and new exercise expiration period hereunder, prior to any consummation of
any proposed transfer or sale of Class B Common Stock. Any transfer or sale of
Class B Common Stock, which is not, in the sole discretion of the corporation, made
in accordance with the provisions of this section, shall be void
ab initio
and shall
be given no effect by the corporation. Nothing herein shall be construed to
prohibit the Board from effecting share repurchases of the corporations Class B
Common Stock in accordance with any stock repurchase policy or plan of the
corporation.
(vi) Liquidation Preference. The Class B Common Stock shall have a
liquidation preference superior to the corporations Common Stock, but after the
corporations Class A Common Stock.
The Board of Directors shall have the power and authority at any
time and from time to time to issue, sell or otherwise dispose of
any unissued but authorized shares of any class or classes of stock
presently provided for in the Certificate of Incorporation, or that
may hereafter be provided for by a subsequent amendment to the
Certificate of Incorporation, to such persons or parties, including
the holders of Common Stock or of any such other class of stock, for
such considerations (not less than the par value, if any, thereof)
and upon such terms and conditions as the Board of Directors in its
discretion may deem to be in the best interests of the corporation.
Except as expressly provided to the contrary herein, such issuance,
sale or other disposition may be made without offering such shares,
or any part or class thereof, to the holders of Common Stock or any
such other class of stock, and no such holder shall have any
preemptive right to subscribe for any such shares.
Each holder of Common Stock of the corporation entitled to vote
shall have one vote for each share thereof held, and each holder of
Class A Common Stock or Class B Common Stock shall have one vote for
each share held, for the matters on which those shares are entitled
to vote.
FIFTH:
Contact name and number of person to reach in case of problem with filing:
Name: Charles D. Dunbar, Esq.
Phone: (304) 340-1196
A-5
SIXTH:
Signature of person executing document:
|
|
|
|
|
|
|
Signature
|
|
Capacity in which he/she is signing
|
A-6
ANNEX B
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger dated effective as of
___, 2010 (this
Agreement), is entered into by and between CNB Financial Services, Inc., a West Virginia
corporation (the Company), and CNB Merger Corporation, a West Virginia corporation (Merger
Corp.).
WITNESSETH
WHEREAS, the Company is a corporation duly incorporated and validly existing under the
laws of the State of West Virginia having its principal office in Berkeley Springs, West Virginia,
with authorized capital stock consisting of 5,000,000 shares (Shares) of common stock, $1.00 par
value per share (the Company Stock), of which
shares are issued and outstanding; and
WHEREAS, Merger Corp. is a corporation duly organized and validly existing under the
laws of the State of West Virginia, with authorized capital stock consisting of ten (10) shares of
common stock, $1.00 par value per share (the Merger Corp. Stock), of which ten (10) shares are
issued and outstanding; and
WHEREAS, the boards of directors of the Company and Merger Corp. have approved the terms
and conditions of this Agreement pursuant to which Merger Corp. will be merged with and into the
Company (the Merger) with the Company surviving the Merger;
NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants
and undertakings contained herein, and for such other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
ARTICLE I
MERGER
1.01. GENERAL. At the Effective Time (as defined in Article VIII below) of the Merger
and pursuant to the provisions of this Agreement, the corporate existence of Merger Corp. will be
merged with and into the Company (hereinafter referred to as the Surviving Corporation whenever
reference is made to it as of the Effective Time or thereafter) and continued in the Surviving
Corporation, and the Surviving Corporation shall be deemed to be a continuation of
the entities and identities of Merger Corp. and the Company.
1.02. NAME AND ORGANIZATION. The name of the Surviving Corporation shall remain and
thereafter be CNB Financial Services, Inc. The Articles of Incorporation and Bylaws of the
Company in effect at the Effective Time shall remain the Articles of Incorporation and Bylaws of
the Surviving Corporation until changed as provided therein or by law. The established offices and
facilities of the Company shall remain the established offices and facilities of the Surviving
Corporation. The registered office and registered agent of the Company shall remain the registered
office and registered agent of the Surviving Corporation.
1.03. RIGHTS AND INTERESTS. At the Effective Time, all rights, franchises, and
interests of the Company and Merger Corp., respectively, in and to every type of property shall be
transferred to and vested in the Surviving Corporation by virtue of the Merger without any deed or
other transfer. The Surviving Corporation at the Effective Time, and without any order or other
action on the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, powers, designations, and nominations, and all
other rights and interests as trustee, executor, administrator, agent, transfer agent, registrar of
stocks and bonds, administrator of estates, assignee, and receiver, and in every other fiduciary
and agency capacity in the same manner and to the same extent as such rights, franchises, and
interests were held or enjoyed by the Company and Merger Corp., respectively, immediately
prior to the Effective Time.
B-1
1.04. LIABILITIES AND OBLIGATIONS. Except as otherwise provided herein, the Surviving
Corporation shall be liable for all liabilities of the Company and Merger Corp. All debts,
liabilities, obligations, and contracts of the Company and Merger Corp., matured or unmatured,
whether accrued, absolute, contingent, or otherwise, and whether or not reflected or reserved
against on the balance sheets, books of account, or records of the Company or Merger Corp., as the
case may be, shall be those of, and are hereby expressly assumed by, the Surviving Corporation and
shall not be released or impaired by the Merger. All rights of creditors and other obligees and all
liens on property of either the Company or Merger Corp. shall be preserved unimpaired.
1.05. DIRECTORS AND OFFICERS. The directors, advisory directors, and officers of the
Surviving Corporation at the Effective Time shall be those persons who were directors, advisory
directors, and officers, respectively, of the Company immediately before the Effective Time. The
committees of the Board of Directors of the Surviving Corporation at the Effective Time shall be
the same as, and shall be composed of the same persons who were serving on, the committees
appointed by the Board of Directors of the Company as they existed immediately before the
Effective Time.
1.06. ADOPTION. Unless contrary to the laws of the State of West Virginia or the
United States of America or other applicable laws, all corporate acts, plans, policies,
applications, agreements, orders, registrations, licenses, approvals, and authorizations of the
Company and Merger Corp., their respective shareholders, boards of directors, committees elected or
appointed by their boards of directors or officers, and agents that were valid and effective
immediately before the Effective Time shall be taken for all purposes at and after the Effective
Time as the acts, plans, policies, applications, agreements, orders, registrations, licenses,
approvals, and authorizations of the Surviving Corporation and shall be effective and binding
thereon as the same were with respect to the Company and Merger Corp. immediately before the
Effective Time.
ARTICLE II
TERMS OF THE MERGER
2.01. GENERAL. The manner of exchanging and converting the issued and outstanding
shares of Company Stock and Merger Corp. Stock shall be as hereinafter provided in this Article II.
2.02. CONVERSION AND EXCHANGE OF STOCK. At the Effective Time,
(a) All outstanding shares of Company Common Stock (Company Stock), whether Record
Shares (as hereinafter defined) or Street Shares (as hereinafter defined), held by a Holder (as
hereinafter defined) holding fewer than 150 shares immediately prior to the Effective Time shall,
without any action on the part of the Holder thereof, be converted into the right to receive
Company Class A Common Stock on a one share for one share exchange basis; provided, however, that
the Company may presume that all Street Shares are held by Holders holding fewer than 150 shares
immediately prior to the Effective Time unless either the Company or a Beneficial Owner of Street
Shares are able to demonstrate to the Companys satisfaction that such shares are held beneficially
by a Holder holding 150 or more shares of Company Stock immediately prior to the Effective Time, in
which event such shares of Company Stock shall remain outstanding with all rights, privileges, and
powers existing immediately before the Effective Time.
(b) All outstanding shares of Company Stock, other than those described in Paragraph
(a) as being converted into the right to receive CNB Class A Common Stock, shall remain outstanding
with all rights, privileges, and powers existing immediately before the Effective Time.
(c) The shares of Merger Corp. shall be cancelled and of no further effect.
In no event shall any Holder holding, of record or beneficially, immediately prior to the Effective
Time, 150 or more shares (including any combination of Record Shares and Street Shares), be
entitled to receive Company Class A Common Stock with respect to the shares so held. It shall be a
condition precedent to the right of any Holder to receive Company Class A Common Stock, if any,
that such Holder certify to the Company in a Letter of Transmittal
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delivered by the Company that such Holder held, of record and beneficially, immediately prior to
the Effective Time, fewer than 150 shares (including any combination of Record Shares and Street
Shares) in the aggregate.
For purposes hereof,
(1) The term Record Shares shall mean shares of Company Common Stock, other than Street Shares,
and any Record Share shall be deemed to be held by the registered holder thereof as reflected on
the books of the Company;
(2) The term Street Shares shall mean shares of Company Common Stock held of record in street
name, and any Street Share shall be deemed to be held by the Beneficial Owner thereof as reflected
on the books of the nominee holder thereof;
(3) The term Holder shall mean any record holder or holders of Record Shares who would be
deemed, under Rule 12 G5-1 promulgated under the Securities Exchange Act of 1934, as amended, to be
a person for purposes of determining the number of record shareholders of the Company.
The Company, along with any other person or entity to which it may delegate or assign any
responsibility or task with respect thereto, shall have full discretion and exclusive authority,
subject to its right and power to so delegate or assign such authority, to (i) make such inquiries,
whether of any shareholder(s) or otherwise, as it may deem appropriate, for purposes of this
Article Two and (ii) resolve and determine, in its sole discretion, all ambiguities, questions of
fact and interpretive and other matters relating to this Article Two, including, without
limitation, any questions as to the number of shares of Company Common Stock held by any Holder
immediately prior to the Effective Time. Any and all determinations by the Company under this
Article Two shall be final and binding on all parties, and no person or entity shall have any
recourse against the Company or any other person or entity with respect thereto.
For purposes of this section, the Company may, in its sole discretion, but shall not have the
obligation to do so (i) presume that any shares of Company Common Stock held in a discrete account
(whether Record or Beneficial) are held by a person distinct from any other person, notwithstanding
that the Registered or Beneficial Holder of a separate discrete account has the same or a similar
name as the Holder of a separate discrete account; and (ii) aggregate the Shares held (whether of
record or beneficially) by any person or persons that the Company determines to constitute a single
Holder for purposes of determining the number of Shares held by such Holder.
2.03 MANNER AND BASIS OF CONVERTING SHARES OF EACH MERGING CORPORATION.
(a)
Exchange Procedure
. Promptly after the Effective Time, the Company will
mail to each Holder of a certificate or certificates, which immediately prior to the Effective Time
evidenced outstanding shares that have been converted into the right to receive Company Class A
Common Stock under this Agreement (other than shares as to which rights of dissent have been
perfected as provided under West Virginia law (Certificates), a letter of transmittal and
instructions to effect the surrender of the Certificates in exchange for the Share Certificates
representing an equal number of Company Class A Common Stock shares. Upon surrender of a
Certificate to the Company for cancellation, together with such letter of transmittal, duly
completed and executed, and such other customary documents as may be required pursuant to such
instructions, the Holder of such Certificate shall, subject to the provisions of W. Va. Code
§§ 31D-13-1301,
et seq.
, be entitled to receive in exchange therefor a Share Certificate
representing an equal number of Company Class A Common Stock Shares and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of ownership of shares which
are not registered in the share transfer records of the Company, the Company Class A Common Stock
may be issued to the transferee if the Certificate representing such shares is presented to the
Company and is accompanied by all documents required to evidence and effect such transfer and such
indemnity as may be required by the Company.
(b) ABANDONED PROPERTY LAWS. The Surviving Corporation shall not be liable to any
holder of a Certificate for any cash properly delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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2.04. APPRAISAL RIGHTS OF SHAREHOLDERS. Shareholders may dissent from the Merger and
exercise their appraisal rights pursuant to and subject to the provisions of Sections 31D-13-1301
et seq. of the West Virginia Business Corporation Act.
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF THE COMPANY
The Company hereby represents, warrants, and covenants to and with Merger Corp. as of the
date of this Agreement and as of the Closing Date (as defined in Article VIII below) as follows:
3.01. ORGANIZATION. The Company is a business corporation duly incorporated, validly
existing, and in good standing under the laws of the State of West Virginia. The Company has the
corporate power to carry on its business as is presently being conducted and is qualified to do
business in every jurisdiction in which the character and location of the assets owned by it or the
nature of the business transacted by it requires qualification.
3.02. GOVERNMENTAL AUTHORIZATIONS. The Company is in compliance in all material
respects with all applicable federal, state, and local laws, rules, regulations, and orders,
including, without limitation, those imposing taxes. The approval, execution, delivery, and
performance of this Agreement, and the consummation of the transactions contemplated hereby,
subject to the receipt of the consents and approvals described in Sections 6.03 and 6.04 below,
will not violate in any material respect any provision of, or constitute a default under, any
applicable law, rule, or regulation of any governmental agency or instrumentality, either domestic
or foreign, applicable to the Company.
3.03. NO CONFLICT WITH OTHER INSTRUMENTS. The consummation of the Merger in accordance
with the terms, conditions, and provisions of this Agreement will not conflict with, or result in a
breach of, any term, condition, or provision of, or constitute a default under, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the Company is a party,
and will not conflict with any provisions of the Articles of Incorporation or Bylaws of the Company
or any of its subsidiaries, and will not constitute an event that with the lapse of time or action
by a third party could result in any default under any of the foregoing, or result in the creation
of any lien, charge, or encumbrance upon any of the assets or properties of the Company or upon the
Company Stock.
3.04. NO CONFLICT WITH JUDGMENTS OR DECREES. The consummation of the transactions in
accordance with the terms, conditions, and provisions of this Agreement will not conflict with, or
result in a breach of, any term, condition, or provision of any judgment, order, injunction,
decree, writ, or ruling of any court or tribunal, either domestic or foreign, to which
the Company is a party or is subject.
