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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from _____________ to ____________
Commission File Number 2-94863
CANANDAIGUA NATIONAL CORPORATION
----------------------------------
(Exact name of Registrant as specified in its charter)
New York 16-1234823
--------- ----------
(State of Incorporation) (IRS Employer Identification No.)
72 South Main Street, Canandaigua, NY 14424
------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 394-4260
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
240,000 shares $50 par common
---------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) filed all reports required
to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and
(2) been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of
Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of January 31, 2001.
Common Stock, $50.00 par value - described on page 8 of 2000 Annual
Report and Common Stock Data disclosed on page 32 of the Annual Report are
incorporated herein by reference.
Number of shares outstanding of the Registrant's shares of common stock
as of January 31, 2001. 158,732 shares, common stock, $50.00 par value
The Company's stock is not actively traded nor is it traded in the
over-the-counter market. In addition, it is not listed with a national
securities exchange.
Due to the limited number of transactions, the weighted average sales price
disclosed on page 32 of the Annual Report may not be indicative of the
actual market value of the Company's stock.
Page 1
Documents Incorporated by Reference
---------------------------------------------------
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 2000 are incorporated by reference into Parts I and II.
Portions of the Registrant's Definitive Proxy Statement relating to the Annual
Meeting of Shareholders held on March 14, 2001 are incorporated by reference
into Part III.
SAFE HARBOR STATEMENT
- -----------------------
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: This report contains certain "forward-looking statements" intended to
qualify for the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. When used or incorporated by reference in the Company's
disclosure documents, the words "anticipate," "estimate," "expect," "project,"
"target," "goal" and similar expressions are intended to identify
forward-looking statements within the meaning of Section 27A of the Securities
Act. Such forward-looking statements are subject to certain risks, uncertainties
and assumptions, including, but not limited to (1) economic conditions, (2) real
estate market, and (3) interest rates. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, expected
or projected. These forward looking statements speak only as of the date of the
document. The Company expressly disclaims any obligation or undertaking to
publicly release any updates or revisions to any forward-looking statement
contained herein to reflect any change in the Company's expectation with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
Page 2
CANANDAIGUA NATIONAL CORPORATION
FORM 10-K
INDEX
Page No.
PART I.
Item 1. Business 4
Item 2. Properties 18
Item 3. Legal Proceedings 20
Item 4. Submission of Matters to a Vote of
Security Holders 20
PART II.
Item 5. Market for the Registrant's Common Stock
and Related Security Holder Matters 20
Item 6. Selected Financial Data 20
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 24
Item 8. Financial Statements and Supplementary Data 30
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 30
PART III.
Item 10. Directors and Executive Officers of
the Registrant 30
Item 11. Executive Compensation 31
Item 12. Security Ownership of Certain
Beneficial Owners and Management 31
Item 13. Certain Relationships and Related Transactions 32
PART IV.
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K 33
Signatures 34
Page 3
PART I
Item 1. Business
Canandaigua National Corporation
The Canandaigua National Corporation, referred to as "Company", is a
one-bank holding company which builds lasting customer relationships by
providing comprehensive financial solutions to individuals, be they building
families or businesses. It was organized on October 31, 1984, and registered
under the Bank Holding Company Act of 1956, for the purpose of becoming a
one-bank holding company. The formation of the bank holding company was
consummated on May 31, 1985, through the exchange of 80,000 shares of
Canandaigua National Corporation $50 par value common stock for all of the
outstanding shares of The Canandaigua National Bank and Trust Company. The
one-bank holding company serves as a means of increasing the scope of banking
and financial services in the market area served by The Canandaigua National
Bank and Trust Company. The Company acquired 100% of HomeTown Funding, Inc.
(HTF) during 1997. HTF, operating as the Company's mortgage department, offers
a full line of mortgage products. HTF is engaged in underwriting and funding
mortgages in western New York State. HTF resells residential mortgages to the
Bank and unaffiliated entities, which service the loans. On January 1, 1999,
the Company merged the mortgage banking operations of HTF and Greater Funding of
New York, Inc (GFNYI), a mortgage banking company acquired in 1996. The Bank
will remain the principal source of the Company's operating revenue and net
income.
The Canandaigua National Bank and Trust Company
The Canandaigua National Bank and Trust Company ("Bank") was incorporated
under the laws of The United States of America as a national bank in 1887.
Since that time, the Bank has operated as a national banking association doing
business at its main office at 72 South Main Street, Canandaigua, New York, and
several locations in Ontario County and Monroe County, New York.
As of December 31, 2000, Bank had total assets of $593.8 million; total
capital of $41.4 million; and total deposits of $535.5 million. Its deposits
are insured through the Bank Insurance Fund by the Federal Deposit Insurance
Corporation.
The Bank provides a full range of financial services to its retail,
commercial and municipal customers through a variety of deposit, lending, trust,
investment and insurance products. These products are delivered by employees
through a "lifestyle" marketing concept, whereby customers' needs are
anticipated and evaluated based upon their life style (e.g., growing family,
retirement, college student, etc.). New products are developed around this
concept. These services are delivered through the Bank's network of eighteen
community banking offices, which include drive-up facilities and automatic
teller machines, its customer call center, the internet and other remote
cash-dispensing machines. The locations and staffing of the Bank's full-service
offices are described in more detail in Item 2 and on page 34 of the Annual
Report.
The Bank's deposit services include accepting time, demand and savings
deposits, NOW accounts, regular savings accounts, money market deposits,
fixed-rate certificates of deposit and club accounts. The Bank also provides
its retail customers safe-keeping services through the renting of safe deposit
facilities.
The Bank's lending services include making secured and unsecured commercial
and consumer loans, financing commercial transactions either directly or through
regional industrial development corporations, and making construction and
mortgage loans. Other services include making residential mortgage loans,
revolving credit loans with overdraft checking protection, small business loans,
and student loans. The Bank's business loans include seasonal, credit,
collateral, and term loans.
Page 4
Item 1. Business
The Canandaigua National Bank and Trust Company (continued)
Trust and investment services provided by the Bank include services as
executor and trustee under wills and deeds, as guardian and custodian and as
trustee and agent for pension, profit sharing, individual retirement account and
other employee benefit trusts as well as various investment, pension and estate
planning services. Trust services also include service as transfer agent and
registrar of Canandaigua National Corporation stock and as paying agent for
various bond issues and as escrow agent.
Since the formation of its insurance subsidiary in 1995 and upon its
successful lawsuit against the New York State Superintendent of Insurance, the
Bank has been offering a full line of auto, home and life insurance products to
its customers through its wholly owned subsidiary CNB Insurance Agency.
The Bank also acts as advisor to the Canandaigua Equity Fund and the
Canandaigua Bond Fund. [Shares of these funds are not bank deposits or
obligations of, or guaranteed or endorsed by, any bank, and are not insured by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency. Shares of these funds may lose value.]
The Bank has a relatively stable deposit base and no material amount of
deposits are obtained from a single depositor. Historically, approximately 15%
of average deposits are placed by local governments in the Bank's business
region. The Bank has not experienced any significant seasonal fluctuations in
the amount of its deposits nor does the Bank rely on foreign sources of funds or
income.
Territory Served
The Company's physical market area generally covers western Ontario County
and Monroe County in New York State. Customers generally initiate their
relationship with the Bank from this area. However, the Bank conducts business
through the internet and by telephone and with payment services such as credit
cards and debit cards; thus, the Bank's customers are served world-wide. Since
the mid 1990's, the Bank expanded into Monroe County by opening community
banking offices in Pittsford (1995), Webster/Penfield (1998), Greece (1999),
Chili (1999), Honeoye Falls (1999), Perinton (2000), Irondequoit (2000),
Bushnell's Basin (2000), and the City of Rochester (2000). In 2001 the Company
will relocate the Honeoye Falls office to a permanent site and plans to open an
office in Brighton.
Competition
The Company considers its business to be highly competitive in its service
areas. The Company competes with respect to its lending services, as well as in
attracting deposits, with commercial banks, savings banks, savings and loan
associations, insurance companies, regulated small loan companies, non-bank
banks, credit unions and investment managers. The Company also competes with
insurance companies, investment counseling firms, mutual funds and other
business firms and individuals in corporate trust and investment management
services.
The Company is generally competitive with all financial institutions in its
service areas with respect to interest rates paid on time and savings deposits
and interest rates charged on loans and service charges on deposit accounts.
One measure of competitive strength is the percentage of deposits held by
an institution in a geographic location. Based upon the most recent data
available from the FDIC as of June 30, 2000, the Company's share of deposits for
all banks was 39% in Ontario County compared to 36% in 1999. In Monroe County
the Bank's share increased to 1.1% ($113.1 million) in 2000 from .6% ($54.2
million) in 1999.
Page 5
Item 1. Business (continued)
Employees
At December 31, 2000, the Company had 323 employees of whom 71 worked on a
part-time basis. None of the employees are covered by a collective bargaining
agreement. The Company considers its relations with its employees to be good.
Supervision and Regulation
Canandaigua National Corporation is incorporated under the laws of the
State of New York. As a bank holding company, the Company is subject to the
Bank Holding Company Act of 1956, as amended (the "BHC Act"), and is required to
file annual reports and such additional information as may be required by the
Federal Reserve Board (the "FRB") pursuant to the BHC Act. The FRB has the
authority to examine the Company and its subsidiaries.
