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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or Section 15(D) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
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)
(716) 394-4260
(Registrant's telephone number, including area code)
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
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 [ ]
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(#229.405) is contained in registrant's definitive proxy statement incorporated
herein by reference in Part III of this Form 10-K.
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of January 31, 1997.
Common Stock, $50.00 par value - described on page 9 of 1996 Annual
Report and incorporated herein by reference.
Number of shares outstanding of the Registrant's shares of common stock
as of January 31, 1996. 161,658 shares, common stock, $50.00 par value
Certain portions of the documents listed below have been incorporated by
reference into the indicated Part of this Form 10-K.
(1) Portions of the Annual Report to Stockholders
for the year ended December 31, 1996 Part I, Item 2
(2) Notice of Annual Meeting of Stockholders Part II, Items 5 & 8
and Proxy Statement dated February 26, 1997 Part III, Items 10-13
(3) Index of Exhibits Part II, Item 5
Page 31
CANANDAIGUA NATIONAL CORPORATION
FORM 10-K
INDEX
Page Number
PART I.
Item 1. Business 4-18
Item 2. Properties 19
Item 3. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of
Security Holders 19
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 Operation 21-26
Item 8. Financial Statements and Supplementary Data 26
Item 9. Changes in Disagreements with Accountants on Accounting
and Financial Disclosure 26
PART III.
Item 10. Directors and Executive Officers of
the Registrant 27, 28
Item 11. Executive Compensation 28-30
Item 12. Security Ownership of Certain
Beneficial Owners and Management 30
Item 13. Certain Relationships and Related Transactions 31
PART IV.
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K 32
Signatures 33, 34
PART I
Item 1. Business
Canandaigua National Corporation
The Canandaigua National Corporation, referred to as The Corporation, 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 Corporation
acquired Greater Funding of New York, Inc. (GFNYI) d/b/a Greater Funding, the
Mortgage Company during 1996 BY purchasing its remaining 66.3% shares not owned
by the Company. GFNYI offers mortgage products that the bank is not licensed
to offer, therefore offering their customer base a larger range of products.
GFNYI is engaged in underwriting and funding mortgages in western New York
State. GFNYI typically resells residential mortgages to entities, which
service the loans. The Bank will remain the principal source of the
Corporation'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, Bank has operated as a national banking association doing
business at several locations in Ontario County and at its Branch locations in
the town of Mendon and Village of Pittsford in Monroe County, New York.
As of December 31, 1996, Bank had total assets of approximately
$360,623,000; total stockholders' equity of approximately $39,119,000; and
total deposits of approximately $307,966,000. Its deposits are insured through
the Bank Insurance Fund by the Federal Deposit Insurance Corporation.
Bank engages in a full service commercial and consumer banking and trust
business. Bank, with its main office at 72 South Main Street, Canandaigua, New
York, provides services to its customers through its network of ten branches
which include drive-in facilities and customer Bank communication terminals.
Bank's full service offices are located in Ontario County and in the town of
Mendon and Village of Pittsford in Monroe County, New York.
Bank's services include accepting time, demand and savings deposits, NOW
accounts, regular savings accounts, money market certificates, investment
certificates, fixed rate certificates of deposit and club accounts. Its
services also include making secured and unsecured commercial and consumer
loans, financing commercial transactions either directly or through regional
industrial development corporations, making construction and mortgage loans
and the renting of safe deposit facilities. Additional services include
making residential mortgage loans, revolving credit loans with overdraft
checking protection, small business loans, and student loans. Bank's
business loans include seasonal, credit, collateral, and term loans. Trust
services provided by Bank include services as executor and trustee under
Item 1. Business
The Canandaigua National Bank and Trust Company - continued
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. In 1995 the Bank formed a subsidiary (CNB
Operating Subsidiary No.1, Inc.). The primary business of this company is to
sell life insurance to individuals. This company is an agency only. During
1996 the Bank purchased the Burlingham Agency, Inc. The primary business of
this company is to sell life insurance to individuals. This company is an
agency only. The Bank purchased Burlingham Agency to gain access to an already
established business with a customer base. By this purchase the Bank can offer
a full line of products.
Bank has a relatively stable deposit base and no material amount of
deposits are obtained from a single depositor or group of depositors (including
federal, state and local governments). Bank has not experienced any
significant seasonal fluctuations in the amount of its deposits nor does Bank
rely on foreign sources of funds or income.
Territory Served and Competition
All phases of Bank's business are highly competitive. Bank's market area
is generally Ontario County, with concentration in the Canandaigua, New York
area. Bank competes with local commercial banks as well as other commercial
banks with branches in Bank's market area as well as federal savings and loan
associations and non-bank banks and credit unions. Bank considers its
competition to be Chase Manhattan Bank, N.A., Key Bank, National Bank of
Geneva, Community Bank, N.A., and WCTA Federal Credit Union located in
Canandaigua, New York and Sears Financial Network Center and Fleet Bank,
located in Rochester, New York.