3.05. APPROVAL OF AGREEMENTS. The board of directors of the Company has approved this
Agreement and the transactions contemplated hereby and has authorized the execution and delivery of
this Agreement by the Company. The Company has full corporate
power, authority, and legal right to enter into this Agreement.
3.06. CAPITAL STOCK. The authorized capital stock of the Company consists solely of
the Company Stock, all of the shares of which are validly issued, fully paid, and not issued in
violation of the preemptive rights of any shareholder.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF MERGER CORP.
Merger Corp. hereby represents, warrants, and covenants to and with the Company as of the
date of this Agreement and as of the Closing Date as follows:
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4.01. ORGANIZATION. Merger Corp. is a West Virginia corporation duly incorporated,
validly existing, and in good standing under the laws of the State of West Virginia. Merger Corp.
has the corporate power and authority to carry on its business as is presently being conducted and
is qualified to do business in every jurisdiction in which the character and location of the assets
owned by it or the nature of the businesses conducted by it requires qualification.
4.02. CAPITAL STOCK. The authorized capital stock of Merger Corp. consists solely of
the Merger Corp. Stock, of which ten (10) shares are currently issued and held by the Company.
There are no outstanding subscriptions, warrants, options, or rights of any kind to acquire from
Merger Corp. any shares of Merger Corp. Stock, other equity securities, or debt securities.
4.03. SUBSIDIARIES OR AFFILIATES. Merger Corp. does not own of record or beneficially,
and is not obligated to acquire any capital stock, other equity securities, debt securities, or
other interest of or in any corporation, government, or other entity. Between the date hereof and
the Effective Time, Merger Corp. will not create or acquire any subsidiaries
without the prior written consent of the Company.
4.04. APPROVAL OF AGREEMENTS. The Board of Directors of Merger Corp. has approved this
Agreement and the transactions contemplated hereby and has authorized the execution and delivery by
Merger Corp. of this Agreement. Merger Corp. has full corporate power, authority, and legal right
to enter into this Agreement and, upon appropriate vote of the shareholders of Merger Corp., to
approve this Agreement and consummate the transactions contemplated hereby.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF MERGER CORP.
The obligations of Merger Corp. to cause the Merger to be consummated shall be subject to
the satisfaction on or before the Closing Date of all of the following conditions, except as Merger
Corp. may waive such conditions in writing:
5.01. LITIGATION. On the Closing Date, there shall not be pending or threatened
litigation in any court or any proceeding by any governmental commission, board, or agency with a
view to seeking, or in which it is sought, to restrain or prohibit consummation of the Merger, or
in which it is sought to obtain divestiture, rescission, or damages in connection with the Merger
or the consummation of the Merger, and to the knowledge of any of the parties hereto, no
investigation by any governmental agency shall be pending or threatened that might
result in any such suit, action, or other proceeding.
5.02. REPRESENTATIONS AND WARRANTIES. All representations and warranties of the
Company contained in this Agreement, other than any representations and warranties as to future
events, shall be true in all material respects on and as of the Closing Date as if such
representations and warranties were made on and as of the Closing Date, and the Company shall have
performed all agreements and covenants required by this Agreement to be performed by it on or prior
to the Closing Date.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to cause the Merger to be consummated shall be subject to
the satisfaction on or before the Closing Date of all the following conditions, except as the
Company may waive such conditions in writing:
6.01. LITIGATION. On the Closing Date, there shall not be pending or threatened
litigation in any court or any proceeding by any governmental commission, board, or agency with a
view to seeking, or in which it is sought, to restrain or prohibit consummation of the Merger, or
in which it is sought to obtain divestiture, rescission, or
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damages in connection with the Merger or the consummation of the Merger, and to the knowledge of
any of the parties hereto, no investigation by any governmental agency shall be pending or
threatened that might result in any such suit, action, or other proceeding.
6.02. REPRESENTATIONS AND WARRANTIES. All representations and warranties of Merger
Corp. contained in this Agreement, other than any representations and warranties as to future
events, shall be true in all material respects on and as of the Closing Date as if such
representations and warranties were made on and as of the Closing Date, and Merger Corp. shall have
performed all agreements and covenants required by this Agreement to be performed by it
on or prior to the Closing Date.
6.03. SHAREHOLDER APPROVAL. This Agreement shall have been approved by a vote of the
holders of not less than a majority of the outstanding shares of Company Stock.
6.04. REGULATORY APPROVAL. Any approvals by the Federal Reserve Board, the West
Virginia Board of Banking and Financial Institutions or any other regulatory body or agency for
which the Company deems that approval of the transactions contemplated herein are necessary or
advisable, shall have been obtained and all waiting periods imposed on the Company in relation
thereto shall have elapsed.
ARTICLE VII
EXPENSES
Costs and expenses relating to the negotiation and drafting of this Agreement and the
transactions contemplated hereby shall be borne and paid by the Company or the Company in relation
thereto shall have elapsed.
ARTICLE VIII
CLOSING DATE AND EFFECTIVE TIME
The closing of this Agreement and the transactions contemplated hereby shall be held on
the Closing Date (as defined in this Article VIII) at such time and place as the parties hereto may
mutually agree upon. The Closing Date shall be such date as the Presidents of the Company and
Merger Corp., respectively, may agree upon. Subject to the terms and upon satisfaction on or before
the Closing Date of all requirements of law and conditions specified in this Agreement, the Company
and Merger Corp. shall, at the Closing Date, execute, acknowledge, and deliver such other documents
and instruments and take such further action as may be necessary or appropriate to consummate the
Merger. The Effective Time is the date on which the Merger is effective, which shall be on the
date specified in the certificate of merger to be issued by the Secretary of State of West
Virginia, and if no date is specified in such certificate, then the Effective Time shall be the
time of the opening of business on the date the certificate of merger is recorded by the Secretary
of State of West Virginia.
ARTICLE IX
AMENDMENTS
This Agreement may be amended only by written agreement duly authorized by the boards of
directors of the parties hereto prior to the Closing Date.
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ARTICLE X
TERMINATION
This Agreement may be terminated by either the Company or Merger Corp. at any time prior
to the Effective Time. In the event of a termination of this Agreement, this Agreement shall become
void and shall have no effect and create no liability on the part of any of the parties hereto or
their respective directors, officers, or shareholders.
ARTICLE XI
NOTICES
All notices, requests, demands, and other communications under this Agreement shall be in
writing and shall be deemed to have been duly given at the time either personally delivered or
sent by registered or certified mail, postage prepaid, as follows:
If to the Company, at
101 S. Washington Street
Berkeley Springs, West Virginia 25411
If to Merger Corp, at
101 S. Washington Street
Berkeley Springs, West Virginia 25411
ARTICLE XII
MISCELLANEOUS
12.01. FURTHER ASSURANCES. Each party hereto agrees to perform any further acts and to
execute and deliver any further documents that may be reasonably necessary to carry out
the provisions of this Agreement.
12.02. SEVERABILITY. In the event that any of the provisions, or portions thereof, of
this Agreement are held to be illegal, unenforceable, or invalid by any court of competent
jurisdiction, the legality, enforceability, and validity of the remaining provisions, or portions
thereof, shall not be affected thereby, and, in lieu of the illegal, unenforceable, or invalid
provision, or portion thereof, there shall be added a new legal, enforceable, and valid provision
as similar in scope and effect as is necessary to effectuate the results intended by the deleted
provision or portion.
12.03. CONSTRUCTION. Whenever used herein, the singular number shall include the
plural, and the plural number shall include the singular.
12.04. GENDER. Any references herein to the masculine gender, or to the masculine form
of any noun, adjective, or possessive, shall be construed to include the feminine or neuter gender
and form, and vice versa.
12.05. HEADINGS. The headings contained in this Agreement are for purposes of reference
only and shall not limit or otherwise affect the meaning of any of the provisions contained herein.
12.06. MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
12.07. GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED IN AND SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF WEST VIRGINIA, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES THEREOF OR
OF ANY STATE.
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12.08. INUREMENT. The provisions of this Agreement shall inure to the benefit of, and
shall be binding on, the assigns and successors in interest of each of the parties hereto.
12.09. WAIVERS. No waiver of any provision or condition of this Agreement shall be
valid unless executed in writing and signed by the party to be bound thereby, and then only to the
extent specified in such waiver. No waiver of any provision or condition of this Agreement shall be
construed as a waiver of any other provision or condition of this Agreement, and no present waiver
of any provision or condition of this Agreement shall be construed as a future waiver of
such provision or condition.
12.10. ENTIRE AGREEMENT. This Agreement contains the entire understanding between the
parties hereto concerning the subject matter contained herein. There are no representations,
agreements, arrangements, or understandings, oral or written, between or among the parties hereto
relating to the subject matter of this Agreement that are not fully expressed herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by as of the
date first written above.
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CNB FINANCIAL SERVICES, INC.
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By:
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Its:
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CNB MERGER CORP.
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By:
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Its:
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June 29, 2010
Board of Directors
CNB Financial Services, Inc.
101 S. Washington Street
Berkeley Springs, West Virginia 25411
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of view, to the holders
of the outstanding shares of common stock of CNB Financial Services, Inc. (CNB Financial) of the
terms of the proposed merger of CNB Financial with CNB Merger Corp. (Merger Corp) with CNB
Financial being the surviving corporation (the Merger) pursuant to the Agreement of Merger (the
Merger Agreement.)
Subject to the terms and conditions of the Merger Agreement, all CNB Financial common stock shares
held by any shareholder who holds in the aggregate, 150 or more CNB Financial common stock shares
will remain CNB Financial common stock shareholders. All CNB Financial common stock shares held by
any shareholder who holds, in the aggregate, less than 150 CNB Financial common stock shares will
be converted into the right to receive CNB Financial Class A common stock on a
one-share-for-one-share exchange basis. The Class A common stock will have rights and privileges
that are separate and distinct from the existing CNB common stock which are summarized below:
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Voting Rights The Class A common stock will be allowed voting rights only if the
shareholders are being asked to approve a merger, consolidation, conversion, sale of assets
other than in the regular course of business, voluntary dissolution of the corporation, or
as required by law. The Class A common stock will not enjoy general voting rights,
including the right to participate in the annual election of directors.
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Dividends If CNB Financial declares dividends, dividends must be paid on the Class A
common stock before dividends may be paid on the existing CNB Financial common stock.
However, CNB Financial shall be under no obligation to pay dividends, and dividends are not
cumulative. If dividends are paid, the dividends paid on the Class A common stock will
enjoy a 10% premium over and above what is paid on the existing CNB Financial common stock.
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Conversion In the event CNB Financial is party to a merger, share exchange, sale of
assets other than in the regular course of business, voluntary dissolution of CNB
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Board of Directors
CNB Financial Services, Inc.
June 29, 2010
Page 2
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Financial, or other change in control which will result in the merger, sale, dissolution or
effective dissolution of CNB Financial, the Class A common stock will be converted into
common stock shares and will be treated equally in all respects with the existing common
stock.
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Redemption The Class A common stock will have no redemption rights.
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Right of First Refusal The Class A common stock has a right of first refusal in favor
of CNB Financial. Generally, this right of first refusal requires a Class A common stock
shareholder to notify CNB Financial in writing of the terms of any transfer or sale of the
Class A common stock. Following receipt of the written notice, CNB Financial has five
business days to either request additional information regarding the sale or to immediately
exercise its right of first refusal and purchase the shares of Class A common stock that
are subject to the proposed transfer or sale upon the same terms as the proposed transfer
or sale. If the transfer is to be made without consideration (i.e., a gift), CNB
Financial shall have the right to purchase the shares for an amount determined by the Board
to be the fair value of the shares. CNB Financial retains the right to not exercise its
right of first refusal, which will allow the Class A Common Stock shareholder to sell or
transfer the shares in accordance with the terms of the proposed transfer or offer. Any
Class A Common Stock shares transferred in violation of the right of first refusal is void
and of no effect and will not be recognized by CNB Financial.
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Liquidation Preference The Class A common stock will have a liquidation preference
over the existing CNB common stock and the Class B common stock. In the event of a
liquidation, the Class A common stock shareholders will be entitled to receive liquidation
assets equal to those assets received by the common stock shareholders or the book value of
the corporations common stock, whichever is greater.
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All capitalized items used in this paragraph shall have the meanings ascribed to them in the Merger
Agreement. The terms of the Merger are more fully set forth in the Merger Agreement.
For purposes of this opinion and in connection with our review of the proposed transaction, we
have, among other things:
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1.
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Participated in discussions with representatives of CNB Financial concerning
its financial condition, businesses, assets, earnings, prospects, and such senior
managements views as to its future financial performance;
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2.
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Reviewed the terms of the Merger Agreement;
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Board of Directors
CNB Financial Services, Inc.
June 29, 2010
Page 3
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3.
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Reviewed certain financial statements, both audited (where available) and
un-audited, and related financial information of CNB Financial, including those
included in its annual reports for the past two years and its quarterly reports for the
past two years as well as other internally generated reports relating to
asset/liability management, asset quality, and similar documents;
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4.
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Reviewed certain financial forecasts and projections of CNB Financial, prepared
by its management team, as well as the amount and timing of the cost savings expected
to result from the Merger furnished to us by CNB Financial;
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5.
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Reviewed reported market prices and historical trading activity of CNB
Financial common stock;
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6.
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Reviewed certain aspects of the financial performance of CNB Financial and
compared such financial performance of CNB Financial, together with stock market data
relating to CNB Financial common stock, with similar data available for certain other
financial institutions and certain of their publicly traded securities;
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7.
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Compared the proposed financial terms of the Merger with the financial terms of
certain other going private transactions that we deemed to be relevant;
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8.
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Participated in certain discussions among representatives of CNB Financial and
its financial and legal advisors; and
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9.
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Reviewed such other information and performed such other studies and analyses
as we considered relevant.