The Gramm-Leach-Bliley Act (the Act) of 1999 represents the most sweeping reform
of financial services regulation in over sixty years. The Act permits the
creation of new financial products under a strong regulatory regime based on the
principle of functional regulation. The legislation eliminates legal barriers
to affiliation among banks and securities firms, insurance companies, and other
financial services companies. The Act provides financial organizations with
flexibility in structuring these new financial affiliations through a holding
company structure or a financial subsidiary, with appropriate safeguards.
The Act preserves the role of the Federal Reserve Board as the umbrella
supervisor for holding companies while at the same time incorporating a system
of functional regulation designed to utilize the strengths of the various
federal and state regulators. It also sets up a mechanism for coordination
between the Federal Reserve Board and the Secretary of the Treasury regarding
the approval of new financial activities for both holding companies and national
bank financial subsidiaries. The Act provides for functional regulation of bank
securities activities. The Act repeals Bank's blanket exemption from the
definition of a "broker" and replaces it with a set of limited exemptions that
allow the continuation of some traditional activities performed by banks
(trust-related activities). The Act amends the Exchange Act to include banks
within the general definition of dealer. The bank exclusion from the definition
of investment adviser is also eliminated.
The Act also establishes, for the first time, a minimum federal standard
for privacy. Financial institutions are required to have written privacy
policies that must be disclosed to customers. The disclosure of a financial
institution's privacy policy must take place at the time a customer relationship
is established and not less than annually during the continuation of the
relationship.
The Act opens the possibility for complex new products to be developed
with both banking and securities elements. The Act provides a procedure for
handling new hybrid products sold by banks that have securities elements. The
statute provides for a rule-making and resolution process between the Securities
and Exchange Commission (SEC) and the Federal Reserve Board regarding new hybrid
products, with a federal appeal court as final arbiter.
As discussed above, the Company already conducts business directly, through
affiliates or through other contractual arrangements in many of the activities
allowed under the Act. Management and the Board of Directors review the
Company's strategic plan at least annually. However, the implications of the
Act on the Company have not yet been assessed.
The Federal Reserve Act imposes restrictions on extensions of credit by
subsidiary banks of a bank holding company to the bank holding company or any of
its subsidiaries, or investments in the stock or other securities of the holding
company, and on the use of such stock or securities as collateral for loans to
any borrower. Further, under the FRB's regulations, a bank holding company and
its subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit, lease or sale of property, or
furnishing of services.
Page 6
Item 1. Business
Supervision and Regulation (continued)
From time to time the FRB may adopt further regulations pursuant to the
Act. The Company cannot predict whether any further regulations will be adopted
or how such regulations will affect the consolidated operating results or
business of the Company.
In addition, the Company reports to the Securities and Exchange Commission
under the laws governing corporations with registered securities.
The primary supervisory authority of the Bank is the Office of the
Comptroller of the Currency (the " OCC"), which regularly examines aspects of
the Bank's operations such as capital adequacy, reserves, loans, investments,
management practices, etc. In addition to these regular examinations, the Bank
must furnish quarterly and annual reports to the OCC. The OCC has the authority
to issue cease-and-desist orders to prevent a bank from engaging in an unsafe or
an unsound practice or violating the law in conducting its business.
The Bank is also a member of the Federal Reserve System, and as such, is
subject to certain laws and regulations administered by the FRB. As a member
of the Federal Reserve System, the Bank is required to maintain non-interest
bearing reserves against certain accounts. The amount of reserves required to
be maintained is established by regulations of the FRB and is subject to
adjustment from time to time.
The Bank's deposits are insured by the Bank Insurance Fund (BIF) of the
FDIC up to a maximum of $100,000 per insured deposit account, subject to the
rules and regulations of the FDIC. For this protection, the Bank pays a
quarterly statutory assessment.
Government Monetary Policies and Economic Controls
The earnings of the Company and the Bank are affected by the policies of
regulatory authorities including the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System and the Federal Deposit Insurance
Corporation. An important function of the Federal Reserve System is to regulate
the money supply and interest rates. Among the instruments used to implement
these objectives are open market operations in U.S. Government securities,
changes in reserve requirements against member bank deposits, and changes in the
federal discount rate. These instruments are used in varying combinations to
influence overall growth and distribution of bank loans, investments and
deposits, and their use may also affect interest rates charged on loans or paid
for deposits.
The policies and regulations of the Federal Reserve Board have had, and
will probably continue to have, a significant effect on the Bank's deposits,
loans and investment growth, as well as the rate of interest earned and paid,
and are expected to affect the Bank's operations in the future. The effect of
such policies and regulations, if any, upon the future business and earnings of
the Bank cannot be predicted.
The United States Congress has periodically considered and adopted
legislation that has resulted in deregulation of banks and other financial
institutions. Such legislative changes have placed the Bank in more direct
competition with other financial institutions including mutual funds, securities
brokerage firms, insurance companies, and investment banking firms. The effect
of any such legislation on the business of the Bank cannot be predicted.
Consolidated Financial and Statistical Data
A review of the business activities of the Company and Bank is
presented in the following pages.
Page 7
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES
Distribution of Assets, Liabilities and Stockholders' Equity; Interest
Rates and Interest Differential
A. and B. Average Balance Sheets and Analysis of Net Interest Margin
The following table reflects the net interest margin and interest rate
spread for the years shown. Average amounts are based upon the average daily
balances. No tax equivalent adjustments have been made.
Average Balance Sheets and Analysis of Net Interest Margin
For the Years December 31, 2000, 1999 and 1998
(Dollars in thousands)
2000 Average Average
Balance Interest Rate
---------- --------- ---------
Assets
Interest earning assets:
Interest bearing deposits with
others $ 107 $ 5 4.67 %
Federal funds sold 1,201 71 5.91
Securities (1):
Taxable 40,095 2,355 5.87
Tax-exempt 46,018 1,998 4.34
Loans, net (2) 431,768 37,647 8.72
---------- --------- --------
Total interest earning assets 519,189 42,076 8.10
--------- ========
Non-interest earning assets 50,052
----------
Total assets $ 569,241
==========
Liabilities and Stockholders'
Equity
Interest bearing liabilities:
Savings, interest checking and
money market $ 217,052 5,449 2.51 %
Certificates of deposit 205,140 11,985 5.84
Borrowings 21,760 1,367 6.28
---------- --------- --------
Total interest bearing
liabilities 443,952 18,801 4.23
--------- ========
Non-interest bearing liabilities 82,618
Stockholders' equity 42,671
----------
Total liabilities and
stockholders' equity $ 569,241
==========
Interest rate spread 3.87 %
==========
Net interest margin $ 23,275 4.48 %
========== =========
(1) Securities available-for sale are stated at fair value and include the
Company's required investments in Federal Reserve Bank Stock and Federal Home
Loan Bank Stock.
(2) Average balance includes non-accrual loans. Interest includes fees of $
395,000.
Page 8
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
1999 Average Average
Balance Interest Rate
---------- --------- ---------
Assets
Interest earning assets:
Interest bearing deposits with
others $ 182 $ 6 3.30 %
Federal funds sold 4,700 226 4.81
Securities (1):
Taxable 36,647 2,015 5.50
Tax-exempt 40,853 1,741 4.26
Loans, net (2) 339,351 28,865 8.51
---------- --------- --------
Total interest earning assets 421,733 32,853 7.79
--------- ========
Non-interest earning assets 47,893
----------
Total assets $ 469,626
==========
Liabilities and Stockholders'
Equity
Interest bearing liabilities:
Savings, interest checking and
money market $ 188,333 4,676 2.48 %
Certificates of deposit 156,618 8,049 5.14
Borrowings 9,917 527 5.31
---------- --------- --------
Total interest bearing
liabilities 354,868 13,252 3.73
--------- ========
Non-interest bearing liabilities 73,225
Stockholders' equity 41,533
----------
Total liabilities and
stockholders' equity $ 469,626
==========
Interest rate spread 4.06 %
==========
Net interest margin $ 19,601 4.65 %
========== =========
(1) Securities available-for sale are stated at fair value and include the
Company's required investments in Federal Reserve Bank Stock and Federal Home
Loan Bank Stock.
(2) Average balance includes non-accrual loans. Interest includes fees of $
463,000.
Page 9
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
1998 Average Average
Balance Interest Rate
--------- --------- --------
Assets
Interest earning assets:
Interest bearing deposits with
others $ 368 $ 19 5.16 %
Federal funds sold 630 33 5.24
Securities (1):
Taxable 41,131 2,400 5.84
Tax-exempt 34,511 1,567 4.54
Loans, net (2) 303,940 26,834 8.83
---------- --------- --------
Total interest earning assets 380,580 30,853 8.11 %
--------- ========
Non-interest earning assets 36,421
----------
Total assets $ 417,001
==========
Liabilities and Stockholders'
Equity
Interest bearing liabilities:
Savings, interest checking and
money market $ 152,018 3,675 2.42 %
Certificates of deposit 128,942 7,071 5.48
Borrowings 29,926 1,687 5.64
---------- --------- --------
Total interest bearing
liabilities 310,886 12,433 4.00 %
--------- ========
Non-interest bearing liabilities 65,758
Stockholders' equity 40,357
----------
Total liabilities and
stockholders' equity $ 417,001
==========
Interest rate spread 4.11 %
==========
Net interest margin $ 18,420 4.84 %
========== =========
(1) Securities available-for sale are stated at fair value and include the
Company's required investments in Federal Reserve Bank Stock and Federal Home
Loan Bank Stock.