Bank, along with other commercial banks, competes with respect to its
lending activities as well as in attracting demand deposits, with savings
banks, savings and loan associations, insurance companies, regulated small loan
companies, non-bank banks and credit unions. Bank also competes with
insurance companies, investment counseling firms, mutual funds and other
business firms and individuals in corporate trust and investment management
services.
Bank is generally competitive with all financial institutions in its
service area with respect to interest rates paid on time and savings deposits
and interest rates charged on loans and service charges on deposit accounts.
Bank employed 204 people as of December 31, 1996.
Supervision and Regulation
Canandaigua National Corporation is incorporated under the laws of the
State of New York and is directly supervised by the Federal Reserve Bank under
the laws governing one-bank holding companies. In addition, the Corporation
reports to the Securities and Exchange Commission under the laws governing
corporations with registered securities.
As a national bank and member of the Federal Reserve System, the Bank is
subject to regulations of the Comptroller of the Currency and the Board of
Governors of the Federal Reserve System. As an insured bank under the Federal
Deposit Insurance Act, Bank is also regulated by the Federal Deposit Insurance
Corporation. Representatives of the Comptroller of the Currency regularly
conduct examinations of Bank's affairs and records, and Bank must furnish
quarterly reports to the Comptroller.
Government Monetary Policies and Economic Controls
The earnings of 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 Bank's deposits, loans
and investment growth, as well as the rate of interest earned and paid, and are
expected to affect Bank's operations in the future. The effect of such
policies and regulations, if any, upon the future business and earnings of Bank
cannot accurately be predicted.
Consolidated Financial and Statistical Data
A detailed review of the business activities of the Corporation and Bank
is presented in the following pages.
I. Distribution of Assets, Liabilities and Stockholders' Equity;
Interest Rates and Interest Differential
A. Average Balance Sheet (In Thousands)
Average Assets 1996 1995 1994
Cash & Due from Banks $ 15,059 $ 13,392 $ 14,178
Securities:
U.S. Government Securities 32,180 32,479 28,438
Obligations of States and
Political Subdivisions: Tax Exempt 28,370 28,349 30,402
Taxable 912 1,131 899
Other 11,386 12,706 13,703
Federal Funds Sold 7,184 12,023 14,689
Loans 227,781 209,280 202,622
Allowance for Loan Losses (2,388) (2,213) (2,213)
Premises & Equipment - net 8,764 8,269 8,087
Other Assets 5,411 5,354 4,507
________ ________ _______
Total $334,659 $320,770 315,312
Average Liabilities & Stockholders' Equity
Deposits:
Interest Bearing Demand $ 33,695 $ 32,989 $ 37,913
Non-interest Bearing Demand 50,801 46,967 44,566
Savings 112,494 118,300 137,669
Other Time 96,965 84,746 61,151
_______ _______ _______
Total 293,955 283,002 281,299
Short-term Borrowings and
Securities Sold Under Agreements
to Repurchase 651 0 8
Borrowing from FHLB 1,001 1,304 0
Other Liabilities 1,218 477 970
_____ _______ _______
Total Liabilities 296,825 284,783 282,277
Stockholders' Equity 37,834 35,987 33,035
________ ________ ________
Total $334,659 $320,770 $315,312
B. Average Rates and Yields (Dollars In Thousands)
1996 1995
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INT. RATE BALANCE INT. RATE
Interest Earning Assets:
U.S. Gov't. Securities 32,180 1,968 6.12% $ 32,479 $ 1,865 5.74%
Obligations of States
& Political
Subdivisions-Tax Exempt 28,370 1,332 4.70% 28,349 1,395 4.92%
Taxable 912 58 6.36% 1,131 64 5.66%
Federal Funds Sold 7,184 389 5.42% 12,023 697 5.80%
Loans (1)(2) 227,781 21,046 9.24% 209,280 19,998 9.56%
Other Securities 11,386 712 6.25% 12,023 812 6.75%
_______ ______ _______ ______
Total Interest
Earning Assets $307,813 $25,505 8.29% $295,285 $24,831 8.41%
_______ ______ ____ _______ ______ ____
Interest Bearing Liabilities:
Demand Deposits 33,695 $ 457 1.36% $ 32,989 $ 601 1.82%
Savings 112,494 3,075 2.73% 118,300 3,570 3.02%
Other Time 96,965 5,203 5.37% 84,746 4,614 5.44%
Short-term Borrowings and
Securities Sold Under
Agreements to
Repurchase 0 0 0% 0 0 0%
Borrowing from FHLB 1,001 25 2.50% 477 11 2.31%
Fed Funds Purchased 651 37 5.68%
_______ ______ ____ _______ _____
Total Interest
Bearing Liabilities $244,806 $8,797 3.59% $236,512 $8,796 3.72%
_______ ______ ____ _______ ______ ____
Net Interest Income $16,708 $16,035
______ ______
Net Yield 4.70% 4.69%
____ ____
Net Interest Income
to Earning Assets 5.43% 5.43%
____ ____
(1) Non-accrual loans are included in the average loan balance.