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In giving our opinion, we have assumed and relied, without independent verification, upon the
accuracy and completeness of all of the financial and other information that has been provided to
us by CNB Financial, and its representatives, and of the publicly available information that was
reviewed by us. We are not experts in the evaluation of allowances for loan losses and have not
independently verified such allowances, and have relied on and assumed that the allowance for loan
losses set forth in the balance sheet of CNB Financial at March 31, 2010 was adequate to cover such
losses and complied fully with applicable law, regulatory policy and sound banking practice as of
the date of such financial statements. We were not retained to and we did not conduct a physical
inspection of any of the properties or facilities of CNB Financial, did not make any independent
evaluation or appraisal of the assets, liabilities or prospects of CNB Financial, were not
furnished with any such evaluation or appraisal, and did not review any individual credit files.
Our opinion is necessarily based on economic, market, and other conditions as in effect on, and the
information made available to us as of, the date hereof.
Board of Directors
CNB Financial Services, Inc.
June 29, 2010
Page 4
Accordingly, it is important to understand that although subsequent developments may affect its
opinion, we do not have any obligation to further update, revise, or reaffirm its opinion. We
express no opinion on matters of a legal, regulatory, tax or accounting nature of the Merger or the
ability of the Merger, as set forth in the Merger Agreement, to be consummated. No opinion is
expressed as to whether any alternative transaction might be more favorable to holders of CNB
Financials common stock than the Merger.
Howe Barnes Hoefer & Arnett, Inc. (Howe Barnes), as part of its investment banking business, is
regularly engaged in the valuation of banks and bank holding companies, thrifts and thrift holding
companies, and various other financial services companies, in connection with mergers and
acquisitions, initial and secondary offerings of securities, and valuations for other purposes. In
rendering this fairness opinion, we have acted on behalf of the Board of Directors of CNB Financial
and will receive a fee for our services, which is payable upon delivery of this opinion.
Howe Barnes opinion as expressed herein is limited to the fairness, from a financial point of
view, of the merger consideration to be received by holders of CNB Financials common stock and
does not address CNB Financials underlying business decision to proceed with the Merger. We have
been retained on behalf of the Board of Directors of CNB Financial, and our opinion does not
constitute a recommendation to any director of CNB Financial as to how such director should vote
with respect to the Merger Agreement.
Except as provided above, during the two years preceding the date of the opinion we have not had a
material relationship with CNB Financial where compensation was received or that we contemplate
will be received after closing of the transaction.
Except as hereinafter provided, this opinion may not be disclosed, communicated, reproduced,
disseminated, quoted or referred to at any time, to any third party or in any manner or for any
purpose whatsoever without our prior written consent, which consent will not be unreasonably
withheld, based upon review by us of the content of any such public reference, which shall be
satisfactory to us in our reasonable judgment. This letter is addressed and directed to the Board
of Directors of CNB Financial in your consideration of the Merger and is not intended to be and
does not constitute a recommendation to any shareholder as to how such shareholder should vote with
respect to the Merger.
Board of Directors
CNB Financial Services, Inc.
June 29, 2010
Page 5
Subject to the foregoing and based on our experience as investment bankers, our activities as
described above, and other factors we have deemed relevant, we are of the opinion as of the date
hereof that the terms of the proposed Merger are fair, from a financial point of view, to the
holders of CNB Financials common stock.
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Sincerely,
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/s/ Howe Barnes Hoefer & Arnett, Inc.
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Howe Barnes Hoefer & Arnett, Inc.
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CNB FINANCIAL SERVICES, INC.
BERKELEY SPRINGS, WEST VIRGINIA
Documentation Report Relating to the
Fairness of the Proposed Merger of
CNB Financial Services, Inc.
With and Into
CNB Merger Corp.
CNB FINANCIAL SERVICES, INC.
DISCUSSION
DESCRIPTION OF ASSIGNMENT
CNB Financial Services, Inc., Berkeley Springs, West Virginia (CNB Financial) has engaged Howe
Barnes Hoefer & Arnett, Inc. to determine whether the terms of the proposed merger of
CNB Financial with and into CNB Merger Corp. (Merger Corp) with CNB
Financial being the surviving corporation (the Merger) pursuant to the Agreement of Merger
(the Merger Agreement) are fair to the shareholders of CNB Financial, from a
financial point of view. The following presents our general observations and
conclusions as a result of our analysis.
Structure of Transaction.
Subject to the terms and conditions of the Merger Agreement, all
CNB Financial common stock shares held by any shareholder who holds in the
aggregate, 150 or more CNB Financial common stock shares will remain
CNB Financial common stock
shareholders. All CNB Financial common stock shares held by any shareholder who holds, in the
aggregate, less than 150 CNB Financial common stock shares will be converted into the right to
receive CNB Financial Class A common stock on a one-share-for-one-share exchange basis. The Class A
common stock will have rights and privileges that are separate and
distinct from the existing CNB
common stock which are summarized below:
|
|
|
Voting Rights The Class A common stock will be allowed voting rights only if the
shareholders are being asked to approve a merger, consolidation, conversion, sale of
assets other than in the regular course of business, voluntary dissolution of the
corporation, or as required by law. The Class A common stock will not enjoy general voting
rights, including the right to participate in the annual election of directors.
|
|
|
|
|
Dividends If CNB Financial declares dividends, dividends must be paid on the Class
A common stock before dividends may be paid on the existing CNB Financial common stock.
However, CNB Financial shall be under no obligation to pay dividends, and dividends are
not cumulative. If dividends are paid, the dividends paid on the Class A common stock will
enjoy a 10% premium over and above what is paid on the existing CNB Financial common
stock.
|
1
CNB FINANCIAL SERVICES, INC.
|
|
|
Conversion In the event CNB Financial is party to a merger, share exchange,
sale of assets other than in the regular course of business, voluntary dissolution of CNB
Financial, or other change in control which will result in the merger, sale,
dissolution or effective dissolution of CNB Financial, the Class A common stock will be
converted into common stock shares and will be treated equally in all respects
with the existing common stock.
|
|
|
|
|
Redemption The Class A common stock will have no redemption rights.
|
|
|
|
|
Right of First Refusal The Class A common stock has a right of
first refusal in favor of CNB Financial. Generally, this right of first refusal requires a
Class A common stock shareholder to notify CNB Financial in writing of the terms of any
transfer or sale of the Class A common stock. Following receipt of
the written notice, CNB
Financial has five business days to either request additional information
regarding the sale or to immediately exercise its right of first refusal and
purchase the shares of Class A common stock that are subject to the proposed transfer or
sale upon the same terms as the proposed transfer or sale. If the transfer is to be made without consideration (i.e., a gift), CNB Financial shall
have the right to purchase the shares for an amount determined by the Board to be the fair
value of the shares. CNB Financial retains the right to not exercise its right of first
refusal, which will allow the Class A Common Stock shareholder to sell or transfer the
shares in accordance with the terms of the proposed transfer or offer. Any Class A Common
Stock shares transferred in violation of the right of first refusal is void and of no
effect and will not be recognized by CNB Financial.
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|
|
Liquidation Preference The Class A common stock will have a liquidation
preference over the existing CNB common stock and the Class B common stock. In the event
of a liquidation, the Class A common stock shareholders will be entitled to receive
liquidation assets equal to those assets received by the common stock shareholders or the
book value of the corporations common stock, whichever is greater.
|
The terms of the Merger are more fully set forth in the Merger Agreement and all capitalized items
used in this paragraph shall have the meanings ascribed to them in the Merger Agreement.
As a
result of this reorganization or going-private transaction, CNB Financial will have
less than 300 shareholders owning CNB Financials existing CNB common stock and less than 500
shareholders owning the newly created Class A common stock. CNB Financials management believes it
will be able to suspend its SEC reporting obligations, which will allow CNB Financial to save
approximately $143, 000 annually.
2
CNB FINANCIAL SERVICES, INC.
Analysis of Comparable Going Private Transactions.
We reviewed certain publicly available
information regarding 20 selected going private transactions (the Guideline Transactions)
announced from June 30, 2005 to June 18, 2010 involving U.S. banking organizations. The
transactions included in the group are shown on the following page and in Section 2. The data was
obtained from public filings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Dividend
|
|
Liquidation
|
Company
|
|
City
|
|
State
|
|
Announced
|
|
Premium
|
|
Rights
|
Atlantic Bancshares, Inc.
|
|
Atlanta
|
|
GA
|
|
5/27/2010
|
|
5%
|
|
Preference over common
|
GrandSouth Bancorporation
|
|
Greenville
|
|
SC
|
|
9/29/2009
|
|
5%
|
|
Equal to common
|
Citizens Financial Corp.
|
|
Elkins
|
|
WV
|
|
9/25/2009
|
|
5%
|
|
Preference over common
|
Southcrest Financial
Group, Inc.
|
|
Thomaston
|
|
GA
|
|
9/11/2009
|
|
10%
|
|
Preference over common
|
Piedmont Community
Bank Group, Inc.
|
|
Grey
|
|
GA
|
|
5/6/2009
|
|
5%
|
|
Equal to common
|
Thomasville Bancshares, Inc.
|
|
Thomasville
|
|
GA
|
|
11/26/2008
|
|
Equal to common
|
|
Preference over common
|
First Freedom Bancshares,
Inc.
|
|
Lebanon
|
|
TN
|
|
10/12/2008
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
Series A Preferred
|
|
|
|
|
|
|
|
10%
|
|
Preference over common
|
Mountain Valley
Bancshares, Inc.
|
|
Cleveland
|
|
GA
|
|
8/8/2008
|
|
5%
|
|
|
Treaty Oak Bancorp, Inc.
|
|
Austin
|
|
TX
|
|
11/15/2007
|
|
Equal to common
|
|
Preference over common
|
Tri-State 1st Bane, Inc.
|
|
East Liverpool
|
|
OH
|
|
11/9/2007
|
|
Equal to common
|
|
Preference over common
|
CB Financial Corp.
|
|
Wilson
|
|
NC
|
|
10/25/2007
|
|
Greater of $0.04 or same as common
|
|
Preference over common
|
|
|
|
|
|
|
|
|
|
|
|
Southern Heritage
Bancshares, Inc.
|
|
Cleveland
|
|
TN
|
|
10/19/2007
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred
|
|
|
|
|
|
|
|
10%
|
|
Greater of common stock or book value
|
Chestatee Bancshares,
Inc.
|
|
Dawsonville
|
|
GA
|
|
10/19/2007
|
|
|
|
|
Class A Preferred
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
Class B Preferred
|
|
|
|
|
|
|
|
Greater of 5% prem.
|
|
Equal to common
|
|
|
|
|
|
|
|
|
on Class A Preferred
|
|
|
|
|
|
|
|
|
|
|
or $0.10 per share
|
|
|
|
|
|
|
|
|
|
|
annually
|
|
|
3
CNB
FINANCIAL SERVICES, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Dividend
|
|
Liquidation
|
Company
|
|
City
|
|
State
|
|
Announced
|
|
Premium
|
|
Rights
|
FMB Equibanc, Inc.
|
|
Statesboro
|
|
GA
|
|
10/3/2007
|
|
10%
|
|
Preference over common
|
First Ipswich Bancorp
|
|
Ipswich
|
|
MA
|
|
9/11/2007
|
|
Equal to common
|
|
Preference over common
|
Southeast Bancshares, Inc.
|
|
Athens
|
|
TN
|
|
8/15/2007
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
First Commerce Bancorp
|
|
Lewisburg
|
|
TN
|
|
5/29/2007
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
First McMinnville Corp.
|
|
McMinnville
|
|
TN
|
|
5/25/2007
|
|
7%
|
|
Equal to common
|
Legends Financial Holdings, Inc.
|
|
Clarksville
|
|
TN
|
|
3/2/2006
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
First Community Corporation
|
|
Rogersville
|
|
TN
|
|
9/27/2005
|
|
|
|
|
Class A Preferred
|
|
|
|
|
|
|
|
5%
|
|
Preference over common
|
Class B Preferred
|
|
|
|
|
|
|
|
10%
|
|
Preference over common
|
We reviewed the terms of the transactions and the characteristics of the new classifications
of common and preferred stocks and compared them with the terms of the Merger and the newly created
Class A common stock. The dividend premium for the new classifications of common and preferred
stocks ranged from zero to 10%. In this instance, the Class A common stock will receive a 10%
premium on the dividends paid to holders of Class A common stock, which falls within the range of
values in the Guideline Transactions, which supports the fairness of the transaction.
Historical Financial Analysis
. We prepared an overview of the historical financial performance of
CNB Financial, as shown in Section 3.
Trading
Analysis.
We reviewed the closing per share market prices and volumes for CNB
Financial common stock, which is thinly traded on the Pink Sheets under the symbol CBFC, on a
daily basis from December 18, 2009 to June 18, 2010. A
price and volume chart for CNB Financial for
the period between December 18, 2009 and June 18, 20l0 is contained in Section 4. For the period
between December 18, 2009 and June 18. 2010. the price of CNB Financial common stock has ranged
from a low of $45.25 to a high of $52.00. The average
4
CNB FINANCIAL SERVICES, INC.
closing
price for the period was $47.77, the closing price on June 18, 2010 was $52.00 per
share and the average daily trading volume for CNB Financial was 41 shares, but many days
there were no shares traded.
In conducting our review and in arriving at our opinion, we have relied upon and
assumed the accuracy and completeness of the financial and other information provided to us or
publicly available, and we have not assumed any responsibility for independent verification of the
same. We have relied upon the management of CNB Financial as to the reasonableness of the
financial and operating forecasts and projections (and the assumptions and bases therefore)
provided to us, and we have assumed that such forecasts and projections reflect the best currently
available estimates and judgment of the management of CNB Financial. We did not make or obtain any
evaluations or appraisals of the assets or liabilities of CNB Financial.