(2) Average balance includes non-accrual loans. Interest includes fees of $
227,000.
C. Rate/Volume Analysis
The following table sets forth the dollar and volume of changes in interest
income and interest expense resulting from changes in the volume of earning
assets and interest bearing liabilities, and from changes in rates. Volume
changes are computed by multiplying the volume difference by the prior year's
rate. Rate changes are computed by multiplying the rate difference by the prior
year's balance. The change in interest due to both rate and volume has been
allocated to rate and volume changes in proportion to the dollar amounts of the
change in each.
Page 10
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
C. Rate/Volume Analysis (continued)
Rate/Volume Analysis
For the Years December 31, 2000 and 1999
(Dollars in thousands)
2000 vs. 1999
Increase/(decrease) due
to change in
Volume Rate Total
-------- ------- -------
Assets
Interest bearing deposits with
others $ (3) $ 2 $ (1)
Federal funds sold (198) 43 (155)
Securities 430 167 597
Loans, net 8,041 741 8,782
-------- ------- -------
Total 8,270 953 9,223
======== ======= =======
Liabilities
Savings, interest checking and
money market 720 53 773
Certificates of deposit 2,730 1,206 3,936
Borrowings 729 111 840
-------- ------- -------
Total 4,179 1,370 5,549
======== ======= =======
Net change $ 4,091 $ (417) $3,674
======== ======= =======
1999 vs. 1998
Increase/(decrease) due
to change in
Volume Rate Total
-------- -------- --------
Assets
Interest bearing deposits with
others $ (8) $ (5) $ (13)
Federal funds sold 196 (3) 193
Securities 96 (307) (211)
Loans, net 3,039 (1,008) 2,031
-------- -------- --------
Total 3,323 (1,323) 2,000
======== ======== ========
Liabilities
Savings, interest checking and
money market 899 102 1,001
Certificates of deposit 1,444 (466) 978
Borrowings (1,068) (92) (1,160)
-------- -------- --------
Total 1,275 (456) 819
======== ======== ========
Net change $ 2,048 $ (867) $ 1,181
======== ======== ========
Page 11
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
II. Securities Portfolio
A. Securities Portfolio
The following table summarizes the Company's carrying value of securities
available for sale and held to maturity. Other securities includes the Company's
required investments in Federal Reserve Bank stock and Federal Home Loan Bank
stock.
Securities
As of December 31, 2000, 1999 and 1998
(Dollars in thousands)
2000 1999 1998
------- ------- -------
US Treasury and other U.S.
government agencies' obligations $36,949 $26,865 $29,936
Obligations of states and political
subdivisions 42,062 46,061 39,253
Other securities 5,734 6,486 7,275
------- ------- -------
Total $84,745 $79,412 $76,464
======= ======= =======
B. Maturity and Yields of Securities Portfolio
The following table summarizes the maturities and weighted average yields of the
Company's securities available for sale and held to maturity at year end. Yields on
"Obligations of States and Political Subdivisions" are not reflected on a tax equivalent
basis. Other securities includes the Company's required investments in Federal Reserve
Bank Stock and Federal Home Loan Bank Stock. Mortgage backed securities, included in
other securities, are reported at their final contractual maturity, notwithstanding that
principal is prepaid regularly, reducing their effective maturity.
Maturities and Weighted Average Yields of Securities
As of December 31, 2000
(Dollars in thousands)
- - - - After After -
One Five
One through through After
Year or Five Ten Ten
Less Years Years Years
Amount Yield Amount Yield Amount Yield Amount Yield
-------- ------- -------- ----- ------- ----- ------- -----
US Treasury and other
US Government agen-
cies' obligations $ 25,452 5.17 $ 10,995 6.51 $ 502 7.48 $ -- --
Obligations of states
and political
subdivisions(1) 8,862 4.41 26,150 4.43 6,862 4.74 188 5.52
Other securities 497 6.39 796 4.91 -- -- 4,441 4.77
-------- ------- -------- ----- ------- ----- ------- -----
Total $ 34,811 4.99 $ 37,941 5.04 $ 7,364 4.93 $ 4,629 4.80
======== ======= ======== ===== ======= ===== ======= =====
(1) Yields are not reflected on a tax equivalent basis.
Page 12
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
III. Loan Portfolio
The loan portfolio is comprised solely of domestic loans with their
concentrations set forth in the schedule of loan classifications below. Other
than general economic risks, management is not aware of any material
concentrations of credit risk to any industry or individual borrower. The
following summary shows the classifications of loans by category.
A. Types of Loans
Composition of Loan Portfolio
As of December 31,
(Dollars in thousands)
2000 1999 1998 1997 1996
--------- --------- --------- -------- --------
Commercial, financial and
agricultural $ 65,324 $ 62,491 $ 43,260 37,610 27,503
Commercial mortgage 195,153 141,255 83,771 74,228 62,513
Residential mortgage 81,475 69,862 76,130 94,593 101,349
Consumer
Auto - indirect 104,559 103,605 84,370 73,211 45,747
Other 9,401 18,561 17,753 15,245 9,925
Other 4,059 2,589 6,485 14,257 11,437
--------- --------- --------- -------- --------
459,974 398,363 311,769 309,144 258,474
Less: Allowance for loan losses (4,712) (4,136) (3,283) (3,153) (2,675)
--------- --------- --------- -------- --------
Loans, net $455,259 $394,227 $308,486 305,991 255,799
========= ========= ========= ======== ========
B. Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table sets forth the maturities and sensitivity to changes in
interest rates of the loan portfolio exclusive of real estate mortgage, consumer
and other loans.
Maturity and Sensitivity of Loans
As of December 31, 2000
(Dollars in thousands)
After
One
One through After
Year or Five Five
Less Years Years Total
-------- ------- ------ ------
Commercial, financial and
agricultural $ 33,207 20,591 11,526 65,324
Loans maturing after one year:
With a predetermined interest rate 16,902 7,688
With a floating or adjustable rate 3,689 3,838
The maturities set forth above are based upon contractual maturities.
Demand loans, overdrafts and certain time loans, the principal of which will be
renewed in whole or in part, are included in the " One Year or Less"
classification. The Company's loan policy encourages a repayment schedule to be
established whenever possible.
The policy provides that a demand loan should not be renewed more than
once, with renewals at the then prevailing interest rates and with the assurance
the borrower demonstrates the ability to repay on maturity of the loan.
Page 13
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
III. Loan Portfolio (continued)
The Company provides standby letters of credit commitments which also
provide for availability of funds over a period of generally one year. All such
commitments have fixed expiration dates and may require the payment of a fee.
The Company extends lines of credit under which a customer may borrow for
various purposes. The extension of these commitments and lines of credit have
been in the normal course of business. In the opinion of management, at December
31, 2000, there are no material commitments to extend credit which represent
unusual risks.
C. Risk Elements
(1) Non-accrual, Past Due and Restructured Loans
The following table summarizes the Company's non-performing assets as of
December 31 for each of the last five years.
Non-Performing Assets
(Dollars in thousands)
2000 1999 1998 1997 1996
-------- -------- -------- ------- --------
Loans past due 90 days or more and
accruing:
Commercial, financial and
agricultural $ 22 $ -- $ 14 $ 347 $ -
Real estate-commercial -- 11 102 610 --
Real estate-residential 17 13 157 508 48
Consumer 166 91 108 501 28
-------- -------- -------- ------- --------
Total past due 90 days or more
and accruing 205 115 381 1,966 76
-------- -------- -------- ------- --------
Loans in non-accrual status:
Commercial, financial and
agricultural 437 509 1,498 1,210 2,285
Real estate-commercial 1,890 980 225 1,327 7,565
Real estate-residential 371 151 390 586 1,364
Consumer 471 -- -- 53 75
-------- -------- -------- ------- --------
Total non-accrual loans 3,169 1,640 2,113 3,176 11,289
-------- -------- -------- ------- --------
Total non-performing loans 3,374 1,755 2,494 5,142 11,365
-------- -------- -------- ------- --------
Other real estate owned:
Commercial 1,466 1,651 1,642 2,494 1,012
Residential -- -- -- 18 129
-------- -------- -------- ------- --------
Total other real estate owned 1,466 1,651 1,642 2,512 1,141
-------- -------- -------- ------- --------
Total non-performing assets $ 4,840 $ 3,406 $ 4,136 $7,654 $12,506
======== ======== ======== ======= ========
Non-performing loans to total
period-end loans 0.73% 0.44% 0.80% 1.66% 4.40%
======== ======== ======== ======= ========
Non-performing assets to total
period-end loans and other real
estate 1.05% .85% 1.33% 2.48% 4.84%
======== ======== ======== ======= ========
Allowance to non-performing loans 139.66% 235.67% 131.64% 61.32% 23.54%
======== ======== ======== ======= ========
Restructured loans $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======= ========
Page 14
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
III. Loan Portfolio (continued)
The accrual of interest on commercial and real estate loans is discontinued
and previously accrued interest is reversed when the loans become 90 days
delinquent or when, in management's judgment, the collection of principal and
interest is uncertain. Recognition of interest income on non-accrual loans does
not resume until management considers outstanding principal and interest
collectible. Consumer loans are generally charged off upon becoming 120 days
past due.