(2) Loan interest includes fees on loans of $753,171, $610,946, and $758,214
in 1996, 1995, and 1994 respectively.
(3) Yields for securities were calculated based on amortized cost of securities.
Average Rates and Yields-continued (Dollars in Thousands)
1994
AVERAGE
AVERAGE YIELD/
BALANCE INT. RATE
Interest Earning Assets:
U.S. Gov't. Securities $ 28,438 $ 1,378 4.85%
Obligations of States
& Political
Subdivisions-Tax Exempt 30,402 1,376 4.53%
Taxable 899 55 6.12%
Federal Funds Sold 14,689 558 3.80%
Loans (1)(2) 202,622 17,654 8.71%
Other Securities 13,703 868 6.33%
_______ ______
Total Interest
Earning Assets $290,753 $21,889 7.53%
_______ ______ ____
Interest Bearing Liabilities:
Demand Deposits $ 37,913 $ 724 1.91%
Savings 137,669 3,568 2.59%
Other Time 61,151 2,837 4.64%
Short-term Borrowings and
Securities Sold Under
Agreements to
Repurchase 8 0 0%
Borrowing from FHLB 0 0 0%
_______ ______
Total Interest Bearing Liabilities $236,741 $ 7,129 3.01%
_______ ______ ____
Net Interest Income $14,760
______
Net Yield 4.52%
____
Net Interest Income to Earning Assets 5.08%
____
C. Rate/Volume Analysis (Dollars In Thousands)
1996 vs 1995 1995 vs 1994
Increase (Decrease) Average Average Average Average Average Average
Due to Change In: Volume Rate Total Volume Rate Total
Interest Income:
Loans $1,725 $ (677) $ 1,048 $ 580 1,764 2,344
Federal Funds Sold (265) (43) (308) (101) 240 139
Investment Securities:
U.S. Gov't Securities (17) 120 103 196 291 487
Obligations of State
and Political
Subdivision-Exempt 1 (64) (63) (93) 112 19
-Taxable (13) 7 (6) 14 (5) 9
Other (42) (58) (100) (106) 50 (56)
______ _______ _______ _____ ____ ____
Total Interest
Income 1,389 (715) 674 490 2,452 2,942
Interest Expense:
Deposits:
Interest Bearing
Demand 13 (157) (144) (94) (29) (123)
Savings (170) (325) (495) (502) 504 2
Other Time 657 (68) 589 1,094 683 1,777
Borrowing from FHLB 13 1 14 0 11 11
Federal Funds Purchased 37 0 37
_____ ____ _____ ____ ____ ____
Total Interest
Expense 550 (549) 1 (498) 1,169 1,667
_____ _____ _____ ___ ___ ___
Net Interest Income $ 839 $ (166) $ 673 $ 428 $1,283 $1,275
Note: 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 relationship of the absolute
dollar amounts of the change in each.
I. Securities Portfolio
A. Securities Portfolio, (at carrying value) including FHLB and FRB stock
(Dollars In Thousands)
------December 31--------
1996 1995 1994
U.S. Government Obligations and Agencies $30,671 $31,955 $27,972
Mortgage backed Securities 325 310 283
Obligations of States and Political
Subdivisions: Exempt 29,365 26,321 29,921
Taxable 955 839 904
Other Securities 10,455 12,495 13,514
_______ _______ _______
Total $71,771 $71,920 $72,594
Securities Portfolio, including FHLB and FRB stock by Maturity with Weighted
Average Yield (Dollars In Thousands)
December 31, 1996
Within One Through Six Through Over
One Year Five Years Ten Years Ten Years
Amount Yield Amount Yield Amount Yield Amount Yield
U.S. Treasury
Obligations $18,921 6.09% $11,750 6.06% 0 0
Mortgage backed
Securities 9 8.45% 34 8.37% 44 8.21% 238 8.0%
US Gov't Agencies
Obligations of State
and Political
Subdivisions
Taxable: 0 0.00% 955 6.24% 0 0.00% 0
Exempt: 7,549 4.53% 14,686 4.48% 6,449 4.56% 681 4.98%
Other Securities 3,400 6.47% 4,966 6.45% 0 0.00% 2,089 %
_______ _______ ______ ______
Total $29,879 $32,391 $6,493 $3,008
Note: (a) Securities with no stated maturity are included in the "Over Ten
Years" category.
(b) Yield on "States and Political Subdivisions" (non-taxable
investments) are not reflected on a tax equivalent basis.