CONCLUSION
In reaching our opinion, we took into consideration the financial benefits of the
proposed transaction to the shareholders of CNB Financial. Based on the projected cost savings from
suspending SEC reporting obligations, the comparative analysis with selected going private
transactions and assuming the accuracy and completeness of the information and data provided to us
by CNB Financial, it is our opinion that, as of June 24, 2010, the terms of the proposed
transaction are fair to the existing shareholders of CNB Financial, from a financial point of view.
|
|
|
|
|
|
Respectfully Submitted,
|
|
|
|
|
|
|
|
|
Howe Barnes Hoefer & Arnett, Inc.
|
|
|
5
Going
Private Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Dividend
|
|
Liquidation
|
|
Other
|
Company
|
|
City
|
|
State
|
|
Announced
|
|
Premium
|
|
Rights
|
|
Features
|
Atlantic Bancshares, Inc.
|
|
Atlanta
|
|
GA
|
|
5/27/2010
|
|
5%
|
|
Preference over common
|
|
|
GrandSouth Bancorporation
|
|
Greenville
|
|
SC
|
|
9/29/2009
|
|
5%
|
|
Equal to common
|
|
|
Citizens Financial Corp.
|
|
Elkins
|
|
WV
|
|
9/25/2009
|
|
5%
|
|
Preference over common
|
|
|
Southcrest Financial Group, Inc.
|
|
Thomaston
|
|
GA
|
|
9/11/2009
|
|
10%
|
|
Preference over common
|
|
|
Piedmont Community Bank Group, Inc.
|
|
Grey
|
|
GA
|
|
5/6/2009
|
|
5%
|
|
Equal to common
|
|
|
Thomasville Bancshares, Inc.
|
|
Thomasville
|
|
GA
|
|
11/26/2008
|
|
Equal to common
|
|
Preference over common
|
|
|
First Freedom Bancshares, Inc.
|
|
Lebanon
|
|
TN
|
|
10/12/2008
|
|
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
|
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
Series A Preferred
|
|
|
|
|
|
|
|
10%
|
|
Preference over common
|
|
|
Mountain
Valley Bancshares, Inc.
|
|
Cleveland
|
|
GA
|
|
8/8/2008
|
|
5%
|
|
|
|
|
Treaty Oak Bancorp, Inc.
|
|
Austin
|
|
TX
|
|
11/15/2007
|
|
Equal to common
|
|
Preference over common
|
|
Put option
|
Tri-State
1st Banc, Inc.
|
|
East Liverpool
|
|
OH
|
|
11/9/2007
|
|
Equal to common
|
|
Preference over common
|
|
Redeem at greater of $17.00 or 1.35x tangible book
|
CB Financial Corp.
|
|
Wilson
|
|
NC
|
|
10/25/2007
|
|
Greater of $0.04 or
|
|
Preference over common
|
|
|
|
|
|
|
|
|
|
|
same as common
|
|
|
|
|
Southern Heritage Bancshares, Inc.
|
|
Cleveland
|
|
TN
|
|
10/19/2007
|
|
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
|
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
Series A Preferred
|
|
|
|
|
|
|
|
10%
|
|
Greater of common stock or book value
|
|
|
Chestatee Bancshares, Inc.
|
|
Dawsonville
|
|
GA
|
|
10/19/2007
|
|
|
|
|
|
|
Class A Preferred
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
Class B Preferred
|
|
|
|
|
|
|
|
Greater of 5% prem.
|
|
Equal to common
|
|
|
|
|
|
|
|
|
|
|
on Class A Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
or $0.10 per share annually
|
|
|
|
|
FMB Equibanc, Inc.
|
|
Statesboro
|
|
GA
|
|
10/3/2007
|
|
10%
|
|
Preference over common
|
|
|
First Ipswich Bancorp
|
|
Ipswich
|
|
MA
|
|
9/11/2007
|
|
Equal to common
|
|
Preference over common
|
|
|
Southeast Bancshares, Inc.
|
|
Athens
|
|
TN
|
|
8/15/2007
|
|
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
|
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
First Commerce Bancorp
|
|
Lewisburg
|
|
TN
|
|
5/29/2007
|
|
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
|
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
First McMinnville Corp.
|
|
McMinnville
|
|
TN
|
|
5/25/2007
|
|
7%
|
|
Equal to common
|
|
|
Legends Financial Holdings, Inc.
|
|
Clarksville
|
|
TN
|
|
3/2/2006
|
|
|
|
|
|
|
Class A Common
|
|
|
|
|
|
|
|
3%
|
|
Equal to common
|
|
|
Class B Common
|
|
|
|
|
|
|
|
5%
|
|
Equal to common
|
|
|
First Community Corporation
|
|
Rogersville
|
|
TN
|
|
9/27/2005
|
|
|
|
|
|
|
Class A Preferred
|
|
|
|
|
|
|
|
5%
|
|
Preference over common
|
|
|
Class B Preferred
|
|
|
|
|
|
|
|
10%
|
|
Preference over common
|
|
|
CNB Financial Services , Inc. (Pink: CBFC)
Financial Highlights
Native Currency: U.S. dollar (USD)
Current Currency: U.S. dollar(USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
|
2007 FY
|
|
|
2008 FY
|
|
|
2009 FY
|
|
|
2010 FQ1 YTD
|
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
12/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
Restatement Date
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Accounting Principle
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet ($000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
276,069
|
|
|
|
290,415
|
|
|
|
282,257
|
|
|
|
289,498
|
|
|
|
285,565
|
|
Total Net Loans
|
|
|
204,319
|
|
|
|
202,669
|
|
|
|
200,752
|
|
|
|
194,707
|
|
|
|
191,378
|
|
Total Deposits
|
|
|
233,083
|
|
|
|
226,645
|
|
|
|
227,895
|
|
|
|
252,292
|
|
|
|
253,180
|
|
Equity Attributable to Parent Company
|
|
|
20,322
|
|
|
|
22,821
|
|
|
|
23,218
|
|
|
|
25,630
|
|
|
|
26,370
|
|
Equity
|
|
|
20,322
|
|
|
|
22,821
|
|
|
|
23,218
|
|
|
|
25,630
|
|
|
|
26,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income ($000)
|
|
|
2,469
|
|
|
|
2,504
|
|
|
|
2,715
|
|
|
|
2,150
|
|
|
|
427
|
|
Net Income Attributable to Parent ($000)
|
|
|
2,469
|
|
|
|
2,504
|
|
|
|
2,715
|
|
|
|
2,150
|
|
|
|
427
|
|
ROAA
|
|
|
0.92
|
|
|
|
0.90
|
|
|
|
0.96
|
|
|
|
0.75
|
|
|
|
0.59
|
|
Core ROAA
|
|
|
0.95
|
|
|
|
0.92
|
|
|
|
0.99
|
|
|
|
0.79
|
|
|
|
0.58
|
|
ROAE
|
|
|
12.46
|
|
|
|
11.88
|
|
|
|
11.66
|
|
|
|
8.88
|
|
|
|
6.71
|
|
Core ROAE
|
|
|
12.95
|
|
|
|
12.04
|
|
|
|
12.02
|
|
|
|
9.30
|
|
|
|
6.51
|
|
Net Interest Margin
|
|
|
3.88
|
|
|
|
3.62
|
|
|
|
4.00
|
|
|
|
3.93
|
|
|
|
3.66
|
|
Reported: Net Interest Margin
|
|
|
3.77
|
|
|
|
3.53
|
|
|
|
3.92
|
|
|
|
3.71
|
|
|
|
3.61
|
|
Efficiency Ratio
|
|
|
64.35
|
|
|
|
66.51
|
|
|
|
60.36
|
|
|
|
59.21
|
|
|
|
67.56
|
|
Noninterest Inc/ Operating Rev
|
|
|
17.24
|
|
|
|
20.23
|
|
|
|
17.87
|
|
|
|
17.92
|
|
|
|
16.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet Ratios/ Capital (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans/ Deposits
|
|
|
88.57
|
|
|
|
90.07
|
|
|
|
89.30
|
|
|
|
78.72
|
|
|
|
77.21
|
|
Securities/ Assets
|
|
|
19.06
|
|
|
|
23.64
|
|
|
|
23.00
|
|
|
|
25.77
|
|
|
|
26.54
|
|
Total Equity/ Total Assets
|
|
|
7.36
|
|
|
|
7.86
|
|
|
|
8.23
|
|
|
|
8.85
|
|
|
|
9.23
|
|
Tangible
Equity/ Tangible Assets
|
|
|
7.19
|
|
|
|
7.74
|
|
|
|
8.14
|
|
|
|
8.80
|
|
|
|
9.19
|
|
Tang Common
Equity/ Tang Assets
|
|
|
7.19
|
|
|
|
7.74
|
|
|
|
8.14
|
|
|
|
8.80
|
|
|
|
9.19
|
|
Tier 1 Common Capital Ratio
|
|
|
12.04
|
|
|
|
12.89
|
|
|
NA
|
|
|
|
14.65
|
|
|
NA
|
|
Tier 1 Ratio
|
|
|
12.04
|
|
|
|
12.89
|
|
|
|
13.94
|
|
|
|
14.65
|
|
|
|
15.24
|
|
Total Risk-based Capital Ratio
|
|
|
13.29
|
|
|
|
14.14
|
|
|
|
15.19
|
|
|
|
15.91
|
|
|
|
16.50
|
|
Leverage
Ratio (Bank, BHC Only)
|
|
|
7.34
|
|
|
|
7.70
|
|
|
|
8.56
|
|
|
|
8.78
|
|
|
|
9.10
|
|
Core Cap/
Tang Assets (OTS Only)
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NPAs/ Assets
|
|
|
0.15
|
|
|
|
0.35
|
|
|
|
0.60
|
|
|
NA
|
|
|
NA
|
|
NPAs &
90+ PD/ Assets
|
|
|
0.15
|
|
|
|
0.35
|
|
|
|
0.60
|
|
|
NA
|
|
|
NA
|
|
NPAs/ Loans & REO
|
|
|
0.19
|
|
|
|
0.49
|
|
|
|
0.83
|
|
|
NA
|
|
|
NA
|
|
Nonaccrual
& 90+ & OREO/ Assets
|
|
|
0.15
|
|
|
|
0.35
|
|
|
|
0.60
|
|
|
|
0.66
|
|
|
|
0.58
|
|
NPA &
Loans 90+/ Tangible Common Equity + LLR
|
|
|
1.85
|
|
|
|
4.08
|
|
|
|
6.59
|
|
|
NA
|
|
|
NA
|
|
NCOs/ Avg Loans
|
|
|
0.09
|
|
|
|
0.08
|
|
|
|
0.16
|
|
|
|
0.35
|
|
|
|
0.54
|
|
Loan Loss
Reserves/ Gross Loans
|
|
|
1.03
|
|
|
|
1.05
|
|
|
|
1.35
|
|
|
|
1.97
|
|
|
|
2.09
|
|
Reserves/ NPAs
|
|
|
530.35
|
|
|
|
213.55
|
|
|
|
162.40
|
|
|
NA
|
|
|
NA
|
|
Loan Loss
Provision/ NCO
|
|
|
166.27
|
|
|
|
107.64
|
|
|
|
282.58
|
|
|
|
264.34
|
|
|
|
171.70
|
|
Copyright 2010, SNL Financial LC
CNB
Financial Services, Inc. (Pink: CBFC)
Financial Highlights
Native Currency: U.S. dollar (USD)
Current Currency: U.S.dollar(USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
|
2007 FY
|
|
|
2008 FY
|
|
|
2009 FY
|
|
|
2010 FQ1 YTD
|
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
12/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
Restatement Date
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Accounting Principle
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Information ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Outstanding (actual)
|
|
|
458,048
|
|
|
|
454,949
|
|
|
|
449,151
|
|
|
|
443,648
|
|
|
|
442,804
|
|
Avg Diluted Shares(actual)
|
|
|
458,048
|
|
|
|
457,274
|
|
|
|
451 ,686
|
|
|
|
446,029
|
|
|
|
443,629
|
|
Book Value per Share
|
|
|
44.37
|
|
|
|
50.16
|
|
|
|
51.69
|
|
|
|
57.77
|
|
|
|
59.55
|
|
Tangible Book Value per Share
|
|
|
43.28
|
|
|
|
49.31
|
|
|
|
51.08
|
|
|
|
57.40
|
|
|
|
59.25
|
|
Common Dividends Declared
|
|
|
1.5400
|
|
|
|
1.6900
|
|
|
|
1.9000
|
|
|
|
1.5500
|
|
|
|
0.0000
|
|
EPS after Extra
|
|
|
5.39
|
|
|
|
5.48
|
|
|
|
6.01
|
|
|
|
4.82
|
|
|
|
0.96
|
|
EPS Growth after Extra(%)
|
|
|
0.9
|
|
|
|
1.7
|
|
|
|
9.7
|
|
|
|
(19.8
|
)
|
|
|
(31.9
|
)
|
Core EPS
|
|
|
5.58
|
|
|
|
5.64
|
|
|
|
6.19
|
|
|
|
5.05
|
|
|
|
0.93
|
|
Core EPS Growth (%)
|
|
|
(5.2
|
)
|
|
|
1.0
|
|
|
|
9.8
|
|
|
|
(18.5
|
)
|
|
|
(33.6
|
)
|
Diluted EPS before Amortization
|
|
|
5.83
|
|
|
|
5.72
|
|
|
|
6.26
|
|
|
|
5.07
|
|
|
|
1.02
|
|
Copyright 2010, SNL Financial LC
CNB Financial Services, Inc. (Pink: CBFC)
Performance Analysis
Native Currency: U.S. dollar (USD)
Current Currency: U.S. dollar(USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
|
2007 FY
|
|
|
2008 FY
|
|
|
2009 FY
|
|
|
2010 FQ1 YTD
|
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
12/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
Restatement Date
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Accounting Principle
|
|
U.S. GAAP
|
|
U.S.GAAP
|
|
U.S.GAAP
|
|
U.S.GAAP
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profitability
Ratios (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROAA
|
|
|
0.92
|
|
|
|
0.90
|
|
|
|
0.96
|
|
|
|
0.75
|
|
|
|
0.59
|
|
ROAE
|
|
|
12.46
|
|
|
|
11.88
|
|
|
|
11.66
|
|
|
|
8.88
|
|
|
|
6.71
|
|
ROACE
|
|
|
12.46
|
|
|
|
11.88
|
|
|
|
11.66
|
|
|
|
8.88
|
|
|
|
6.71
|
|
Return on Avg Tangible Equity
|
|
|
13.50
|
|
|
|
12.49
|
|
|
|
12.15
|
|
|
|
9.26
|
|
|
|
7.04
|
|
Profit Margin
|
|
|
31.59
|
|
|
|
31.13
|
|
|
|
31.03
|
|
|
|
22.14
|
|
|
|