The Company earned interest on a cash basis of $55,000 in 2000, $77,000 in
1999, and $281,000 in 1998 on non-accrual loans. Additional interest income of
$245,000, $138,000, and $239,000 would have been recognized during 2000, 1999,
and 1998, respectively, if the loans reported above as non-accrual had been
current in accordance with the original terms.
(2) Potential Problem Loans
Management is unaware of any potential problem loans at December 31, 2000,
which are not already disclosed in the table above.
IV. Summary of Loan Loss Experience
A. Analysis of Loss Experience
The determination of the allowance for loan losses is based on an analysis
of the loan portfolio and reflects an amount which, in management's judgment, is
adequate to provide for loan losses inherent in the portfolio. This analysis is
based on management's periodic evaluation, which considers factors such as past
loss experience, identification of adverse conditions that may affect a
borrower's ability to repay, an assessment of current and expected economic
conditions and the estimated value of any underlying collateral.
Page 15
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
IV. Summary of Loan Loss Experience (continued)
The following table summarizes the changes in the allowance for loan losses for
each of the last five years.
Summary of Loan Loss Allowance
(Dollars in thousands)
2000 1999 1998 1997 1996
------- ------- -------- ------- --------
Balance at beginning of year $4,136 $3,283 $ 3,153 $2,675 $ 2,258
Provision charged to operations 1,028 1,239 641 851 1,490
Charge-offs:
Commercial, financial and
agricultural (165) (3) (274) (257) (1,356)
Real estate-commercial -- -- -- -- (44)
Real estate-residential -- (29) (19) (40) (16)
Consumer (792) (843) (760) (498) (221)
------- ------- -------- ------- --------
(957) (875) (1,053) (795) (1,637)
------- ------- -------- ------- --------
Recoveries:
Commercial, financial and
agricultural 85 20 25 190 216
Real estate-commercial -- -- -- -- 71
Real estate-residential 13 3 102 19 1
Consumer 407 466 415 213 276
------- ------- -------- ------- --------
505 489 542 422 564
------- ------- -------- ------- --------
Net charge-offs: (452) (386) (511) (373) (1,073)
------- ------- -------- ------- --------
Balance at end of year $4,712 $4,136 $ 3,283 $3,153 $ 2,675
======= ======= ======== ======= ========
Net charge-offs to average loans 0.10% 0.11% 0.17% 0.13% 0.47%
======= ======= ======== ======= ========
Allowance to total loans 1.02% 1.04% 1.05% 1.02% 1.03%
======= ======= ======== ======= ========
B. Allocation of Allowance for Loan Losses
The following table presents an allocation of the allowance for loan losses
and the percentage of loans in each category to total loans at December 31 of
each of the last five years. In addition to an allocation for specific problem
loans, each category includes a portion of the non-specific allowance for loan
losses based upon loans outstanding, credit risk and historical charge-offs.
Notwithstanding the following allocation, the entire allowance for loan losses
is available to absorb charge-offs in any category of loans.
Page 16
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
IV. Summary of Loan Loss Experience (continued)
Allocation of Allowance for Loan Losses
(Dollars in thousands)
2000 1999 1998
------- ---------- -------
Allowance % (1) Allowance % (1) Allowance % (1)
- ---------------------------- ------- ---------- ------- ---------- -------
Commercial, financial and
agricultural (2) $2,200 56.6% $1,783 51.1% $1,484 40.7%
Real estate-residential 309 17.7% 50 17.5% 54 24.4%
Consumer 2,203 25.7% 2,303 31.4% 1,745 34.8%
------- ---------- ------- ---------- ------- ------
$4,712 100.0% $4,136 100.0% $3,283 100.0%
======= ---------- ======= ---------- ======= ------
1997 1996
------- ----------
Allowance % (1) Allowance % (1)
- ---------------------------- ------- ---------- -------
Commercial, financial and
agricultural (2) $1,974 36.2% $1,982 34.8%
Real estate-residential 111 30.6% 122 39.2%
Consumer 1,068 33.2% 571 26.0%
------- ---------- ------- ----------
$3,153 100.0% $2,675 100.0%
======= ---------- ======= ----------
(1)Percentage of loans in each category to total loans.
(2)Includes commercial real estate.
V. Deposits
The following tables summarize the average deposits and average rates paid
during the years presented.
Average Deposits and Rates Paid
For the Years Ended December 31, 2000, 1999 and 1998
(Dollars in thousands)
2000 1999 1998
-------- ------- --------
Amount Rate Amount Rate Amount Rate
------- -------- ------- -------- ------- ------
Non-interest bearing demand $ 78,775 --% $ 66,769 --% $ 62,944 --%
Interest-bearing demand 51,652 1.15% 47,851 1.33% 42,099 1.50%
Savings and money market 165,400 2.93% 140,480 2.88% 109,919 2.77%
Time 205,140 5.84% 156,618 5.14% 128,942 5.48%
-------- ------- -------- ------- -------- ------
$500,967 3.48% $411,718 3.09% $343,904 3.12%
======== ======= ======== ======= ======== ======
The following table sets forth the time certificate of deposits of $100,000
or greater, classified by the time remaining until maturity, which were on
deposit as of December 31, 2000.
Maturity Distribution of Time Deposits of $100,000 or More
As of December 31, 2000
(Dollars in thousands)
3 months or less $ 98,463
3 through 6 months 10,144
6 through 12 months 6,758
Over 12 months 16,022
--------
$131,387
========
Page 17
STATISTICAL DISCLOSURE BY BANK HOLDING COMPANIES (continued)
VI. Return on Equity and Assets
The following table sets forth certain ratios used in evaluating the
Company's financial position and results of operations.
Financial Ratios
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
------ ------ ------
Return on average assets 0.61% 0.50% 0.86%
Return on average equity 8.17% 5.68% 8.89%
Dividend payout ratio 54.44% 77.81% 49.15%
Average equity to average assets 7.50% 8.84% 9.68%
------ ------ ------
VII. Short-term Borrowings
The following table sets forth the Company's short-term borrowings at the
dates indicated. The Company considers short-term borrowings to be those with
an original maturity date of three months or less.
Short-term Borrowings
For the Years Ended December 31, 2000, 1999 and 1998
(Dollars in Thousands)
2000 1999 1998
------- ------- -------
Amount outstanding at December 31, 10,400 18,900 2,300
Weighted average rate 5.85% 5.72% 4.84%
Maximum outstanding at any month end 19,200 26,300 48,200
Average amount outstanding during the year 7,855 3,948 24,753
Weighted average rate 6.30% 5.36% 5.66%
Item 2. Properties
Canandaigua National Corporation operates from the main office of the Bank.
The Company owns a building in Pittsford that is occupied by HomeTown Funding,
Inc., and is sublet to them and other unrelated businesses. The Bank owns and
leases real property in Ontario County and Monroe County for its Community Bank
Offices and to support its operations.
As of December 31, 2000, the Bank's operations were conducted from eight
offices (including the main office) located in Ontario County, New York, and ten
offices located in Monroe County, New York. The main office of the Bank is a
three-story structure located at 72 South Main Street, Canandaigua, New York.
The administrative, operational and electronic data processing offices of the
Bank are located in this facility. There are drive-up facilities located at all
permanent offices except for the Eastview Mall and Pittsford offices. Some of
the leases also provide for contingent rent to be paid annually based upon
increases in the cost of living. Properties providing customer service are as
follows:
Location Use Ownership Expiration (1)
- --------------- ---------------------- ------------- --------------
Canandaigua, NY Main office space Owned --
Bloomfield, NY Bloomfield bank office Owned --
Canandaigua, NY Customer call center Leased office 06/30/2002
Page 18
Item 2. Properties (continued)
Location Use Ownership Expiration (1)
- ----------------- ----------------------------------- ------------------ ---------------
Victor, NY Eastview Mall bank office Leased office 10/31/2004
Farmington, NY Farmington bank office Owned, leased land 06/30/2002
Honeoye, NY Honeoye bank office Owned --
Canandaigua, NY Lakeshore bank office Leased office 12/31/2001
Shortsville, NY Manchester-Shortsville bank office Leased office Month to month
Mendon, NY Mendon bank office Leased office 12/31/2004
Pittsford, NY Pittsford bank office Leased office 12/31/2001
Victor, NY Victor bank office Owned --
Penfield, NY Webster bank office Leased office 08/31/2008
Greece, NY Greece bank office Leased office 10/31/2003
Chili, NY Chili bank office Leased office 06/01/2010
Honeoye Falls, NY Honeoye Falls bank office (2) Leased office 07/31/2001
Honeoye Falls, NY Permanent bank office site Owned --
Irondequoit, NY Irondequoit bank office Owned --
Perinton, NY Perinton bank office Leased office 03/15/2004
Perinton, NY Basin Park Financial Center Leased office 04/30/2011
Rochester, NY Rochester bank office Leased office 12/31/2009
Pittsford, NY HomeTown Funding Owned --
Canandaigua, NY HomeTown Funding branch office Leased office 04/30/2001
Bloomfield, NY CNB Agency office Leased office 04/30/2001
(1) If applicable
(2) Temporary
During 2001 the Bank will continue to increase its number of Monroe County
offices. It expects to enter into a lease agreement for an office in the town
of Brighton, New York.
