Page 9 - CNB Bank Shares 2018 Annual Report

rate hikes made to-date and forecast by economies, too numerous for discussion
the U.S. Federal Reserve Bank. During and here. Each year we prepare projections in
DIVIDENDS TO TOTAL $119.7 after the Great Recession, rates were pulled the form of a budget and a capital plan that
STOCKHOLDERS $2,261 STOCKHOLDERS' down so low, and held there so long, that a define a range of expectations. While our
EQUITY move towards “normalizing” levels can make accountants and attorneys caution us about
$1,744 $83.7 it difficult for borrowers to cover increased providing “forward-looking statements”,
$1,549 $71.9 $76.9
IN THOUSANDS IN MILLIONS to rebuild a “cushion” of higher rates so that 2019 supports the increased market value of
$1,391 $66.7 interest costs with more static levels of suffice it to say that even the conservative
$1,279 revenue. It’s understood that the Fed desires end of our projected range for profitability in

our $1.3 billion institution. We look forward to
they can help moderate future economic
helping customers and investors alike open
swings, yet many economists feel the current
pace of hikes is excessive.
A second trend for farmers has been doors in the years ahead.
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 depressed grain prices, particularly on

soybeans. Increased tariffs have helped
these are “salaries and employee benefits” to $0.39 in 2018, a 5.4% increase; yet total create an expected surplus supply, with lower
that include change-in-control related dollars paid in cash dividends went up 29.7% prices partially bolstered by government
accelerated benefits, as well as negotiated due to the increase in shares issued. subsidies. In general, Midwest farmers have James T. Ashworth
severance packages for JSB staff. Also, as The Statements of Cash Flow on page become increasingly more adept at managing President & Vice Chairman, CNB Bank Shares, Inc.
would be expected with any acquisition and 13 also reflect the major impact of stock their margins with timely marketing, crop
merger activity, the “legal and professional issuance, as well as the increases in both insurance, and hedging strategies. Yet the
fees” expense was especially high. Other loans and deposits. Also worth noting is challenge remains, as input costs tend to be
expense line items reflect increases of a the increase of 34% in “mortgage loans volatile. Shawn Davis
larger organization. The result was a decline originated for sale in secondary market”, Of course, there are many other factors President & CEO, CNB Bank & Trust, N.A.
in “income before applicable income taxes” which is encouraging in a rising rate that impact the general and local CEO, Jacksonville Savings Bank
of more than $1 million; yet due to recent environment, yet possible due to the
income tax reform legislation, “applicable residential mortgage operations of two banks.
income tax expense” declined from more Note 16 on page 40 reviews regulatory
than 39% effective rate in 2017 to just 23.5% capital requirements. This year the ratios
in 2018, resulting in a 15% improvement in net are broken-out for both CNB and JSB, and
income. although the acquisition resulted in a slight Anywhere access to CNB Bank Shares Inc.
2018 Annual Report, online at www.cnbil.com.
The Statements of Stockholders’ Equity decline in the ratios from 2017 levels, all
on page 12 shows the preferred and common capital measures continue to exceed the
stock issuance of the Castle Creek investment definitions for both “adequacy” and to be
previously highlighted. In addition, customary considered “well-capitalized”.
stock option transactions are reflected in Looking towards the remainder of 2019,
the purchase and sale of shares through two major economic trends are especially
the company’s treasury. Cash dividends to impacting our segment of the banking
shareholders were raised from $0.37 in 2017 industry. First and foremost are the interest

6 ANNUAL REPOR T 2018 ANNUAL REPOR T 2018 7