15.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Margin
|
|
|
3.88
|
|
|
|
3.62
|
|
|
|
4.00
|
|
|
|
3.93
|
|
|
|
3.66
|
|
Reported: Net Interest Margin
|
|
|
3.77
|
|
|
|
3.53
|
|
|
|
3.92
|
|
|
|
3.71
|
|
|
|
3.61
|
|
Yield: Interest Earning Assets
|
|
|
6.38
|
|
|
|
6.57
|
|
|
|
6.35
|
|
|
|
5.93
|
|
|
|
5.50
|
|
Cost of Interest-bearing Liab
|
|
|
3.09
|
|
|
|
3.66
|
|
|
|
2.93
|
|
|
|
2.54
|
|
|
|
2.35
|
|
Interest Spread
|
|
|
3.29
|
|
|
|
2.91
|
|
|
|
3.42
|
|
|
|
3.39
|
|
|
|
3.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest
Income/ Avg Assets
|
|
|
3.60
|
|
|
|
3.40
|
|
|
|
3.77
|
|
|
|
3.71
|
|
|
|
3.48
|
|
Noninterest
Income/ Avg Assets
|
|
|
0.75
|
|
|
|
0.86
|
|
|
|
0.82
|
|
|
|
0.78
|
|
|
|
0.71
|
|
Net
Operating Expense/ Avg Assets
|
|
|
2.05
|
|
|
|
1.97
|
|
|
|
1.95
|
|
|
|
1.88
|
|
|
|
2.12
|
|
Noninterest
Inc/ Operating Rev
|
|
|
17.24
|
|
|
|
20.23
|
|
|
|
17.87
|
|
|
|
17.92
|
|
|
|
16.90
|
|
Overhead Ratio
|
|
|
56.92
|
|
|
|
58.02
|
|
|
|
51.73
|
|
|
|
50.60
|
|
|
|
60.96
|
|
Efficiency Ratio
|
|
|
64.35
|
|
|
|
66.51
|
|
|
|
60.36
|
|
|
|
59.21
|
|
|
|
67.56
|
|
Net
Nonrecurring Income/ NIBT
|
|
|
(0.55
|
)
|
|
|
0.00
|
|
|
|
(1.22
|
)
|
|
|
(2.91
|
)
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield/ Cost Detail (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield
Earned On:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield: Total
Loans
|
|
|
6.92
|
|
|
|
7.15
|
|
|
|
6.89
|
|
|
NA
|
|
|
|
6.17
|
|
Yield: Securities
|
|
|
4.44
|
|
|
|
4.52
|
|
|
|
4.67
|
|
|
NA
|
|
|
|
3.93
|
|
Yield: Oth Int-earn Assets
|
|
|
4.87
|
|
|
|
5.99
|
|
|
NM
|
|
|
NA
|
|
|
|
0.28
|
|
Yield:
Interest Earning Assets
|
|
|
6.38
|
|
|
|
6.57
|
|
|
|
6.35
|
|
|
|
5.93
|
|
|
|
5.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Incurred By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Int Cost: CDs
|
|
|
3.79
|
|
|
|
4.59
|
|
|
|
4.10
|
|
|
|
3.51
|
|
|
|
3.22
|
|
Int Cost: Other Deposits
|
|
|
1.78
|
|
|
|
1.68
|
|
|
|
0.67
|
|
|
|
0.27
|
|
|
|
0.24
|
|
Int Cost: Int-bearing Deposits
|
|
|
2.87
|
|
|
|
3.53
|
|
|
|
3.00
|
|
|
|
2.54
|
|
|
|
2.37
|
|
Int Cost: Total Deposits
|
|
|
2.32
|
|
|
|
2.89
|
|
|
|
2.46
|
|
|
|
2.10
|
|
|
|
1.97
|
|
Int Cost: Debt
|
|
|
5.22
|
|
|
|
5.03
|
|
|
|
2.51
|
|
|
|
2.42
|
|
|
|
1.61
|
|
Cost of Interest-bearing Liab
|
|
|
3.09
|
|
|
|
3.66
|
|
|
|
2.93
|
|
|
|
2.54
|
|
|
|
2.35
|
|
Cost of Funds
|
|
|
2.54
|
|
|
|
3.05
|
|
|
|
2.46
|
|
|
|
2.12
|
|
|
|
1.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Income
|
|
|
2,558
|
|
|
|
2,578
|
|
|
|
2,798
|
|
|
|
2,251
|
|
|
|
414
|
|
Core EPS ($)
|
|
|
5.58
|
|
|
|
5.64
|
|
|
|
6.19
|
|
|
|
5.05
|
|
|
|
0.93
|
|
Core EPS before Amortization ($)
|
|
|
5.87
|
|
|
|
5.80
|
|
|
|
6.36
|
|
|
|
5.21
|
|
|
|
0.97
|
|
Copyright 2010, SNL Financial LC
CNB Financial Services, Inc. (Pink: CBFC)
Performance Analysis
Native Currency: U.S. dollar (USD)
Current Currency :U.S. dollar(USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
|
2007 FY
|
|
|
2008 FY
|
|
|
2009 FY
|
|
|
2010 FQ1 YTD
|
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
21/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
No
|
|
No
|
|
No
|
|
No
|
Restatement Date
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
Accounting Principle
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core ROAA (%)
|
|
|
0.95
|
|
|
|
0.92
|
|
|
|
0.99
|
|
|
|
0.79
|
|
|
|
0.58
|
|
Core ROAE (%)
|
|
|
12.95
|
|
|
|
12.04
|
|
|
|
12.02
|
|
|
|
9.30
|
|
|
|
6.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share Info ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS before Extra
|
|
|
5.22
|
|
|
|
5.48
|
|
|
|
6.01
|
|
|
|
4.82
|
|
|
|
0.96
|
|
Basic EPS after Extra
|
|
|
5.39
|
|
|
|
5.48
|
|
|
|
6.01
|
|
|
|
4.82
|
|
|
|
0.96
|
|
EPS before Extra
|
|
|
5.22
|
|
|
|
5.48
|
|
|
|
6.01
|
|
|
|
4.82
|
|
|
|
0.96
|
|
EPS after Extra
|
|
|
5.39
|
|
|
|
5.48
|
|
|
|
6.01
|
|
|
|
4.82
|
|
|
|
0.96
|
|
Diluted EPS before Amortization
|
|
|
5.83
|
|
|
|
5.72
|
|
|
|
6.26
|
|
|
|
5.07
|
|
|
|
1.02
|
|
Book Value per Share
|
|
|
44.37
|
|
|
|
50.16
|
|
|
|
51.69
|
|
|
|
57.77
|
|
|
|
59.55
|
|
Tangible Book Value per Share
|
|
|
43.28
|
|
|
|
49.31
|
|
|
|
51.08
|
|
|
|
57.40
|
|
|
|
59.25
|
|
Common Dividends Declared
|
|
|
1.5400
|
|
|
|
1.6900
|
|
|
|
1.9000
|
|
|
|
1.5500
|
|
|
|
0.0000
|
|
Dividend Payout Ratio (%)
|
|
|
28.6
|
|
|
|
30.8
|
|
|
|
31.6
|
|
|
|
32.2
|
|
|
|
0.0
|
|
Avg Diluted Shares Out (actual )
|
|
|
458,048
|
|
|
|
457,274
|
|
|
|
451,686
|
|
|
|
446,029
|
|
|
|
443,629
|
|
Common Shares Outstanding (actual)
|
|
|
458 ,048
|
|
|
|
454,949
|
|
|
|
449,151
|
|
|
|
443,648
|
|
|
|
442,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Info and Historical Pricing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Price ($)
|
|
|
75.00
|
|
|
|
65.00
|
|
|
|
47.00
|
|
|
|
45.25
|
|
|
|
46.00
|
|
Price/ Trailing-four-quarter Earnings (x)
|
|
|
13.9
|
|
|
|
11.9
|
|
|
|
7.8
|
|
|
|
9.4
|
|
|
|
10.5
|
|
Price/ Book (%)
|
|
|
169.0
|
|
|
|
129.6
|
|
|
|
90.9
|
|
|
|
78.3
|
|
|
|
77.2
|
|
Price/ Tangible Book Value (%)
|
|
|
173.3
|
|
|
|
131.8
|
|
|
|
92.0
|
|
|
|
78.8
|
|
|
|
77.6
|
|
Market Capitalization ($M)
|
|
|
34.4
|
|
|
|
29.6
|
|
|
|
21.1
|
|
|
|
20.1
|
|
|
|
20.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SNL Bank Index at Period End
|
|
|
658.64
|
|
|
|
492.85
|
|
|
|
268.30
|
|
|
|
260.81
|
|
|
|
301.07
|
|
S&P 500 at Period End
|
|
|
1,418.30
|
|
|
|
1,468.36
|
|
|
|
903.25
|
|
|
|
1,115.10
|
|
|
|
1,169.43
|
|
DJIA at Period End
|
|
|
12,463.15
|
|
|
|
13.264.82
|
|
|
|
8,776.39
|
|
|
|
10,428.05
|
|
|
|
10.856.63
|
|
Copyright 2010, SNL Financial LC
CNB Financial Services, Inc. (Pink: CBFC)
Balance Sheet
Native Currency: U.S. dollar (USD)
Current Currency: U.S. dollar(USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
|
2007 FY
|
|
|
2008 FY
|
|
|
2009 FY
|
|
|
2010 FQ1 YTD
|
|
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
12/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
No
|
|
No
|
|
No
|
|
No
|
Restatement
Date
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
Accounting Principle
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets ($000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Due from Banks
|
|
|
7,356
|
|
|
|
7,766
|
|
|
|
4,691
|
|
|
|
5,021
|
|
|
NA
|
Fed Funds Sold
|
|
|
9
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
NA
|
Deposits at Financial Institutions
|
|
|
3
|
|
|
|
25
|
|
|
|
80
|
|
|
|
2,036
|
|
|
NA
|
Securities Purchased, to Resell
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
Other Cash & Cash Equivalents
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
Cash and Cash Equivalents
|
|
|
7,368
|
|
|
|
7,791
|
|
|
|
4,771
|
|
|
|
7,057
|
|
|
|
5,813
|
|
Trading Account Secs
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Available for Sale Secs
|
|
|
50,873
|
|
|
|
66,017
|
|
|
|
62,605
|
|
|
|
72,273
|
|
|
|
73,473
|
|
Held to Maturity Secs
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Secs
|
|
|
1,753
|
|
|
|
2,624
|
|
|
|
2,321
|
|
|
|
2,321
|
|
|
|
2,321
|
|
Total Cash & Securities
|
|
|
59,994
|
|
|
|
76,432
|
|
|
|
69,697
|
|
|
|
81,651
|
|
|
|
81,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Loans Held for Investment
|
|
|
206,451
|
|
|
|
204,141
|
|
|
|
203,503
|
|
|
|
198,610
|
|
|
|
195,472
|
|
Loan Loss Reserve
|
|
|
2,132
|
|
|
|
2,144
|
|
|
|
2,751
|
|
|
|
3,903
|
|
|
|
4,093
|
|
Loans Held for Sale, before Reserves
|
|
|
0
|
|
|
|
672
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Net Loans
|
|
|
204,319
|
|
|
|
202,669
|
|
|
|
200,752
|
|
|
|
194,707
|
|
|
|
191,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Owned and Held for Investment
|
|
|
0
|
|
|
|
151
|
|
|
|
253
|
|
|
|
387
|
|
|
|
548
|
|
Goodwill
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Core Deposit Intangibles
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Intangibles
|
|
|
497
|
|
|
|
386
|
|
|
|
274
|
|
|
|
163
|
|
|
|
135
|
|
Intangible Assets other than Goodwill
|
|
|
497
|
|
|
|
386
|
|
|
|
274
|
|
|
|
163
|
|
|
|
135
|
|
Intangible Assets
|
|
|
497
|
|
|
|
386
|
|
|
|
274
|
|
|
|
163
|
|
|
|
135
|
|
Loan Servicing Rights
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Credit Card Rights
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Loan Servicing Rights
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Servicing Rights
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Prepaid Expense
|
|
NA
|
|
NA
|
|
NA
|
|
|
1,474
|
|
|
NA
|
Total Other Assets
|
|
|
11,259
|
|
|
|
10,778
|
|
|
|
11,281
|
|
|
|
12,590
|
|
|
|
11,897
|
|
Total Assets
|
|
|
276,069
|
|
|
|
290,415
|
|
|
|
282,257
|
|
|
|
289,498
|
|
|
|
285,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities ($000 )
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Deposits
|
|
|
233,083
|
|
|
|
226,645
|
|
|
|
227,895
|
|
|
|
252,292
|
|
|
|
253,180
|
|
FHLB Borrowings
|
|
|
18,500
|
|
|
|
37,500
|
|
|
|
25,445
|
|
|
|
6,400
|
|
|
|
1,100
|
|
Senior Debt
|
|
|
18,500
|
|
|
|
37,500
|
|
|
|
25,445
|
|
|
|
6,400
|
|
|
|
1,100
|
|
Trust Preferred (FAS 150)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Subordinated Debt
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Redeemable Financial Instruments
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Debt
|
|
|
18,500
|
|
|
|
37,500
|
|
|
|
25,445
|
|
|
|
6,400
|
|
|
|
1,100
|
|
Total Other Liabilities
|
|
|
4,163
|
|
|
|
3,449
|
|
|
|
5,699
|
|
|
|
5,176
|
|
|
|
4,915
|
|
Total Liabilities
|
|
|
255,746
|
|
|
|
267,594
|
|
|
|
259,039
|
|
|
|
263,868
|
|
|
|
259,195
|
|
Copyright 2010, SNL Financial LC
CNB Financial Services, Inc. (Pink:CBFC)
Balance Sheet
Native Currency: U.S. dollar (USD )
Current Currency: U.S. dollar (USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
2007 FY
|
|
2008 FY
|
|
2009 FY
|
|
2010 FQ1 YTD
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
12/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
Restatement Date
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Accounting Principle
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine ($000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Preferred
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Trust Preferred Securities
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Minority Interest