The Bank also provides, free to its customers, 24-hour banking services
through automatic teller facilities located at each office and through remote
automatic teller machines and cash dispenser machines at the following
locations:
Finger Lakes Community College Hopewell, New York
F.F. Thompson Hospital Canandaigua, New York
Finger Lakes Performing Arts Center Hopewell, New York
Bristol Mountain Bristol, New York
Case's Convenient Canandaigua, New York
Roseland Bowl Canandaigua, New York
The Greater Rochester International Airport Rochester, New York
The Company Store Cheshire, New York
The Strong Museum Rochester, New York
J-Mart Canandaigua, New York
Canandaigua Medical Group Canandaigua, New York
Rank's IGA Canandaigua, New York
Webster Community Sports Center Webster, New York
Midtown Tennis Club Rochester, New York
Hemlock General Store Hemlock, New York
The Bank anticipates that in order to expand its service to its Monroe and
Ontario County customers it will increase the number of remote cash-dispenser
machines in operation.
The carrying value of the Company's properties as of December 31, 2000,
which is required to be included herein pursuant to Item 102 of Regulation S-K,
is included under the caption "Notes to Consolidated Financial Statements" set
forth on pages 12 through 31 of the 2000 Annual Report to Stockholders and is
incorporated herein by reference.
Page 19
Item 3. Legal Proceedings
The Company and its subsidiaries are not involved in any pending legal
proceedings other than legal proceedings arising in the ordinary course of
business. In the opinion of management the ultimate outcome of these legal
matters is not expected to be material to the consolidated financial condition
or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders (in the fourth
quarter of 2000)
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
The market and dividend information required to be included herein,
pursuant to Item 201 of Regulation S-K, is incorporated herein by reference from
page 32 of the 2000 Annual Report to Stockholders and the Proxy Statement.
While there can be no assurance that the amount and timing of dividends
paid in recent years will continue, management has no knowledge of current
activities that would require reduction of dividends paid in recent years and at
the same times.
At December 31, 2000, the Company had approximately 849 shareholders of
record. Information regarding beneficial ownership of the Company's stock is set
forth in the Company's Proxy Statement and incorporated herein by reference.
Item 6. Selected Financial Data
The following table represents a summary of selected components of the
Company's consolidated financial statements for the five years ended December
31, 2000. All information concerning the Company should be read in conjunction
with the consolidated financial statements and related notes.
Selected Financial Data
(Dollars in Thousands except per share data)
2000 1999 1998 1997 1996
-------- ------- ------- ------- -------
Income Statement Information:
Net interest income $ 23,275 19,601 18,420 18,194 16,343
Provision for loan losses 1,028 1,239 641 851 1,490
Non-interest income 8,942 7,274 5,924 3,788 3,401
Non-interest expense 26,487 22,383 18,430 15,632 14,163
Income taxes 1,215 896 1,686 1,762 1,144
Net income 3,487 2,357 3,587 3,737 2,947
Balance Sheet Data:
Total investments $ 84,745 79,412 76,464 74,499 71,771
Total loans, net 455,259 394,227 308,486 305,991 255,799
Total assets 594,693 522,135 428,047 418,942 360,623
Total deposits 533,809 454,290 376,507 324,761 307,966
Total borrowings 12,644 22,218 7,142 50,667 11,590
Total equity 44,269 42,477 42,478 40,932 39,119
Average assets 569,241 469,626 417,001 385,767 334,659
Average equity 42,671 41,533 40,357 39,383 37,834
Per Share Data:
Net income, basic $ 22.00 14.82 22.38 23.22 18.20
Net income, diluted $ 21.86 14.78 22.38 23.22 18.20
Cash dividends 11.90 11.50 11.00 10.00 8.75
Page 20
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The purpose of this discussion is to focus on information about Canandaigua
National Corporation's financial condition and results of operations which is
not otherwise apparent from the consolidated financial statements in the annual
report. Reference should be made to those statements and the selected financial
data presented elsewhere in this document for an understanding of the following
discussion and analysis. (Dollar and percentage changes are calculated before
rounding.)
Overview
- --------
2000 was a year of continued growth as the Company furthered its
investments in new offices and expanded its market reach throughout the
metropolitan Rochester area. These plans were outlined in 1998's Annual Report.
During 2000, the Company opened four banking offices in Irondequoit, Perinton,
Bushnell's Basin and downtown Rochester. The Company is making plans to open an
office in Brighton later in 2001 as well as relocating its Honeoye Falls office
to a permanent site. 2000 saw strong asset growth, albeit lower than 1999's
levels: 13.9% growth in assets, 15.5% growth in loans, 17.5% growth in
deposits, and 4.2% in equity. Importantly, the investments in the future we
began making in 1998 are beginning to pay off, with earnings of $3.5 million in
2000, a 47.9% increase over 1999's $2.4 million.
2000's results of $21.86 per diluted share compare favorably to budget of
$15.24 and to 1999's results of $14.78. The Company anticipates continued
income growth in 2001 with a target of $29.17. This is in line with a five-year
plan laid out in late 1998 resulting from the accelerated expansion. As
disclosed at the March 2001 annual shareholders' meeting, management is
targeting further earnings growth to $53.64 per share by year end 2003.
Impacting 2000's pre-tax results was approximately $0.1 million in
severance costs and $0.4 million in contract termination costs. These costs
were a result of the Company's efforts to slow the rate of expense growth during
the expansion plan and a realignment of the Company's credit card operations.
Management estimates that approximately $1.0 million in salary and benefits
(prior to annual raises) was eliminated. Annual operating expenses
approximating $0.4 million are expected to be eliminated from the Company's
realignment of its credit card activities. Another $0.5 million in revenue
increases are projected due to changes in deposit account and other fees, and at
least $0.1 million in cost reduction is expected to come from the consolidation
of the Company's mortgage businesses. The combined impact of these changes
totals $2.0 million (pre-tax) and is consistent with the target set out by
management in early 2000.
While management anticipates the aforementioned targets will be met in 2001
and 2003, they are subject to changes in economic conditions, the real estate
market, interest rates and other factors. Therefore, actual results may vary
materially.
The quality of the Company's assets remained good with non-performing loans
at December 31, 2000, at less than 1.0% of total loans. The allowance for loan
losses stood at 139.7% of non-performing loans at year-end 2000 versus 235.7% at
December 31, 1999. However, the provision for loan loss decreased to $1.0
million in 2000 from $1.2 million in 1999 reflective of slower loan growth and
good asset quality. Other real estate owned declined to $1.5 million in 2000
from $1.7 million in 1999.
Financial Condition
- --------------------
As of December 31, 2000, total assets of the Company were $594.7 million,
up from $522.1 million at year end 1999. Cash and equivalents increased $1.4
million to $28.3 million in connection with the growth in customer deposits.
Securities showed an increase of $5.8 million to $81.7 million. The
Company's securities, with the exception of a minor amount of equity securities,
are held to maturity.
Page 21
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The portfolio is comprised mainly of US Treasuries and agencies and tax-exempt
obligations of state and local subdivisions. Nearly all of the portfolio is
pledged to federal financial agencies and to secure municipal deposits. These
deposits, in turn, are used to purchase securities of local municipalities.
Other securities consist mainly of high-grade corporate bonds and other local
investments. The mix of taxable and tax-exempt securities can vary during the
year and year-on-year depending upon the volume of the Company's taxable income,
the securities' tax-equivalent yield and the supply of high-grade municipal
securities. During much of 2000 management replaced maturing tax-exempt
municipal bonds with US Treasury securities.
Net loans increased $61.0 million to $455.3 million. The growth in loans
came mostly in the first half of the year, having reached the year-end target by
June. Management slowed loan growth during the second half of the year to
ensure the Company and Bank remained well-capitalized. (Refer to "Capital
Resources" section). Nearly all of 2000's loan growth came from commercial
loans, which was consistent with projected results.
All other assets rose $4.3 million, most of which was in premises and
equipment for expansion.
Total non-performing loans increased over the twelve-month period ended
December 31, 2000, by $1.6 million to $3.4 million at year-end 2000 as compared
to $1.8 million at year-end 1999. All categories showed an increase. However,
commercial loans increased the most and is due mainly to one relationship, which
is likely to result in foreclosure in 2001. Management believes the underlying
collateral value is sufficient to cover the loan balance.
Management has been successful over the past five years in reducing overall
non-performing assets as a percentage of total assets. It attributes this trend
to a combination of strict underwriting procedures, strong collection efforts
and a relatively stable economic cycle in the Company's market.
The allowance for loan losses stood at $4.7 million at December 31, 2000,
up $0.6 million from December 31, 1999. 2000's year-end balance represents
1.02% of total loans versus 1.04% for 1999. Net charge-offs for the year
remained favorable at 0.10% of average loans versus 0.11% in 1999.
Other real estate owned consists of three parcels, all commercial, for $1.5
million. These are the same three parcels from 1999. However, during 2000 the
Company made progress in plans to liquidate these assets, some of which are
expected to occur in 2001.
In 2000 the Company added approximately $4.9 million in premises and
equipment with most relating to the new bank offices. With the planned opening
of at least two banking offices in 2001, more fixed assets additions can be
anticipated, which the Company expects to fund from current operations.
Total deposits at December 31, 2000, were $533.8 million and were up $79.5
million from December 31, 1999. For the same period, borrowings from the FHLB
were down $9.6 million to $12.6 million. Other liabilities increased by $0.8
million to $4.0 million. Deposit growth since December 31, 1999, came in all
account categories: Demand deposits were up $20.0 million, savings and money
market up $6.9 million and time deposits up $52.6 million. Overall, the deposit
growth is attributable to expansion in Monroe County. The Company's Ontario
County retail deposits grew approximately 3.7%, while Monroe County deposits
grew 49.1% from 1999. The decrease in borrowings is a direct result of deposit
growth. The Company anticipates both loan and deposit growth to continue into
2001, but at a rate less than 2000's.