III. Loan Portfolio
The loan portfolio is comprised solely of domestic loans which are widely
diversified with no concentrations in an industry group or with borrowers
engaged in similar activities. The following summary shows the
classifications of loans by category.
A. Types of Loans
December 31,
1996 1995 1994 1993 1992
(Dollars In Thousands)
Commercial, financial
and agricultural $ 27,503 28,326 32,442 30,367 27,672
Consumer
Auto 44,784 15,123 12,379 10,796 9,272
Other 9,925 9,146 14,511 12,501 13,290
Residential mortgage 101,349 86,641 83,018 78,315 86,094
Commercial mortgage 62,513 62,038 60,278 59,036 55,100
Other 11,437 8,770 8,121 7,288 3,523
________ ________ ________ ________ ________
Total 257,511 210,044 210,749 198,303 194,951
Less: Allowance for
loan losses 2,675 2,258 2,202 2,277 2,152
________ _______ _______ _______ _______
Loans, Net $254,836 207,786 208,547 196,026 192,799
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 and
installment loans as of December 31, 1996.
Remaining Maturity
Within One Through Over
One Year Five Years Five Years Total
(Dollars In Thousands)
Commercial, financial
and agricultural $10,268 $ 7,926 $9,309 $27,503
Loans maturing after one year:
With a predetermined interest
rate $ 8,729
With a floating or adjustable rate $ 8,506
The maturities set forth above are based upon contracted maturities. Demand
loans, overdrafts and certain time loans, the principal of which will be
renewed in whole or in part, are included in the "Within One Year"
classification. The loan policy encourages a repayment schedule to be set
up whenever possible.
B. Maturities and Sensitivities of Loans to Changes
In Interest Rates - continued
Bank 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.
The Bank 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 Bank extends lines of credit under which a customer may borrow for
various purposes such as letters of credit. 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, 1996, there are no material
commitments to extend credit which represent unusual risks.
C. Risk Elements
(1) Non-accrual, Past Due and Restructured Loans
The risk elements in the loan portfolio are disclosed in the following
schedule.
December 31,
Non-Performing Assets 1996 1995 1994 1993 1992
(Dollars In Thousands)
Commercial, financial &
agricultural $ 2,285 $ 1,640 $2,350 $1,151 $2,959
Real-estate 8,919 9,307 8,912 4,866 1,569
Consumer loans 75 0 0 0 0
______ ______ _____ _____ _____
Total non-performing loans 11,279 10,947 11,262 6,017 4,528
Other real estate owned 1,141 2,158 723 721 326
_______ _______ ______ ______ ______
Total non-performing assets $12,420 $13,105 $11,985 $6,738 $4,854
Non-performing loans to year
end loans 4.38% 5.21% 5.35% 3.03% 2.32%
Non-performing assets to year end
loans & other real estate owned 4.80% 6.24% 5.68% 3.40% 2.54%
Item III. C. (continued)
Past Due 90 Days or More
and accruing 1996 1995 1994 1993 1992
.
Commercial, financial &
agricultural $ 0 $ 12 $ 4 $ 381 $ 721
Real estate 48 101 254 889 533
Consumer 28 55 44 69 77
____ ____ ______ ______ ______
Total past due 90 days
or more and accruing $ 76 $168 $ 302 $1,339 $1,331
1996 1995 1994 1993 1992
Restructured Loans $0 $0 $0 $393 $393
The accrual of interest on commercial and real estate loans is
discontinued 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 principal and interest collectible. Installment loans are generally
charged off upon becoming 120 days past due.
Additional gross income of $841,000, $739,000, and $496,000 would have
been reported during 1996, 1995, and 1994, respectively, if the loans reported
above as non-accrual and restructured loans had been current in accordance with
the original terms.
(2) Potential Problem Loans
Loans which are not disclosed pursuant to Item III C. (1), but where known
information about credit problems of borrowers causes Management to have
serious doubts as to the ability of such borrowers to comply with present
loan repayment terms which may result in disclosure in Item III C. (1) above
amounted to $325,071 as of December 31, 1995. There were no potential problem
loans as of December 31, 1996.
IV. Summary of Loan Loss Experience
An analysis of the Allowance for Loan Losses and statistics
relating to the relationship of the Allowance and Charge-offs to Loans is
presented in the following summary.