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Mezzanine Items
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Mezzanine Level Items
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity ($000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TARP Preferred Equity
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Preferred Equity
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total Preferred Equity
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Common Equity
|
|
|
20,322
|
|
|
|
22,821
|
|
|
|
23,218
|
|
|
|
25,630
|
|
|
|
26,370
|
|
Equity Attributable to Parent Company
|
|
|
20,322
|
|
|
|
22,821
|
|
|
|
23,218
|
|
|
|
25,630
|
|
|
|
26,370
|
|
Noncontrolling Interests
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Equity
|
|
|
20,322
|
|
|
|
22,821
|
|
|
|
23,218
|
|
|
|
25,630
|
|
|
|
26,370
|
|
Net Unrealized Gain
|
|
|
(655
|
)
|
|
|
(10
|
)
|
|
|
(194
|
)
|
|
|
750
|
|
|
|
1,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tot Acc Other Comprehensive Inc
|
|
|
(1,721
|
)
|
|
|
(748
|
)
|
|
|
(1,849
|
)
|
|
|
(643
|
)
|
|
|
(290
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Analysis (%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Loans HFI/ Total Assets
|
|
|
74.78
|
|
|
|
70.29
|
|
|
|
72.10
|
|
|
|
68.60
|
|
|
|
68.45
|
|
Loans/ Deposits
|
|
|
88.57
|
|
|
|
90.07
|
|
|
|
89.30
|
|
|
|
78.72
|
|
|
|
77.21
|
|
Loan Loss Reserves/ Gross Loans
|
|
|
1.03
|
|
|
|
1.05
|
|
|
|
1.35
|
|
|
|
1.97
|
|
|
|
2.09
|
|
One Year Gap/ Assets
|
|
|
10.18
|
|
|
|
6.35
|
|
|
|
28.74
|
|
|
|
13.54
|
|
|
NA
|
|
1-4 Loans Serviced for Others ($000)
|
|
|
3,610
|
|
|
|
3,588
|
|
|
|
2,056
|
|
|
|
1,095
|
|
|
NA
|
|
Level 1 Assets ($000)
|
|
NA
|
|
|
NA
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Level 2 Assets ($000)
|
|
NA
|
|
|
NA
|
|
|
|
63,644
|
|
|
|
75,318
|
|
|
|
76,400
|
|
Level 3 Assets ($000)
|
|
NA
|
|
|
NA
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Level 1 Liabilities ($000)
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Level 2 Liabilities($000)
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Level 3 Liabilities($000)
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
FTE Employees (actual)
|
|
|
100
|
|
|
|
97
|
|
|
|
95
|
|
|
|
91
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark-to-Market Info ($000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Asset Equity Adj
|
|
|
(553
|
)
|
|
|
1,056
|
|
|
|
387
|
|
|
|
(2,117
|
)
|
|
|
(2,311
|
)
|
Financial Liability Equity Adj
|
|
|
(2,294
|
)
|
|
|
(3,955
|
)
|
|
|
(5,294
|
)
|
|
|
(5,990
|
)
|
|
|
(2,378
|
)
|
Off-balance Sheet Fair Value Adjustment
|
|
|
6
|
|
|
|
7
|
|
|
|
2
|
|
|
|
0
|
|
|
|
0
|
|
Market-to-Market Equity
|
|
|
17,479
|
|
|
|
19,927
|
|
|
|
18,312
|
|
|
|
17,523
|
|
|
|
21,681
|
|
Market-to-Market Book Value
|
|
|
38.16
|
|
|
|
43.80
|
|
|
|
40.77
|
|
|
|
39.50
|
|
|
|
48.96
|
|
Mark-to-Market Net Income
|
|
|
1,305
|
|
|
|
2,453
|
|
|
|
703
|
|
|
|
(1,051
|
)
|
|
|
3,845
|
|
Mark-to-Market EPS ($)
|
|
|
2.85
|
|
|
|
5.37
|
|
|
|
1.56
|
|
|
|
(2.36
|
)
|
|
|
8.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Growth Rates(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Growth
|
|
|
6.61
|
|
|
|
5.20
|
|
|
|
(2.81
|
)
|
|
|
2.57
|
|
|
|
(5.43
|
)
|
Gross Loans HFI Growth
|
|
|
13.29
|
|
|
|
(1.12
|
)
|
|
|
(0.31
|
)
|
|
|
(2.40
|
)
|
|
|
(6.32
|
)
|
Deposit Growth
|
|
|
6.29
|
|
|
|
(2.76
|
)
|
|
|
0.55
|
|
|
|
10.71
|
|
|
|
1.41
|
|
Copyright 2010, SNL Financial LC
CNB Financial Services, Inc. (Pink: CBFC)
Income Statement
Native
Currency: U.S. dollar (USD)
Current Currency: U.S. dollar(USD)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 FY
|
|
2007 FY
|
|
2008 FY
|
|
2009 FY
|
|
2010 FQ1 YTD
|
Period Ended
|
|
|
12/31/2006
|
|
|
|
12/31/2007
|
|
|
|
12/31/2008
|
|
|
|
12/31/2009
|
|
|
|
03/31/2010
|
|
Period Restated?
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
|
No
|
|
Restatement Date
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Accounting Principle
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
15,989
|
|
|
|
17,201
|
|
|
|
16,996
|
|
|
|
15,642
|
|
|
|
3,769
|
|
Interest Expense
|
|
|
6,269
|
|
|
|
7,725
|
|
|
|
6,307
|
|
|
|
5,412
|
|
|
|
1,261
|
|
Net Interest Income
|
|
|
9,720
|
|
|
|
9,476
|
|
|
|
10,688
|
|
|
|
10,230
|
|
|
|
2,508
|
|
FTE Net Interest Income
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
|
10,587
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Loan Losses
|
|
|
276
|
|
|
|
169
|
|
|
|
941
|
|
|
|
1,853
|
|
|
|
455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading Account Income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Foreign Exchange Income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Trust Revenue
|
|
|
199
|
|
|
|
243
|
|
|
|
232
|
|
|
|
197
|
|
|
NA
|
|
Service Charges on Deposits
|
|
|
1,273
|
|
|
|
1,390
|
|
|
|
1,390
|
|
|
|
1,322
|
|
|
|
281
|
|
Gain on Sale of Loans (FAS 140)
|
|
|
0
|
|
|
|
87
|
|
|
|
52
|
|
|
|
36
|
|
|
|
5
|
|
Loan Fees & Charges
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
Bank-owned Life Insurance Revenue
|
|
|
115
|
|
|
|
96
|
|
|
|
126
|
|
|
|
179
|
|
|
|
6
|
|
Insurance Revenue
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Investment Banking & Brokerage
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Noninterest Income
|
|
|
438
|
|
|
|
587
|
|
|
|
527
|
|
|
|
500
|
|
|
|
218
|
|
Total Noninterest Income
|
|
|
2,025
|
|
|
|
2,403
|
|
|
|
2,326
|
|
|
|
2,234
|
|
|
|
510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gain/Loss on Securities
|
|
|
(37
|
)
|
|
|
(3
|
)
|
|
|
33
|
|
|
|
35
|
|
|
|
48
|
|
Nonrecurring Revenue
|
|
|
(20
|
)
|
|
|
0
|
|
|
|
(49
|
)
|
|
|
51
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation & Benefits
|
|
|
4,144
|
|
|
|
4,171
|
|
|
|
4,161
|
|
|
|
3,862
|
|
|
|
1,031
|
|
Occupancy and Equipment
|
|
|
1,322
|
|
|
|
1,307
|
|
|
|
1,284
|
|
|
|
1,069
|
|
|
|
307
|
|
Marketing and Promotion Expense
|
|
|
174
|
|
|
|
205
|
|
|
|
186
|
|
|
|
125
|
|
|
NA
|
|
Professional Fees
|
|
|
282
|
|
|
|
438
|
|
|
|
384
|
|
|
|
352
|
|
|
NA
|
|
Tech & Communications Expense
|
|
|
219
|
|
|
|
224
|
|
|
|
214
|
|
|
|
410
|
|
|
NA
|
|
Amrt of
lntang & Goodwill Impair
|
|
|
202
|
|
|
|
111
|
|
|
|
112
|
|
|
|
112
|
|
|
|
28
|
|
Foreclosure & Repo
|
|
|
0
|
|
|
|
0
|
|
|
|
69
|
|
|
|
149
|
|
|
|
37
|
|
Other Expense
|
|
|
1,417
|
|
|
|
1,557
|
|
|
|
1,626
|
|
|
|
1,773
|
|
|
|
701
|
|
Total Noninterest Expense
|
|
|
7,760
|
|
|
|
8,012
|
|
|
|
8,036
|
|
|
|
7,852
|
|
|
|
2,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecurring Expense
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
130
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Provision Net Revenue
|
|
|
3,985
|
|
|
|
3,867
|
|
|
|
4,978
|
|
|
|
4,969
|
|
|
|
914
|
|
Net Income before Taxes
|
|
|
3,653
|
|
|
|
3,695
|
|
|
|
4,022
|
|
|
|
2,715
|
|
|
|
506
|
|
Provision for Taxes
|
|
|
1,263
|
|
|
|
1,191
|
|
|
|
1,307
|
|
|
|
565
|
|
|
|
80
|
|
Effective Tax Rate
(%)
|
|
|
34.57
|
|
|
|
32.23
|
|
|
|
32.50
|
|
|
|
20.81
|
|
|
|
15.81
|
|
Min Int
& Oth after-tax Items
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Extraordinary Items
|
|
|
79
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Net Income
|
|
|
2,469
|
|
|
|
2,504
|
|
|
|
2,715
|
|
|
|
2,150
|
|
|
|
427
|
|
Net Income Attributable to Noncontrolling Int
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Net Income Attributable to Parent
|
|
|
2,469
|
|
|
|
2,504
|
|
|
|
2,715
|
|
|
|
2,150
|
|
|
|
427
|
|
Preferred Dividends
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Other Preferred Dividends after Net Income
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Net Income Avail to Common
|
|
|
2,469
|
|
|
|
2,504
|
|
|
|
2,715
|
|
|
|
2,150
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for Diluted EPS
|
|
|
2,469
|
|
|
|
2,504
|
|
|
|
2,715
|
|
|
|
2,150
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS after Extra ($)
|
|
|
5.39
|
|
|
|
5.48
|
|
|
|
6.01
|
|
|
|
4.82
|
|
|
|
0.96
|
|
EPS Growth after Extra (%)
|
|
|
0.9
|
|
|
|
1.7
|
|
|
|
9.7
|
|
|
|
(19.8
|
)
|
|
|
(31.9
|
)
|
Copyright 2010, SNL Financial LC
ANNEX D
WEST VIRGINIA CODE ANNOTATED
CHAPTER 31D. WEST VIRGINIA BUSINESS CORPORATION ACT
ARTICLE 13. APPRAISAL RIGHTS
PART I. RIGHT TO APPRAISAL AND PAYMENT FOR SHARES
W. Va. Code §§ 31D-13-1301 (2003)
§ 31D-13-1301. Definitions
In this article:
(1) Affiliate means a person that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with another person or is a senior executive.
For purposes of subdivision (4), subsection (b), section one thousand three hundred two [§
31D-13-1302] of this article, a person is deemed to be an affiliate of its senior executives.
(2) Beneficial shareholder means a person who is the beneficial owner of shares held in a voting
trust or by a nominee on the beneficial owners behalf.
(3) Corporation means the issuer of the shares held by a shareholder demanding appraisal and,
for matters covered in sections one thousand three hundred twenty-two [§§ 31D-13-1322 through
31D-13-1326, 31D-13-1330 and 31D-13-1331], one thousand three hundred twenty-three, one thousand
three hundred twenty-four, one thousand three hundred twenty-five, one thousand three hundred
twenty-six, one thousand three hundred thirty and one thousand three hundred thirty-one of this
article, includes the surviving entity in a merger.
(4) Fair value means the value of the corporations shares determined:
(A) Immediately before the effectuation of the corporate action to which the shareholder objects;
(B) Using customary and current valuation concepts and techniques generally employed for similar
businesses in the context of the transaction requiring appraisal; and
(C) Without discounting for lack of marketability or minority status except, if appropriate, for
amendments to the articles pursuant to subdivision (5), subsection (a), section one thousand three
hundred two [§ 31D-13-1302] of this article.
(5) Interest means interest from the effective date of the corporate action until the date of
payment, at the rate of interest on judgments in this state on the effective date of the corporate
action.
(6) Preferred shares means a class or series of shares whose holders have preference over any
other class or series with respect to distributions.