Results of Operations
- -----------------------
With a $97.5 million or 23.1% growth in average earning assets for 2000 and
a corresponding $79.1 million or 22.3% growth in average interest bearing
liabilities, net interest income increased $3.7 million or 18.7%. The Company's
cost of funds increased 50 basis points to 4.23% for the year ended December 31,
2000, as compared to 1999. This
Page 22
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
resulted from the combined factors of an increasing interest rate environment
brought on by the Federal Reserve's Open Market Committee and increased
competitive pressure in the Company's market area, particularly Monroe County.
The yield on assets increased 31 basis points, resulting in a spread reduction
of 19 basis points. As noted in last year's report, management anticipated a
lowering of the interest rate spread and interest margin (which declined 17
basis points from 1999) due to the competitive Monroe County market. This trend
will likely continue through 2001 as most of the Company's new loans and
deposits are originated in the Monroe County area. Refer to Interest Rate
Sensitivity and Asset / Liability Management Review section for additional
discussion.
Other income for the year ended December 31, 2000, increased $1.7 million
or 22.9% over 1999. The increase was reflected in all major sources of
non-interest revenue. Service charges on deposit accounts rose 33.5%
attributable to increased transaction volume and changes in account fee
structures. Trust income grew 19.1%, year on year due, to the growth in assets
under management. The book value of assets under management increased 9.9% to
$645.1 million at year end 2000. The Company continues to see strong demand for
locally managed trust services in its market area.
To take advantage of the Company's expanded market presence, it opened its
Basin Park Financial Center. This state-of-the-art space is dedicated to trust,
investment and commercial services. This new office allows the Company to offer
more financial services, while providing a comfortable environment in which to
conduct business. Its location in Bushnell's Basin was chosen for its proximity
to the Company's Ontario County and growing number of Monroe County customers.
Other operating income increased overall, but mortgage banking income was
lower than 1999's as market rate increases lowered the demand for mortgage
refinancings. Loans originated for sale decreased 34.1% from 1999.
Operating expenses increased $4.1 million or 18.3% for the year ended
December 31, 1999. Increases came in all major expense categories and were
attributed to growth in the Company's operations, expansion in Monroe County,
and the charges discussed in the "Overview" section above. Based upon the
projected growth in banking offices in 2001, operating expenses are expected to
increase over 2000. Management continues to estimate that the Company's new
banking offices will break even after 24 to 36 months in operation.
The Company's effective tax rate decreased in 2000 to 25.8% from 27.5% in
1999. The primary factor leading to this decrease was the higher percentage of
tax-exempt income to taxable income. As discussed above, during 2000,
management began reducing holdings of tax-exempt securities due to this low
effective rate. Management anticipates the effective tax rate to increase in
2001 to at least 1999's level.
Liquidity
- ---------
The Board of Directors has set general liquidity standards for the Bank to
meet which can be summarized as: the ability to generate adequate amounts of
cash to meet the demand from depositors who wish to withdraw funds, borrowers
who require funds, and capital expansion. Liquidity is produced by cash flows
from operating, investing, and financing activities of the Company. For the
year ended December 31, 2000, the Company generated $1.4 million in net cash and
equivalents versus $2.6 million for the year ended December 31, 1999.
Net cash from operating activities was $3.2 million in 2000, a significant
decrease from that of 1999. Both the largest source and use of operating cash
in 2000 and 1999 were mortgage banking activity. However, activity in 2000 was
much less than 1999's. The overall decrease in operating cash generation is
attributable to lower mortgage banking activities and higher interest accruals
due to loan growth over the last two years.
Page 23
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Cash used by investing activities decreased substantially in 2000 to $70.0
million from $96.5 million in 1999. This decrease in investing activities was
primarily a result of lower loan growth than in 1999.
Cash provided by financing activities was $68.1 million in 2000 versus of
$90.5 million in 1999.
The Company has two primary sources of non-customer (wholesale) liquidity:
the Federal Home Loan Bank of New York (FHLB) and the Federal Reserve Bank of
New York. At December 31, 2000, residential mortgage loans with a carrying value
of approximately $18.1 million were pledged as collateral for the Bank's
advances from the Federal Home Loan Bank, and an additional $33.5 million was
available for pledging. Indirect automobile loans with a carrying value of
approximately $90.4 million were pledged as collateral for a $72.3 million line
of credit from the Federal Reserve Bank of New York.
Secondarily, the Company continues to use the liquidity source time deposit
sales in the national brokered market. This source will be used from time to
time to manage both liquidity and interest rate risk as conditions may require.
The balance of these so-called "brokered deposits" amounted to $32.0 million at
year-end 2000 versus $10.0 million at year end 1999.
For 2001, cash for growth is expected to come from both customer and
wholesale sources. Customer deposit growth is mainly expected to come from
Monroe County sources.
Interest Rate Sensitivity and Asset / Liability Management Review
- -------------------------------------------------------------------------
(Item 7a Quantitative and Qualitative Disclosures about Market Risk)
The Company realizes income principally from the differential or spread
between the interest earned on loans, investments and other interest-earnings
assets and the interest paid on deposits and borrowings. Loan volumes and
yields, as well as the volume of and rates on investments, deposits and
borrowings, are affected by market interest rates. Additionally, because of the
terms and conditions of many of the Company's loan documents and deposit
accounts, a change in interest rates could also affect the projected maturities
of the loan portfolio and/or the deposit base, which could alter the Company's
sensitivity to future changes in interest rates. Accordingly, management
considers interest rate risk to be the Company's most significant market risk.
Interest rate risk management focuses on maintaining consistent growth in
net interest income within Board approved policy limits while taking into
consideration, among other factors, the Company's overall credit, operating
income, operating cost, and capital profile. The Company's Asset/Liability
Committee (ALCO), which includes senior management and reports to the Board of
Directors, monitors and manages interest rate risk to maintain an acceptable
level of change to net interest income as a result of changes in interest rates.
Management of the Company's interest rate risk requires the selection of
appropriate techniques and instruments to be utilized after considering the
benefits, costs and risks associated with available alternatives. Since the
Company does not utilize derivative financial instruments, management's
techniques usually consider one or more of the following: (1) interest rates
offered on products, (2) maturity terms offered on products, (3) types of
products offered, and (4) products available to the Company in the wholesale
market such as advances from the FHLB and brokered CD's.
Page 24
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The Company uses an interest margin simulation model as one method to identify
and manage its interest rate risk profile. The model is based on expected cash
flows and repricing characteristics for all financial instruments and
incorporates market-based assumptions regarding the impact of changing interest
rates on these financial instruments over a twelve-month period. Assumptions
based on the historical behavior of deposit rates and balances in relation to
changes in interest rates are also incorporated into the model. These
assumptions are inherently uncertain and, as a result, the model cannot
precisely measure net interest income or precisely predict the impact of
fluctuations in interest rates on net interest income. Actual results will
differ from simulated results due to timing, magnitude, and frequency of
interest rate changes as well as changes in market conditions and management
strategies.
Using the aforementioned simulation model, net interest earnings
projections reflect a decrease when applying the falling interest rate
environment as of December 31, 2000 ("Base Case"). A net interest income
decrease is projected as management does not anticipate reducing deposit rates
as fast as asset yields will fall. The table below, which shows the Company's
estimated net interest earnings sensitivity profile as of December 31, 2000,
assumes no changes in the operating environment, but assumes interest rates
increase/decrease immediately (rate shock) and remains unchanged thereafter. The
table indicates the estimated impact on net interest income under the various
interest rate scenarios as a percentage of Base Case earnings projections.
Changes in Interest Estimated
Rates Percentage Change in
(basis points) Future Net Interest Income
12 Months
Base Case --
+200 2%
+100 1
- -100 (2)
- -200 (5)
A second method used to identify and manage the Company's interest rate
risk profile is the static gap analysis. Interest sensitivity gap ("gap")
analysis measures the difference between the assets and liabilities repricing or
maturing within specific time periods. An asset-sensitive position indicates
that there are more rate-sensitive assets than rate-sensitive liabilities
repricing or maturing within specific time horizons, which would generally imply
a favorable impact on net interest income in periods of rising interest rates
and a negative impact in periods of falling rates. A liability-sensitive
position would generally imply a negative impact on net interest income in
periods of rising rates and a positive impact in periods of falling rates.
The following table presents an analysis of the Company's interest
rate-sensitivity gap position at December 31, 2000. All interest-earning assets
and interest-bearing liabilities are shown based on the earlier of their
contractual maturity or repricing date with no adjustment for estimated
prepayment and decay rates. It should be noted that the interest rate
sensitivity levels shown in the table could be changed by external factors such
as loan prepayments and liability decay (withdrawal) rates or by factors
controllable by the Company such as asset sales.