Year Ended
December 31,
1996 1995 1994 1993 1992
(Dollars In Thousands)
Total loans outstanding
at end of year (1) $257,511 $210,044 $210,749 $198,303 $192,799
Average loans outstanding
during year (1) $227,781 $203,280 $202,622 $197,168 $196,680
Allowance for loan losses:
Balance at beginning
of year $ 2,258 $ 2,202 $ 2,277 $ 2,152 $ 1,888
Charge-offs
Commercial, financial
and agricultural 1,356 810 712 481 222
Installment 126 191 145 245 289
Real Estate Mortgage (2) 60 151 65 100 259
Credit Cards 95 77 89 69 43
_____ _____ ___ ___ ___
Total 1,637 1,229 1,011 895 813
Recoveries: (2)
Commercial, financial and
agricultural 216 90 82 218 121
Installment 253 118 143 132 131
Real Estate Mortgage 72 20 0 53 0
Credit Cards 23 26 12 17 25
____ ____ ____ ____ ____
Total 564 254 237 420 277
____ ____ ____ ____ ____
Net charge-offs (1073) (975) (774) (475) (536)
Provision charged
to expense 1,490 1,031 699 600 800
______ ______ ______ ______ ______
Balance at end of year $2,675 $2,258 $2,202 $2,277 $2,152
Ratio of net charge-offs
to average loans
outstanding .47% .47% .38% .24% .27%
(1) Loans are shown net of unearned discount.
(2)Includes Residential and Commercial Mortgages.
IV. Summary of loan loss experience - continued
Allocation of allowance for loan losses
December 31
(Dollars in Thousands)
1996 1995 1994
% of % of % of
Loans to Loans to Loans to
Total Total Total
Amount Loans Amount Loans Amount Loans
Commercial, financial
and agricultural (1) $1,873 35% $1,809 43% $1,534 44%
Real Estate Mortgage 115 40% 81 41% 160 40%
Consumer 540 21% 230 12% 360 13%
Other 0 0% 0 4% 0 3%
Unallocated 147 4% 138 N/A 148 N/A
_____ ___ _____ ___ _____ ___
Total $2,258 100% $2,258 100% $2,202 100%
December 31
(Dollars in Thousands)
1993 1992
% of % of
Loans to Loans to
Total Total
Amount Loans Amount Loans
Commercial, financial
and agricultural (1) $1,560 45% $1,549 43%
Real Estate Mortgage 125 40% 100 44%
Consumer 421 12% 300 11%
Other 0 3% 0 2%
Unallocated 171 N/A 203 N/A
_____ ___ _____ ___
Total $2,277 100% $2,152 100%
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. 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. The allowance for loan losses is
applicable for any loan losses despite the allocation provided above. In
addition, future allocations may change due to circumstances inherent in the
loan portfolio
(1)Includes Commercial Mortgages.
V. Deposits
The following summary sets forth the average amounts of the various types of
deposits for December 31, 1996, 1995 and 1994, and the average rate paid on
each.
1996 1995 1994
Amount Rate Amount Rate Amount Rate
(Dollars In Thousands)
Non-interest bearing
demand $ 50,801 -- $ 46,676 -- $ 44,566 --
Interest bearing demand 33,695 1.36% 32,989 1.82% 37,913 1.91%
Savings 112,494 2.73% 118,300 3.02% 137,669 2.59%
Other time 96,965 5.37% 84,746 5.45% 61,151 4.64%
________ ________ ________
Total $293,955 2.97% $282,711 3.11% $281,299 2.53%
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, 1996.
1996
(In Thousands)
Three months or less $36,203
Over three through six months 1,186
Over six through twelve months 1,204
Over twelve months 1,603
_______
Total $40,196
VI. Return on Equity and Assets
The following table sets forth certain ratios used in evaluating financial
position and results of operations.
December 31,
1996 1995 1994
Return on average total assets .88% 1.26% 1.18%
Return on average equity 7.79% 10.88% 11.21%
Dividend payout ratio 47.98% 28.78% 26.07%
Average equity to total
average assets 11.31% 11.22% 10.48%
Item 2. Properties
Canandaigua National Corporation occupies space at the main office of the Bank.
No real property is owned by the Corporation. The Corporation leases real
property in Farmington, Mendon, Manchester, Victor (Eastview Mall), Pittsford,
under long-term renewable leases. The premises are sublet to the Bank for its
Farmington Branch Office.
The Bank's operations are conducted from nine offices located in Ontario
County, New York and two 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. The Bank owns
branch offices which are located on the main street in Victor, New York;
Holcomb, New York; and Honeoye, New York. The Bank subleases space for branch
offices in Farmington, New York, at Wade's Supermarket located on Route 96; in
Canandaigua, New York at 709 South Main Street; in Shortsville-Manchester in
the Bliss Shurfine Foodmart; in the Town of Mendon, Monroe County, New York in
the Hitching Post Plaza in the Big-M Food Market; in Victor, New York in the
Eastview Mall and in Pittsford, New York at State Street. There are drive-in
facilities located at all offices except for the Eastview Mall and Pittsford
offices.
The Bank provides 24-hour banking services to Bank customers through automatic
teller facilities located at each office and through remote Automatic Teller
Machines located at the Finger Lakes Community College on Lincoln Hill in the
Town of Hopewell, New York, and at F.F. Thompson Hospital located on North
Parrish Street, Canandaigua, New York.