(7) Record shareholder means the person in whose name shares are registered in the records of
the corporation or the beneficial owner of shares to the extent of the rights granted by a nominee
certificate on file with the corporation.
(8) Senior executive means the chief executive officer, chief operating officer, chief financial
officer and anyone in charge of a principal business unit or function.
(9) Shareholder means both a record shareholder and a beneficial shareholder.
D-1
§ 31D-13-1302. Right to appraisal
(a) A shareholder is entitled to appraisal rights, and to obtain payment of the fair value of that
shareholders shares, in the event of any of the following corporate actions:
(1) Consummation of a merger to which the corporation is a party: (A) If shareholder approval is
required for the merger by section one thousand one hundred four [§ 31D-11-1104], article eleven of
this chapter and the shareholder is entitled to vote on the merger, except that appraisal rights
may not be available to any shareholder of the corporation with respect to shares of any class or
series that remain outstanding after consummation of the merger; or (B) if the corporation is a
subsidiary and the merger is governed by section one thousand one hundred five [§ 31D-11-1105],
article eleven of this chapter;
(2) Consummation of a share exchange to which the corporation is a party as the corporation whose
shares will be acquired if the shareholder is entitled to vote on the exchange, except that
appraisal rights may not be available to any shareholder of the corporation with respect to any
class or series of shares of the corporation that is not exchanged;
(3) Consummation of a disposition of assets pursuant to section one thousand two hundred two [§
31D-12-1202], article twelve of this chapter if the shareholder is entitled to vote on the
disposition;
(4) An amendment of the articles of incorporation with respect to a class or series of shares that
reduces the number of shares of a class or series owned by the shareholder to a fraction of a share
if the corporation has the obligation or right to repurchase the fractional share so created; or
(5) Any other amendment to the articles of incorporation, merger, share exchange or disposition of
assets to the extent provided by the articles of incorporation, bylaws or a resolution of the board
of directors.
(b) Notwithstanding subsection (a) of this section, the availability of appraisal rights under
subdivisions (1), (2), (3) and (4), subsection (a) of this section are limited in accordance with
the following provisions:
(1) Appraisal rights may not be available for the holders of shares of any class or series of
shares which is:
(A) Listed on the New York stock exchange or the American stock exchange or designated as a
national market system security on an interdealer quotation system by the national association of
securities dealers, inc.; or
(B) Not so listed or designated, but has at least two thousand shareholders and the outstanding
shares of a class or series has a market value of at least twenty million dollars, exclusive of the
value of the shares held by its subsidiaries, senior executives, directors and beneficial
shareholders owning more than ten percent of the shares.
(2) The applicability of subdivision (1), subsection (b) of this section is to be determined as
of:
(A) The record date fixed to determine the shareholders entitled to receive notice of, and to vote
at, the meeting of shareholders to act upon the corporate action requiring appraisal rights; or
(B) The day before the effective date of the corporate action if there is no meeting of
shareholders.
(3) Subdivision (1), subsection (b) of this section is not applicable and appraisal rights are to
be available pursuant to subsection (a) of this section for the holders of any class or series of
shares who are required by the terms of the corporate action requiring appraisal rights to accept
for the shares anything other than cash or shares of any class or any series of shares of any
corporation, or any other proprietary interest of any other entity, that satisfies the standards
set forth in subdivision (1), section (b) of this section at the time the corporate action becomes
effective.
D-2
(4) Subdivision (1), subsection (b) of this section is not applicable and appraisal rights are to
be available pursuant to subsection (a) of this section for the holders of any class or series of
shares where any of the shares or assets of the corporation are being acquired or converted,
whether by merger, share exchange or otherwise, pursuant to the corporate action by a person, or by
an affiliate of a person, who: (A) Is, or at any time in the one-year period immediately preceding
approval by the board of directors of the corporate action requiring appraisal rights was, the
beneficial owner of twenty percent or more of the voting power of the corporation, excluding any
shares acquired pursuant to an offer for all shares having voting power if the offer was made
within one year prior to the corporate action requiring appraisal rights for consideration of the
same kind and of a value equal to or less than that paid in connection with the corporate action;
or (B) for purpose of voting their shares of the corporation, each member of the group formed is
deemed to have acquired beneficial ownership, as of the date of the agreement, of all voting shares
of the corporation beneficially owned by any member of the group.
(c) Notwithstanding any other provision of section one thousand three hundred two [§ 31D-13-1302]
of this article, the articles of incorporation as originally filed or any amendment to the articles
of incorporation may limit or eliminate appraisal rights for any class or series of preferred
shares, but any limitation or elimination contained in an amendment to the articles of
incorporation that limits or eliminates appraisal rights for any of the shares that are outstanding
immediately prior to the effective date of the amendment or that the corporation is or may be
required to issue or sell pursuant to any conversion, exchange or other right existing immediately
before the effective date of the amendment does not apply to any corporate action that becomes
effective within one year of that date if the action would otherwise afford appraisal rights.
(d) A shareholder entitled to appraisal rights under this article may not challenge a completed
corporate action for which appraisal rights are available unless the corporate action:
(1) Was not effectuated in accordance with the applicable provisions of article ten [§§
31D-10-1001 et seq.], eleven [§§ 31D-11-1101 et seq.] or twelve [§§ 31D-12-1201 et seq.] of this
chapter or the corporations articles of incorporation, bylaws or board of directors resolution
authorizing the corporate action; or
(2) Was procured as a result of fraud or material misrepresentation.
§ 31D-13-1303. Assertion of rights by nominees and beneficial owners
(a) A record shareholder may assert appraisal rights as to fewer than all the shares registered in
the record shareholders name but owned by a beneficial shareholder only if the record shareholder
objects with respect to all shares of the class or series owned by the beneficial shareholder and
notifies the corporation in writing of the name and address of each beneficial shareholder on whose
behalf appraisal rights are being asserted. The rights of a record shareholder who asserts
appraisal rights for only part of the shares held of record in the record shareholders name under
this subsection are to be determined as if the shares as to which the record shareholder objects
and the record shareholders other shares were registered in the names of different record
shareholders.
(b) A beneficial shareholder may assert appraisal rights as to shares of any class or series held
on behalf of the shareholder only if the shareholder:
(1) Submits to the corporation the record shareholders written consent to the assertion of the
rights no later than the date referred to in paragraph (D), subdivision (2), subsection (b),
section one thousand three hundred twenty-two [§ 31D-13-1322] of this article; and
(2) Does so with respect to all shares of the class or series that are beneficially owned by the
beneficial shareholder.
D-3
§ 31D-13-1320. Notice of appraisal rights
(a) If proposed corporate action described in subsection (a), section one thousand three hundred
two [§ 31D-13-1302] of this article is to be submitted to a vote at a shareholders meeting, the
meeting notice must state that the corporation has concluded that shareholders are, are not or may
be entitled to assert appraisal rights under this article. If the corporation concludes that
appraisal rights are or may be available, a copy of this article must accompany the meeting notice
sent to those record shareholders entitled to exercise appraisal rights.
(b) In a merger pursuant to section one thousand one hundred five [§ 31D-11-1105], article eleven
of this chapter, the parent corporation must notify in writing all record shareholders of the
subsidiary who are entitled to assert appraisal rights that the corporate action became effective.
The notice must be sent within ten days after the corporate action became effective and include the
materials described in section one thousand three hundred twenty-two [§ 31D-13-1322] of this
article.
§ 31D-13-1321. Notice of intent to demand payment
(a) If proposed corporate action requiring appraisal rights under section one thousand three
hundred two [§ 31D-13-1302] of this article is submitted to a vote at a shareholders meeting, a
shareholder who wishes to assert appraisal rights with respect to any class or series of shares:
(1) Must deliver to the corporation before the vote is taken written notice of the shareholders
intent to demand payment if the proposed action is effectuated; and
(2) Must not vote, or cause or permit to be voted, any shares of the class or series in favor of
the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) of this section is not
entitled to payment under this article.
§ 31D-13-1322. Appraisal notice and form
(a) If proposed corporate action requiring appraisal rights under subsection (a), section one
thousand three hundred two [§ 31D-13-1302] of this article becomes effective, the corporation must
deliver a written appraisal notice and form required by subdivision (1), subsection (b) of this
section to all shareholders who satisfied the requirements of section one thousand three hundred
twenty-one [§ 31D-13-1321] of this article. In the case of a merger under section one thousand one
hundred five [§ 31D-11-1105], article eleven of this chapter, the parent must deliver a written
appraisal notice and form to all record shareholders who may be entitled to assert appraisal
rights.
(b) The appraisal notice must be sent no earlier than the date the corporate action became
effective and no later than ten days after that date and must:
(1) Supply a form that specifies the date of the first announcement to shareholders of the
principal terms of the proposed corporate action and requires the shareholder asserting appraisal
rights to certify: (A) Whether or not beneficial ownership of those shares for which appraisal
rights are asserted was acquired before that date; and (B) that the shareholder did not vote for
the transaction;
(2) State:
(A) Where the form must be sent and where certificates for certificated shares must be deposited
and the date by which those certificates must be deposited, which date may not be earlier than the
date for receiving the required form under this subdivision;
D-4
(B) A date by which the corporation must receive the form which date may not be fewer than forty
nor more than sixty days after the date the appraisal notice and form required by subsection (a) of
this section are sent and state that the shareholder is deemed to have waived the right to demand
appraisal with respect to the shares unless the form is received by the corporation by the
specified date;
(C) The corporations estimate of the fair value of the shares;
(D) That, if requested in writing, the corporation will provide, to the shareholder so requesting,
within ten days after the date specified in paragraph (B) of this subdivision the number of
shareholders who return the forms by the specified date and the total number of shares owned by
them; and
(E) The date by which the notice to withdraw under section one thousand three hundred twenty-three
[§ 31D-13-1323] of this article must be received, which date must be within twenty days after the
date specified in paragraph (B) of this subdivision; and
(3) Be accompanied by a copy of this article.
§ 31D-13-1323. Perfection of rights; right to withdraw
(a) A shareholder who receives notice pursuant to section one thousand three hundred twenty-two [§
31D-13-1322] of this article and who wishes to exercise appraisal rights must certify on the form
sent by the corporation whether the beneficial owner of the shares acquired beneficial ownership of
the shares before the date required to be set forth in the notice pursuant to subdivision (1),
subsection (b), section one thousand three hundred twenty-two of this article. If a shareholder
fails to make this certification, the corporation may elect to treat the shareholders shares as
after-acquired shares under section one thousand three hundred twenty-five [§ 31D-13-1325] of this
article. In addition, a shareholder who wishes to exercise appraisal rights must execute and return
the form and, in the case of certificated shares, deposit the shareholders certificates in
accordance with the terms of the notice by the date referred to in the notice pursuant to paragraph
(B), subdivision (2), subsection (b), section one thousand three hundred twenty-two of this
article. Once a shareholder deposits the shareholders certificates or, in the case of
uncertificated shares, returns the executed forms, that shareholder loses all rights as a
shareholder unless the shareholder withdraws pursuant to subsection (b) of this section.
(b) A shareholder who has complied with subsection (a) of this section may decline to exercise
appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing
by the date set forth in the appraisal notice pursuant to paragraph (E), subdivision (2),
subsection (b), section one thousand three hundred twenty-two [§ 31D-13-1322] of this article. A
shareholder who fails to withdraw from the appraisal process by that date may not withdraw without
the corporations written consent.
(c) A shareholder who does not execute and return the form and, in the case of certificated
shares, deposit the shareholders share certificates where required, each by the date set forth in
the notice described in subsection (b), section one thousand three hundred twenty-two [§
31D-13-1322] of this article, is not entitled to payment under this article.
§ 31D-13-1324. Payment
(a) Except as provided in section one thousand three hundred twenty-five [§ 31D-13-1325] of this
article, within thirty days after the form required by paragraph (B), subdivision (2), subsection
(b), section one thousand three hundred twenty-two [§ 31D-13-1322] of this article is due, the
corporation shall pay in cash to those shareholders who complied with subsection (a), section one
thousand three hundred twenty-three [§ 31D-13-1323] of this article the amount the corporation
estimates to be the fair value of their shares, plus interest.
D-5
(b) The payment to each shareholder pursuant to subsection (a) of this article must be accompanied
by:
(1) Financial statements of the corporation that issued the shares to be appraised, consisting of
a balance sheet as of the end of a fiscal year ending not more than sixteen months before the date
of payment, an income statement for that year, a statement of changes in shareholders equity for
that year and the latest available interim financial statements, if any;
(2) A statement of the corporations estimate of the fair value of the shares, which estimate must
equal or exceed the corporations estimate given pursuant to paragraph (C), subdivision (2),
subsection (b), section one thousand three hundred twenty-two [§ 31D-13-1322] of this article; and
(3) A statement that shareholders described in subsection (a) of this section have the right to
demand further payment under section one thousand three hundred twenty-six [§ 31D-13-1326] of this
article and that if any shareholder does not make a demand for further payment within the time
period specified, shareholder is deemed to have accepted the payment in full satisfaction of the
corporations obligations under this article.
§ 31D-13-1325. After-acquired shares
(a) A corporation may elect to withhold payment required by section one thousand three hundred
twenty-four [§ 31D-13-1324] of this article from any shareholder who did not certify that
beneficial ownership of all of the shareholders shares for which appraisal rights are asserted was
acquired before the date set forth in the appraisal notice sent pursuant to subdivision (1),
subsection (b), section one thousand three hundred twenty-two [§ 31D-13-1322] of this article.