Page 25
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Canandaigua National Corporation
Interest Rate Sensitivity Gap
December 31, 2000
(Dollars in thousands)
Maturity/Repricing Period
---------------------------
Within 3 4 to 12 1 to 5 Over 5
Months Months Years Years
---------- -------- --------- --------
Interest-earning assets:
Interest-bearing deposits
and federal funds sold $ 97 -- -- --
Securities 19,892 14,919 37,941 11,993
Loans 117,193 50,692 257,657 34,429
------------ --------- -------- -------
Total interest-earnings assets 137,182 65,611 295,598 46,422
------------ --------- -------- -------
Interest-bearing liabilities:
NOW accounts 53,665 -- -- --
Money market 55,275 -- -- --
Savings 107,700 -- -- --
Time deposits 138,434 54,937 36,301 --
Borrowings 11,518 18 144 964
------------ --------- -------- -------
Total interest-bearing
liabilities 366,592 54,955 36,445 964
------------ --------- -------- -------
Interest rate sensitivity gap $ (229,410) 10,656 259,153 45,458
============ ========= ======== =======
Cumulative gap $ (229,410) (218,754) 40,399 85,857
============ ========= ======== =======
Cumulative gap ratio(1) 37.4% 48.1% 108.8% 118.7%
============ ========= ======== =======
Cumulative gap as percent of
Total assets (38.6%) (36.8%) 6.8% 14.4%
============ ========= ======== =======
(1)Cumulative total interest-earning assets divided by cumulative total interest-bearing
liabilities.
The chart indicates that the Company was repricing $229.4 million more of
interest-bearing liabilities than interest-earning assets in the 0-3 month
range. The Company considers this gap manageable, as a good portion of the
savings balances are not considered sensitive to rate changes. However, the
Company will be challenged to maintain its interest margins in 2001 even as
market rates decline, because of local competitive pricing pressure. For the
4-12 month period, the Company is asset sensitive, as $10.7 million more of
interest-earning assets are being repriced than interest-bearing liabilities.
For the entire one year range, the Company is repricing $218.8 million more
interest bearing liabilities than assets, and is within Company gap ratio
targets of 30% to 125%. Management's efforts to reduce the volume and percent
of interest rate sensitivity is showing some success. The Company is asset
sensitive at $259.2 million for the one-to-five-year range and $45.6 million
over five years.
For the entire portfolio range, the Company is asset sensitive at $85.9
million versus asset sensitivity of $76.1 million last year reflecting a modest
growth in non-interest- bearing demand accounts. The Company's product mix is
such that nearly all assets and liabilities reprice or mature within five years
of origination, with most at three years. With such a balance sheet profile,
the Company faces interest rate risk over the short-term, but the value of its
equity (assets less liabilities) remains relatively stable.
Page 26
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Interest rates for 2001 are forecasted to continue to fall during the first
half of the year as the Federal Reserve balances economic contraction against
inflation fears. Rate movements in the second half of the year are less
predictable.
Capital Resources
The Company and Bank are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory - and possibly additional
discretionary - actions by regulators that, if undertaken, could have a direct
material effect on the Company's and Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Company and Bank must meet specific capital guidelines that involve
quantitative measures of the Company's and Bank's assets, liabilities, and
certain off-balance-sheet items calculated under regulatory accounting
practices. The Company's and Bank's capital amounts and classifications are also
subject to qualitative judgments by regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and Bank to maintain minimum amounts and ratios. As
disclosed in Note 16 to the Consolidated Financial Statements, as of December
31, 2000, all capital adequacy requirements were met.
As of December 31, 2000, the most recent notification from the Office of
the Comptroller of the Currency categorized the Bank as well-capitalized under
the regulatory framework for prompt corrective action. To be categorized as
well-capitalized, the Bank must maintain a minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the aforementioned
footnote. The Bank's asset growth in 2001 is anticipated to exceed its capital
formation, which will result in declining capital ratios. It is possible the
Bank's capital level will be classified as "adequate" under the regulatory
framework rather than "well" by year end 2001. Management will continue to
closely monitor capital levels at the Bank.
Dividends
Payment of dividends by the Bank to the Company is limited or restricted in
certain circumstances. According to federal banking law, the approval of the
Office of the Comptroller of the Currency (OCC) is required for the declaration
of dividends in any year in which dividends exceed the total of net income for
that year plus retained income for the preceding two years. At December 31,
2000, $1.4 million was available for payment by the Bank to the Company without
the approval of the OCC.
Cash dividends for 2000 were $1.9 million or $11.90 per outstanding share
versus $1.8 million or $11.50 per outstanding share in 1999.
1999 versus 1998
The Company accelerated its expansion in the Rochester metropolitan area in
1999. During that year the Company opened banking offices in Greece, Chili, and
Honeoye Falls. The 1999 result of this expansion was remarkable for the
Company: 22.0% growth in assets, 27.8% growth in loans, 20.7% growth in
deposits, and $3.0 million investment in premises and equipment for these new
offices. But this investment and rapid and planned growth expectedly impacted
1999's financial results with diluted earnings per share of $14.78 versus $22.38
in 1998.
Page 27
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
At December 31, 1999, the Company's assets reached $522.1 million. Total
assets increased $94.1 million or 22.0% for the year. Net loans increased $85.7
million or 27.8% while securities increased $2.9 million or 4.0%. Deposits
increased $ 77.8 million or 20.7% and borrowings (from the FHLB) increased $15.1
million or 212.7%. Funds generated through deposit inflows and borrowings were
used for loan originations and other asset growth.
Net income for the year ended December 31, 1999, was $2.4 million, down
$1.2 million or 33.3% from 1998. Basic earnings per share decreased by $7.60 or
34.0% over the same period. The decrease in net income for 1999 was a result of
expenses related to the aforementioned increase in banking offices.
The quality of the Company's assets improved throughout 1999 with
non-performing loans at December 31, 1999, at less than 1.0% of total loans.
The allowance for loan losses stood at 235.7% of non-performing loans at
year-end 1999 versus 131.6% at December 31, 1998. However, even with the
improvement in non-performing loans, the provision for loan loss doubled from
1998 to $1.2 million to account for the Company's loan growth. Other real
estate owned was unchanged from 1998 at $1.6 million.
Financial Condition
- --------------------
As of December 31, 1999, total assets of the Company were $522.1 million,
up from $428.0 million at year end 1998. Cash and equivalents increased $2.6
million to $26.8 million in connection with the growth in customer deposits and
a buildup of cash reserves for the year 2000 date changeover.
Securities showed an increase of $2.9 million to $75.9 million. The
Company's securities, with the exception of a minor amount of equity securities,
were held to maturity. The portfolio was comprised mainly of US Treasuries and
Agencies and tax-exempt obligations of state and local subdivisions. Nearly all
of the portfolio was pledged to federal agencies and for municipal deposits.
These deposits, in turn, were used to purchase securities of local
municipalities. Other securities consisted mainly of high-grade corporate
bonds. As these bonds matured in 1999, they were replaced with tax-exempt
municipal obligations.
Net loans increased $85.7 million to $394.2 million. The growth in loans
came mostly in the last three quarters of the year, corresponding with the
Company's Monroe County expansion. Nearly 90% of 1999's loan growth came from
commercial loans, which was consistent with projected results. All other assets
rose $2.8 million, most of which was in premises and equipment for expansion.
Total non-performing loans decreased over the twelve-month period ended
December 31, 1999, by $0.7 million to $1.8 million at year-end 1999 as compared
to $2.5 million at year-end 1998. Commercial loans and residential real estate
loans showed a decrease, while one $0.8 million commercial mortgage accounted
for the increase in commercial real estate. Management attributed the overall
decrease to a combination of strict underwriting procedures, strong collection
efforts and a relatively stable economic cycle in the Company's market.
The allowance for loan losses stood at $4.1 million at December 31, 1999,
up $0.8 million from December 31, 1998. 1999's year-end balance represented
1.04% of total loans versus 1.05% for 1998. The increase in the allowance
balance for 1999 mirrored the overall increase in the loan portfolio. Net
charge-offs for the year remained favorable at 0.11% of average loans versus
0.17% in 1998.
Other real estate owned consisted of three parcels, all commercial, for
$1.6 million. While the balance in the account remained the same, this compared
favorably to seven parcels in 1998. The Company had been successful in
liquidating its foreclosed properties.
Page 28
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
In 1999 the Company added approximately $4.0 million in fixed assets with
approximately $3.0 million coming for the new bank offices and the remainder
being other building improvements, furniture, equipment and software.
Total deposits at December 31, 1999, were $454.3 million and were up $77.8
million from December 31, 1998. For the same period borrowings from the FHLB
were up $15.1 million to $22.2 million. Other liabilities increased by $1.2
million to $3.2 million. Deposit growth since December 31, 1998, came mainly in
interest-bearing accounts: savings and money market up $46.8 million and time
deposits up $31.1 million. Demand deposit accounts remained unchanged in total,
but there was some shift from interest bearing to non-interest bearing accounts.
Overall, the deposit growth was attributable to expansion in Monroe County. The
Company's Ontario County retail deposits grew approximately 3.6%, while Monroe
County deposits grew 178.9% from 1998. The increase in borrowings was a direct
result of loan demand outpacing deposit growth.
Results of Operations
- -----------------------
With a $41.1 million or 10.8% growth in earning assets for 1999 and a
corresponding $44.0 million or 14.2% growth in interest bearing liabilities, net
interest income increased $1.2 million or 6.5% and was reflective of the decline
in yields on the assets due to a lower interest rate environment than in 1998.
The Company's cost of funds decreased 27 basis points to 3.73% for the year
ended December 31, 1999, as compared to 1998. However, the yield on assets
decreased 32 basis points, resulting in a spread reduction of 5 basis points.