The carrying value of the properties as of December 31, 1996, 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 13
through 29 of the 1996 Annual Report to Stockholders and is incorporated herein
by reference.
Item 3. Legal Proceedings
The Company and its subsidiaries are not involved in any pending legal
proceeding other than routine legal proceedings undertaken in the ordinary
course of business. In the opinion of the management, after consultation with
counsel, the aggregate amount involved in such proceedings is not material to
the consolidated financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II
Item 5. Market for the Registrant's Common Stock
and Related Security Holder Matters
The information required to be included herein, pursuant to Item 201 of
Regulation S-K, is incorporated herein by reference from the pages of the 1996
Annual Report to Stockholders and proxy statement set forth below:
Required Information Annual Report Caption Annual Report Page
Market information "Common Stock Data" 30
Dividends "Common Stock Data" 30
"Stockholders' Equity" 11
Holdings: (At December 31, 1996, the Corporation had approximately 684
shareholders.) Information regarding beneficial ownership of the Corporation's
stock is set forth on pages 1, 2, 3, and 7 of the Corporation's proxy statement
and incorporated herein by reference.
Item 6. Selected Financial Data
This table represents a summary of selected components of the Corporation's
consolidated financial statements for the five years ended December 31, 1996.
All information concerning the Corporation should be read in conjunction with
the consolidated financial statements and related notes.
Selected Financial Data
(Dollars in Thousands except per share data)
1996 1995 1994 1993 1992
Net Interest Income $ 16,708 16,035 14,760 14,018 13,598
Provision for Loan Losses $ 1,490 1,031 699 600 800
Non-Interest Income $ 3,914 3,393 3,268 3,469 3,157
Non-Interest Expense $ 15,147 12,684 12,022 12,195 11,542
Applicable Income Taxes $ 1,038 1,797 1,604 1,265 1,115
Net Income $ 2,947 3,916 3,703 3,427 3,298
Per Share Data:
Net Income $ 18.20 24.31 23.01 21.32 20.54
Cash Dividends $ 8.75 7.00 6.00 5.50 5.13
Balance Sheet Data:
Total Assets $360,623 317,209 $310,541 $314,640 $320,876
Total Equity $ 39,119 37,397 34,538 31,744 29,162
Average Assets $334,659 320,770 315,312 321,546 315,177
Average Equity $ 37,834 35,987 33,035 30,464 27,939
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 report for an
understanding of the following discussion and analysis.
Liquidity and Interest Rate Sensitivity Management
Liquidity is defined as the ability to generate adequate amounts of cash
to meet the demand for cash from depositors who wish to withdraw funds,
borrowers who require funds to meet their credit needs, and the need for
operating funds and capital expansion.
Interest rate sensitivity management seeks to avoid fluctuating net
interest margins and to enhance consistent growth of net interest income
through periods of changing interest rates. Thus liquidity and interest rate
sensitivity must be jointly managed through asset/liability policy to provide
optimum results for the Corporation.
Asset liquidity is found in cash, federal funds sold, deposits with other
financial institutions, short term security holdings, and loan repayments. On
average for 1996, federal funds sold, cash and due from banks, and interest
bearing deposits with other banks totaled $22.2 million. The securities
portfolio is also an important source of liquidity. As of December 31, 1996,
approximately $29.9 million amortized cost of the portfolio will be mature in
one year or less. Combining these two major sources of liquidity, the
Corporation had $52.1 million of readily available assets, which is 15.6% of
average assets for 1996. Management believes that liquidity needs are
adequately addressed, but also has short term and long term borrowings
available from the Federal Reserve Bank and the Federal Home Loan Bank.
Interest rate sensitivity varies with different types of interest earning
assets and interest bearing liabilities. In general, short term interest
sensitive assets, such as loans tied to the prime rate, will have greater
sensitivity than fixed rate home mortgages or securities due in over one year.
Similarly, money market and passbook savings accounts have more sensitivity
than certificates of deposit maturing after one year. The Corporation has
chosen to limit both its asset and liability exposure in longer term time
frames so as to avoid large mismatches of assets and liabilities that could
cause large earnings swings.
During 1996, increased consumer lending which was not supported by deposit
growth but by short-term borrowings led to a decline in the Rate Sensitive
Assets/Rate Sensitive Liabilities equation. The Corporation believes this
mismatch will continue for sometime and is aware of its challenge to interest
rate risk.