(b) If the corporation elected to withhold payment under subsection (a) of this section, it must,
within thirty days after the form required by paragraph (B), subdivision (2), subsection (b),
section one thousand three hundred twenty-two [§ 31D-13-1322] of this article is due, notify all
shareholders who are described in subsection (a) of this section:
(1) Of the information required by subdivision (1), subsection (b), section one thousand three
hundred twenty-four [§ 31D-13-1324] of this article;
(2) Of the corporations estimate of fair value pursuant to subdivision (2), subsection (b),
section one thousand three hundred twenty-four [§ 31D-13-1324] of this article;
(3) That they may accept the corporations estimate of fair value, plus interest, in full
satisfaction of their demands or demand appraisal under section one thousand three hundred
twenty-six [§ 31D-13-1326] of this article;
(4) That those shareholders who wish to accept the offer must notify the corporation of their
acceptance of the corporations offer within thirty days after receiving the offer; and
(5) That those shareholders who do not satisfy the requirements for demanding appraisal under
section one thousand three hundred twenty-six [§ 31D-13-1326] of this article are deemed to have
accepted the corporations offer.
(c) Within ten days after receiving the shareholders acceptance pursuant to subsection (b) of
this section, the corporation must pay in cash the amount it offered under subdivision (2),
subsection (b) of this section to each shareholder who agreed to accept the corporations offer in
full satisfaction of the shareholders demand.
(d) Within forty days after sending the notice described in subsection (b) of this section, the
corporation must pay in cash the amount it offered to pay under subdivision (2), subsection (b) of
this section to each shareholder described in subdivision (5), subsection (b) of this section.
D-6
§ 31D-13-1326. Procedure if shareholder dissatisfied with payment or offer
(a) A shareholder paid pursuant to section one thousand three hundred twenty-four [§ 31D-13-1324]
of this article who is dissatisfied with the amount of the payment must notify the corporation in
writing of that shareholders estimate of the fair value of the shares and demand payment of that
estimate plus interest and less any payment due under section one thousand three hundred
twenty-four of this article. A shareholder offered payment under section one thousand three hundred
twenty-five [§ 31D-13-1325] of this article who is dissatisfied with that offer must reject the
offer and demand payment of the shareholders stated estimate of the fair value of the shares plus
interest.
(b) A shareholder who fails to notify the corporation in writing of that shareholders demand to
be paid the shareholders stated estimate of the fair value plus interest under subsection (a) of
this section within thirty days after receiving the corporations payment or offer of payment under
sections one thousand three hundred twenty-four [§ 31D-13-1324] or one thousand three hundred
twenty-five [§ 31D-13-1325] of this article, respectively, waives the right to demand payment under
this section and is entitled only to the payment made or offered pursuant to those respective
sections.
§ 31D-13-1330. Court action
(a) If a shareholder makes demand for payment under section one thousand three hundred twenty-six
[§ 31D-13-1326] of this article, which remains unsettled, the corporation shall commence a
proceeding within sixty days after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does not commence the
proceeding within the sixty-day period, it shall pay in cash to each shareholder the amount the
shareholder demanded pursuant to section one thousand three hundred twenty-six of this article plus
interest.
(b) The corporation shall make all shareholders, whether or not residents of this state, whose
demands remain unsettled parties to the proceeding as in an action against their shares, and all
parties must be served with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(c) The jurisdiction of the court in which the proceeding is commenced is plenary and exclusive.
The court may appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The shareholders demanding appraisal rights are
entitled to the same discovery rights as parties in other civil proceedings. There is no right to a
jury trial.
(d) Each shareholder made a party to the proceeding is entitled to judgment: (1) For the amount,
if any, by which the court finds the fair value of the shareholders shares, plus interest, exceeds
the amount paid by the corporation to the shareholder for the shares; or (2) for the fair value,
plus interest, of the shareholders shares for which the corporation elected to withhold payment
under section one thousand three hundred twenty-five [§ 31D-13-1325] of this article.
§ 31D-13-1331. Court costs and counsel fees
(a) The court in an appraisal proceeding commenced under section one thousand three hundred thirty
[§ 31D-13-1330] of this article shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court. The court shall assess
the costs against the corporation, except that the court may assess costs against all or some of
the shareholders demanding appraisal, in amounts the court finds equitable, to the extent the court
finds the shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the
rights provided by this article.
(b) The court in an appraisal proceeding may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
D-7
(1) Against the corporation and in favor of any or all shareholders demanding appraisal if the
court finds the corporation did not substantially comply with the requirements of section one
thousand three hundred twenty [§ 31D-13-1320], one thousand three hundred twenty-two [§
31D-13-1322], one thousand three hundred twenty-four [§ 31D-13-1324] or one thousand three hundred
twenty-five [§ 31D-13-1325], of this article; or
(2) Against either the corporation or a shareholder demanding appraisal, in favor of any other
party, if the court finds that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith with respect to the rights provided by this article.
(c) If the court in an appraisal proceeding finds that the services of counsel for any shareholder
were of substantial benefit to other shareholders similarly situated, and that the fees for those
services should not be assessed against the corporation, the court may award to counsel reasonable
fees to be paid out of the amounts awarded the shareholders who were benefited.
(d) To the extent the corporation fails to make a required payment pursuant to section one
thousand three hundred twenty-four [§ 31D-13-1324], one thousand three hundred twenty-five [§
31D-13-1325], or one thousand three hundred twenty-six [§ 31D-13-1326] of this article, the
shareholder may sue directly for the amount owed and, to the extent successful, are to be entitled
to recover from the corporation all costs and expenses of the suit, including counsel fees.
D-8
ANNEX E
LETTER OF TRANSMITTAL
to Accompany Certificates for Shares of Common Stock of
CNB Financial Services, Inc.
Berkeley Springs, West Virginia
Delivered Pursuant to the Agreement of Merger
By and Between
CNB Financial Services, Inc.
and
CNB Merger Corporation
Return to:
CNB Financial Services, Inc.
101 South Washington Street
P.O. Box 130
Berkeley Springs, West Virginia 25411
Attention: Thomas F. Rokisky
To: CNB Financial Services, Inc.
The undersigned is the registered owner of certain certificates representing shares of outstanding
common stock of CNB Financial Services, Inc. (Company).
It is my understanding that the Company and CNB Merger Corporation (Merger Corp.) engaged in a
merger transaction effective
, 2010. As a result of the transaction each Company
Common Stock share held by any shareholder who held, in the aggregate, less than 150 shares at the
effective time of the transaction was converted into the right to receive Company Class A Common
Stock on a one-share-for-one-share exchange basis.
In accordance with and subject to all the terms and conditions of the Agreement of Merger, the
undersigned hereby irrevocably delivers the certificate(s) representing Company Common Stock shares
registered in his or her name as indicated on page 3 of this Letter. The undersigned understands
that as a result of the Agreement of Merger, CNB Financial Services, Inc. will mail to the
undersigned a certificate representing one (1) share of Company Class A Common Stock for each one
(1) share of Company Common Stock delivered to the Company, according to the terms herein.
The undersigned hereby represents and warrants the following:
1.
|
|
As of the effective date of the merger, the undersigned held, in the aggregate, whether in
record name or in street name, less than 150 shares of Company Common Stock;
|
2.
|
|
The undersigned has read and understands the Agreement of Merger and represents and
warrants to the Company the undersigned is entitled to exchange the Company Common Stock for
Company Class A Common Stock based on the terms of the Agreement of Merger;
|
3.
|
|
The undersigned is the record owner of the certificate(s) hereby delivered;
|
4.
|
|
The undersigned has full right, power, legal capacity and authority to transfer and
deliver such certificate(s); and
|
5.
|
|
The undersigned is delivering the certificates for Company Common Stock shares in exchange
for the right to receive the new certificate evidencing ownership of one (1) share of Company
Class A Common Stock for each one (1) share of Company Common Stock.
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The undersigned will, upon request, execute any additional documents necessary or desirable to
complete the surrender of the Company certificate(s), or to evidence the failure to tender an
actual certificate, including a lost
stock Affidavit or an acknowledgement that existing Company certificates have been cancelled and
are of no further effect.
-1-
ANNEX E
DELIVERY OF CNB FINANCIAL SERVICES, INC. STOCK CERTIFICATES
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Name and Address of Registered Owner(s):
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(If you wish to change your address of record, please
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print the new address on the lines provided)
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Change of Address: (Please Print)
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(Affix label here)
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Please accept the stock certificate(s) representing my shares of Common Stock of CNB Financial
Services, Inc. and issue and deliver, in the name and to the address of the registered owner(s) set
forth on the label affixed above, unless a change of address is indicated above, a certificate
representing one (1) share of Company Class A Common Stock for each one (1) share of Company Common
Stock delivered.
INFORMATION REGARDING SHARE CERTIFICATES DELIVERED:
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Company Common Stock Certificate
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Number of Shares Represented by
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Number(s)
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Certificates(s)
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Total Company Common Stock Shares
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Delivered
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SHAREHOLDER SIGNATURE
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Telephone Number (___)
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Date:
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Signature of Shareholder
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Signature of Shareholder
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(See Instruction 3)
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(See Instruction 3)
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Signature of Shareholder
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Signature of Shareholder
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(See Instruction 3)
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(See Instruction 3)
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Signature(s) Guaranteed by:
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(See Instruction 4)
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Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificates, or by person(s) authorized to receive certificates. (See
Instruction 3).
PLEASE READ CAREFULLY ALL INSTRUCTIONS CONTAINED HEREIN.
-2-
ANNEX E
INSTRUCTIONS
1.
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Delivery of Certificates
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This Letter of Transmittal, or a facsimile copy thereof, completed and signed, together with the
Company Common Stock certificate(s) described herein, should be delivered or mailed to CNB
Financial Services, Inc., at the address specified at the top of the first page of this Letter of
Transmittal. If delivery is to be by mail, insured, registered mail or return receipt requested is
recommended. Upon receipt of your Letter of Transmittal and Company stock certificates, Company
employees will review such documents to ensure that no other signatures or documentation is
required. If your documents are properly completed, CNB Financial Services, Inc. will mail
directly to you at the address indicated on the label affixed to the top of the second page of this
Letter of Transmittal (unless you have indicated a change of address herein) a certificate
representing one (1) share of Company Class A Common Stock for each one (1) share of Company Common
Stock delivered. You must return the Company stock certificates representing ALL of the shares of
Company Common Stock registered in your name with the Letter of Transmittal before it will be
processed. For information on what to do if you have lost your certificate(s), please refer to
Instruction 7 below.
2.
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Consequences of Failure to Return Letter of Transmittal or Failure to Surrender Stock
Certificates
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Stock will only be delivered to those persons who furnish this Letter of Transmittal, or a
facsimile copy thereof, completed and signed, to CNB Financial Services, Inc., together with the
stock certificate(s) representing shares of Company Common Stock. Until such delivery is made,
each outstanding certificate formerly representing shares of Company Common Stock will be deemed to
evidence the right to receive the new certificate for Company Class A Common Stock.
This Letter of Transmittal must be signed in the Shareholder Signature box on page 3. See also
Instruction 4 below.
If this Letter of Transmittal is signed by the registered holder(s) of the certificate(s)
transmitted herewith, the signature
MUST CORRESPOND
with the name(s) as written on the face of the
certificate(s) transmitted without alteration, enlargement or any change whatsoever.
If any shares of Company Common Stock are registered in the name of joint owners, all joint owners
must sign this Letter of Transmittal.
If the registered holder of the certificate(s) transmitted herewith has sold, donated or otherwise
transferred ownership of his/her shares of Company Common Stock, this Letter of Transmittal shall
be signed by the last transferee.
If the registered holder is deceased, this Letter of Transmittal should be signed by the
administrator or executor of his or her estate. If the registered holder is incapacitated or
otherwise unable to sign, this Letter of Transmittal should be signed by his or her trustee,
attorney or legal representative.
If any one other than a registered holder signs this Letter of Transmittal, the signature must be
guaranteed in the manner specified in
Instruction 4.
If, as a result of a sale, gift or other transfer of ownership of shares of Company Common Stock,
the new certificate is to be issued in a name or delivered to an address other than those set forth
on the label affixed to the top of the third page of this Letter of Transmittal, the certificate(s)
being transmitted must be endorsed or accompanied by appropriate signed stock powers, the
signatures of which must be guaranteed in the manner specified in Instruction 4.
-3-
ANNEX E
If the new certificate is to be issued in the name of an heir of a decedents estate, this Letter
of Transmittal must be accompanied by an instrument documenting the transfer of title of the shares
of Company Common Stock from the decedents estate.
Any Letter of Transmittal, endorsement of a Company Common Stock certificate, or stock power
executed by an agent, attorney, administrator, executor, guardian, trustee or other fiduciary or
legal representative to act (including court orders) as CNB Financial Services, Inc. deems
necessary or advisable.
4.
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Guarantee of Signatures
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If anyone other than a registered holder signs this Letter of Transmittal, the signature(s) must be
guaranteed by a commercial company or trust company or by a member of a national securities
exchange or the National Association of Securities Dealers, Inc. If you hand deliver the Letter of
Transmittal together with your stock certificate(s) to the main office of the Company, an officer
will guarantee your signature(s). All persons whose signatures are required must be present and
you should not sign prior to your delivery of the documents.
5.
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Notice of Change of Address
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If a shareholder changes his or her address following the submission of this Letter of Transmittal,
CNB Financial Services, Inc. must be notified in writing of such change of address.
Unless specific instructions to the contrary are transmitted along with this Letter of
Transmittal, a single certificate evidencing ownership in CNB Financial Services, Inc. will be
issued to each shareholder for all certificates surrendered.
7.
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Missing or Retained Certificates
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If you are unable to locate your certificate(s) representing shares of Company Common Stock, you
will be required to furnish an affidavit to that effect, an agreement to indemnify the Company
against liability for failure to require the certificate, and, if CNB Financial Services, Inc.
requests, an indemnity bond.
All questions concerning this Letter of Transmittal should be made directly to Rebecca Stotler at
CNB Financial Services, Inc., at the address at the top of the first page of this Letter of
Transmittal; the telephone number is (304) 258-7381.
[Remainder of this page intentionally left blank]
-4-
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