Management anticipated a lowering of the interest rate spread and interest
margin (which declined 19 basis points from 1998) due to the competitive Monroe
County market.
Other income for the year ended December 31, 1999, increased $1.4 million
or 23.7% over 1998. The increase was reflected in all major sources of
non-interest revenue. Service charges on accounts rose 40.8% attributed to
increased transaction volume, changes in account fee structures, and an increase
in April of ATM convenience fee for non-Canandaigua National Bank and Trust
Company customers to offset the increased cost of operating these machines.
Trust income grew 27.3% year on year due to the growth in assets under
management. The book value of assets under management increased 38.5% to $586.8
million at year end 1999. The Company continued to see strong demand for
locally managed trust services in its market area.
Operating expenses increased $4.0 million or 21.7% for the year ended
December 31, 1999. Increases came in all major expense categories and were
attributed to growth in the Company's operations and expansion in Monroe County.
New Accounting Pronouncements
- -------------------------------
In September 2000 the Financial Accounting Standards Board issued Statement
No. 140 "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." This statement replaces Statement No. 125 and
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures. The adoption
of the standard had no impact on the Company's financial condition or results of
operations.
The Company also implemented the provisions of FASB Statement No. 133
"Accounting for Derivative Instruments and Hedging Activities", as amended, on
January 1, 2001. This Statement establishes comprehensive accounting and
reporting requirements for derivative instruments and hedging activities. The
Company held no freestanding derivative instruments at year-end; therefore, the
adoption of the new standard did not have a material effect on its financial
condition or results of operations.
Page 29
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements of the Company, together with a
report thereon of KPMG LLP dated February 2, 2001, appearing on pages 7 to 31 of
the 2000 Annual Report to Stockholders are incorporated herein by reference. A
reference index to the consolidated financial statements and accompanying notes
presented in the Annual Report to Stockholders is shown in Item 14 of this
filing.
Supplementary data: Selected Quarterly Financial Data
The following tables present selected quarterly financial data for the
Company for each of the quarters in the years ended December 31, 2000 and 1999.
The sum of each quarters' earnings per share data might differ from the full
year's results due to rounding. (in thousands except share data)
1st 2nd 3rd 4th
------ ------ ------ ------
2000 QUARTERS:
Net interest income $5,322 $5,771 $6,081 $6,101
Provision for loan losses 250 308 270 200
Non-interest income 1,862 2,141 2,304 2,635
Non-interest expense 6,092 6,272 6,354 7,769
Income taxes 230 260 347 378
------ ------ ------ ------
Net income $ 612 $1,072 $1,414 $ 389
====== ====== ====== ======
Basic earnings per share $ 3.86 $ 6.76 $ 8.92 $ 2.45
Diluted earnings per share $ 3.84 $ 6.72 $ 8.87 $ 2.44
1st 2nd 3rd 4th
------ ------ ------ ------
1999 QUARTERS:
Net interest income $4,429 $4,643 $5,289 $5,240
Provision for loan losses 50 446 330 413
Non-interest income 1,619 1,854 1,585 2,216
Non-interest expense 5,142 5,548 5,653 6,040
Income taxes 275 159 287 175
------ ------ ------ ------
Net income $ 581 $ 344 $ 604 $ 828
====== ====== ====== ======
Basic earnings per share $ 3.64 $ 2.16 $ 3.80 $ 5.22
Diluted earnings per share $ 3.64 $ 2.15 $ 3.79 $ 5.20
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors
The information with respect to the directors of the Company, which is
required to be included herein pursuant to Item 401 of Regulation S-K, is
included under the caption "Election of Directors" on the Proxy Statement, dated
February 26, 2001, and is incorporated herein from the Proxy Statement by
reference. There are no arrangements or understandings between any director and
any other person pursuant to which the director was selected.
Page 30
(b) Executive Officers
The names, ages and positions of the executive officers of the Company as
of December 31, 2000, are included under the caption "Principal Officers" on the
Proxy Statement, dated February 26, 2001, and is incorporated herein from the
Proxy Statement by reference. Officers are generally elected annually by the
Board of Directors at the meeting of directors immediately following the annual
meeting of stockholders. There are no arrangements or understandings between the
executive officers and any other person pursuant to which the executive officers
were selected.
The executive officers of the Company have been officers of the Bank for
five years or more.
Directors and the executive officers as a group beneficially owned 13,644
shares or 8.60% of the shares outstanding. Shares owned directly total 11,730
and shares held by directors, executive officers, or their spouses in a
fiduciary capacity or by their spouses individually total 1,914.
(c) Significant Employees
Not applicable
(d) Family Relationship
The disclosure of family relationships between executive officers and
directors of the Company is included under the caption "Information on Directors
and Nominees " on the Proxy Statement, dated February 26, 2001, and is
incorporated herein from the Proxy Statement by reference.
(e) Business Experience
Disclosed in Items 10 (a) and 10 (b)
(f) Involvement in Certain Legal Proceedings
Not applicable
(g) Promoters and Controlled Persons
Not applicable
Item 11. Executive Compensation
The information required to be included herein regarding executive
compensation pursuant to Item 402 of Regulation S-K is included under the
caption "Executive Compensation" on the Proxy Statement, dated February 26,
2001, and is incorporated herein from the Proxy Statement by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required to be included herein regarding security ownership
and certain beneficial owners and management pursuant to Items 403 (a) and (b)
of Regulation S-K is included under the caption "Principal Beneficial Owners of
Common Stock" in the Proxy Statement, dated February 26, 2001, and is
incorporated herein from the Proxy Statement by reference.
Page 31
(c) Changes in Control
None
Item 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
None
(b) Certain Business Relationships
None
(c) Indebtedness of Management
Certain directors and executive officers of the Company and the Bank and
their associates were customers of and had transactions with the Bank in the
ordinary course of the Bank's business during 2000. All outstanding loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others, and in the opinion of the Bank and
Company, did not involve more than a normal risk of collectibility or present
other unfavorable features.
(d) Transactions with Promoters
Not applicable
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
(1) Consolidated Financial Statements are contained in the Company's 2000
Annual Report to Shareholders which, as indicated below, is included as Exhibit
13 of this report.
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 2000 and 1999
Consolidated Statements of Income for the Years Ended December 31, 2000,
1999 and 1998
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2000, 1999, and 1998
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999, and 1998
Notes to Consolidated Financial Statements
(2) Schedules
Schedules are omitted because of the absence of conditions under which they
are required or because the required information is provided in the consolidated
financial statements or notes thereto.
Page 32
(3.a) Exhibits
Exhibit Incorporation by Reference or page in
sequential numbering where exhibit may be
found:
(3.i.) Certificate of Incorporation, of the Exhibit A on Form 10-K
Registrant, as amended for the year ended December
31, 1994
(3.ii.) By-laws of the Registrant, Exhibits B on Form 10-K
as amended for the year ended
December 31, 1994
(13) Annual Report to Shareholders for
the year ended December 31, 2000 Page 35
(20) Definitive Proxy Statement to
Shareholders dated February 26, 2001 Page 71
(21) Subsidiaries Page 84
(27) Financial Data Schedule Page 85
(b) Reports on Form 8-K:
None
Page 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CANANDAIGUA NATIONAL CORPORATION
March 30, 2001 By: /s/ George W. Hamlin, IV
George W. Hamlin, IV, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Signature Title Date
- --------------------------- ------------------ --------------
/s/ George W. Hamlin, IV President/Director March 30, 2001
- ---------------------------
(George W. Hamlin, IV)
/s/ Robert G. Sheridan Secretary/Director March 30, 2001
- ---------------------------
(Robert G. Sheridan)
/s/ Gregory S. MacKay Treasurer March 30, 2001
- ---------------------------
(Gregory S. MacKay)
/s/ Patricia A. Boland Director March 30, 2001
- ---------------------------
Patricia A. Boland
/s/ James S. Fralick Director March 30, 2001
- ---------------------------
James S. Fralick
/s/ Daniel P. Fuller Director March 30, 2001
- ---------------------------
Daniel P. Fuller
/s/ David Hamlin, Jr. Director March 30, 2001
- ---------------------------
David Hamlin, Jr.
/s/ Frank H. Hamlin, Director March 30, 2001
- ---------------------------
Frank H. Hamlin
/s/ Stephen D. Hamlin Director March 30, 2001
- ---------------------------
Stephen D. Hamlin
/s/ Richard P. Miller, Jr. Director March 30, 2001
- ---------------------------
Richard P. Miller, Jr.
/s/ Caroline C. Shipley Director March 30, 2001
- ---------------------------
Caroline C. Shipley
/s/ Sue S. Stewart Director March 30, 2001
- ---------------------------
Sue S. Stewart
/s/ Alan J. Stone Director March 30, 2001
- ---------------------------
Alan J. Stone
Page 34
INDEX OF EXHIBITS
Exhibit
(3.i.) Certificate of Incorporation, of the Exhibit A on Form 10-K
Registrant, as amended for the year ended
December
31, 1994
(3.ii.) By-laws of the Registrant, Exhibits B on Form 10-K
as amended for the year ended
December 31, 1994
(13) Annual Report to Shareholders for
the year ended December 31, 2000
(20) Definitive Proxy Statement to
Shareholders dated February 26, 2001
(21) Subsidiaries
(27) Financial Data Schedule
Page 35