The following chart indicates rate sensitivity at December 31, 1996:
INTEREST RATE SENSITIVITY GAPS
As of December 31, 1996
(In Thousands)
MATURITIES
0 - 3 4 - 12 1 - 5 Over 5
MONTHS MONTHS YEARS YEARS
Loans $ 90,214 2,903 115,686 48,708
Securities 9,372 20,507 32,391 9,501
________ ______ _______ ______
Interest-earning
assets $ 99,586 23,410 148,077 58,209
________ ______ _______ ______
Certificate of Deposits 51,567 29,388 30,718
Savings 63,502
Royal Blue Money Market 18,708
Now & Super Now 32,392
Money Market 24,600
Federal Funds Purchased 10,600
Short Term Borrowing FHLB 990
_______ ______ ______ ______
Interest-bearing
liabilities 202,269 29,388 30,718 0
_______ ______ ______ ______
Interest sensitivity
gap $(102,683) (5,978) 117,359 58,209
Interest-earning
assets 99,586 23,410 148,077 58,209
Interest-bearing
liabilities 202,269 29,388 30,718 0
_______ ______ _______ ______
Interest sensitivity
gap $(102,683) (5,978) 117,359 58,209
Rate Sensitive Assets
divided by Rate Sensitive
Liabilities 0.50 .80 4.82
The chart indicates that the Corporation was repricing $101.6 million more
of interest earning liabilities than interest bearing assets in the 0-3 month
range. This gap is not considered to be a problem, as a good portion of the
savings balances are not considered sensitive to rate change. However, the
Corporation will be challenged in a rising interest rate environment to
maintain its interest margins. For the 4-12 month period, the Corporation is
modestly liability sensitive, as $6.0 million more of interest bearing
liabilities are being repriced than interest earning assets. For the entire
one year range, the Corporation is repricing $107.6 million more interest
bearing liabilities than assets, or 32.68% of earning assets. This liability
sensitivity has increased from $58.3 million and 20.21% of earning assets last
year. The imbalance was due to the increase in short-term certificates of
deposit and short-term borrowings to fund loans with a longer maturity. The
Corporation is asset sensitive at $117.4 million for the one to five year
range, as interest earning assets increased $33.4 million from last year's
amounts, along with an interest bearing liabilities increase of $.6 million.
For the entire portfolio range, the Corporation is asset sensitive at
$68.0 million versus asset sensitivity of $61.3 million last year. With
interest rate forecasts continuing to suggest declines, our earnings should be
favorably impacted if we can continue to cut liability rates at the same pace
as earning assets. We will have some difficulty, however, as short term
liability rates are at or near historic lows. Continued declines could lead to
deposit outflows, as investors seek higher returns in other available products.
We may have to limit our liability rate decreases in order to continue to fund
the bank, and that may have a slightly negative impact on historic spreads.
Hopefully increasing lending will offset some of the decline.
Capital Resources
Total Stockholders' equity at December 31, 1996, was $39,119,000,
representing an increase of $1,722,000 (or 4.6%) over 1995. Primary capital,
defined as shareholders equity plus loan loss reserve, was $41,794,000 at
December 31, 1996, or 11.59% of average assets versus $39,655,000 or 12.50% of
average assets at December 31, 1995.
The Federal Reserve Board standards require banks and bank holding
companies to maintain capital based on "risk adjusted" assets so that
categories of assets with potentially higher credit risk will require more
capital backing than assets with lower risk. In addition, banks and bank
holding companies are required to maintain capital to support, on a risk-
adjusted basis, certain off balance sheet activities such as loan commitments
and interest rate swaps. Capital is classified into two tiers. Tier 1 capital
consists of common shareholders' equity, non-cumulative and cumulative
perpetual preferred stock, and minority interests less goodwill and less net
unrealized gain on securities available for sale. Tier 2 capital consists of
allowances for loan and lease losses, hybrid capital instruments, term
subordinated debt, and intermediate-term preferred stock. All banks are
required to meet a minimum ratio of 8% of qualifying total capital to risk
adjusted total assets with at least 4% Tier 1 capital.
The table below illustrates the Corporation's regulatory capital ratio
at December 31, 1996 and December 31, 1995:
1996 1995
(dollars in thousands)
Tier 1 Capital $ 39,119 $ 37,397
Tier 2 Capital $ 2,675 $ 2,258
Total Qualifying Capital $41,794 $ 39,655
Risk Adjusted Total Assets $247,846 $213,442
Tier 1 Risk Based Capital Ratio 15.70% 17.50%
Total Risk Based Capital Ratio 16.78% 18.55%
Leverage Ratio 11.11% 10.48%
As shown in the table, the Corporation's Tier 1 Risk Based Capital has
grown 4.6%, and Total Risk Based Capital has increased 5.4% from year end 1995
levels.
The leverage ratio (Tier 1 Capital divided by total assets less goodwill)
must be at least 3%. The Corporation's leverage ratio was 11.11% as of
December 31, 1996.
The capital ratios of the Corporation are strongly in excess of minimum
regulatory requirements, indicating an ability to meet customer demand and
market competition, while providing sufficient earnings to strengthen the
capital base annually. The Corporation believes that its strong capital base
will allow it to continue a reasonable dividend payment.
Dividends
Payments 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 is required for the declaration
of dividends in any year which dividends exceed the total of net income for
that year plus retained income for the preceding two years. At December 31,
1996, approximately $7,094,000 was available for payment of dividends to the
Company.
Cash dividends for 1996 amounted to $1,414,000, an increase of $287,000 or
11.2% over the $1,127,000 paid in 1995. Dividends paid were 48.0% and 28.8% of
1996 and 1995 earnings respectively.
Results of Operations
Net interest income is the difference between interest received from
earning assets and interest paid on interest bearing liabilities. It is
affected by both the volume and rates applied to both earnings assets and
liabilities, and therefore, is an effective measurement of how well management
has balanced and reacted to the Corporation's interest rate sensitive assets
and liabilities.
For the year ended December 31, 1996, the Corporation had $307.8 million
average earning assets, up $12.5 million or 4.2% from the year earlier.
Average interest bearing liabilities were $244.8 million for 1996, up $8.3
million or 3.5% from 1995. The increase in earning assets reflects the
expansion of our indirect product into the Rochester, NY area. Liability
growth has begun, due to the Company borrowing from the Federal Home Loan Bank
to fund the asset growth. While being mindful of the Corporation's customers'
needs, management was able to increase net interest income for 1996 to $16.7
million, up from $16.0 million for 1995, reflecting an increase of 4.38% for
1996.
The yield on interest earning assets was 8.29% in 1996, down from 8.41% in
1995. Cost of funds decreased, to 3.59% from 3.72% in 1995. Management
continued to stress the cost and size control of liabilities during 1996, and
therefore the net yield increased to 4.70% from 4.69% in 1995. Net interest
income as a percentage of earning assets (net interest rate margin) remained
the same at 5.43%, as the $673,000 increase in net interest income was derived
from successfully managing the changing interest rate environment during the
year, in conjunction with the previously mentioned increase in total earning
assets. Management believes these results are an indication that its interest
rate sensitivity planning is functioning well.
The provision for loan losses in 1996 was $1,490,000, up $459,000 from
1995. The allowance for loan loss as of December 31, 1996 was $2.7 million, or
1.03% of loans outstanding at year end 1996. This ratio is slightly lower than
that of 1995 (1.08%). The cause for the decrease of this ratio is due to the
large increase of the loan portfolio in 1996 of $47.5 million. Also, charge-
offs rose to $1,637,000 in 1996 from $1,229,000 in 1995, recoveries of loans
charged off increased to $564,000 in 1996 from $254,000 in 1995. Management
believes its ability to properly manage the loan portfolio and current loan
loss policies are effective.
The Corporation`s investment portfolio book value fell to $70.0 million at
December 31, 1996 from $70.5 million at December 31, 1995, reflecting a
decrease of .71%.
Other income for 1996 increased to $3.9 million from $3.4 million,
reflecting an increase of $521,000 or 15.4%. Service charges on deposit
accounts were up $57,000 to $1,661,000. Other operating income for 1996 rose
to $940,000 from $678,000 reflecting an increase of $262,000. Strong demand
for our trust services in our traditional markets as well as in our new
Pittsford location led to an increase of Trust Income to $1,337,000 up from
$1,071,000 in 1995.
Operating expenses totaled $15.1 million, up 18.9% from $12.7 million in
1995. Salaries and employee benefits rose $1.4 million as the Corporation
expanded several product areas and purchased two non-traditional financial
service providers. Other operating expenses rose $1 million due to increases
in other real estate expenses and other costs associated with the growing loan
portfolio.
The rate of return on average assets (ROA) and the rate of return on
average equity are a good measure of the Corporation's results. For the year
1996, return on average assets dropped from 1.26% to .84%. Return on average
equity was 7.9% in 1996 compared to 10.88% in 1995. The decline in ROA was a
result of increase in staff which was required for our expansion into new
geographic areas as well as new business ventures. The decline in return on
equity is due to the decrease in earnings as well as the rapid growth of the
Corporation's capital. Management believes the Corporation remains quite
healthy.
Accounting Standards
In June 1996, the Financial Accounting Standards Board issued Statement of
Accounting Standards (SFAS) No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. SFAS No. 125 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996 and is to be applied
prospectively. This Statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
based on consistent application of a financial-components approach that focuses
on control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings. Management of the Company does not
expect the adoption of SFAS No. 125 will have a material impact on the
Company's financial position, results of operations, or liquidity.
Item 8. Financial Statements and Supplementary Data
(Supplementary data has been omitted because it is not applicable)
Financial statements, together with a report thereon of KPMG Peat Marwick LLP
dated February 10, 1997 appearing on Page 8-29 of the 1996 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.
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
NONE
PART III
Item 10. Directors and Executive Officers
(a) Directors
The information with respect to the directors of the Corporation, 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, 1997, 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.
(b) Executive Officers
The name, age and position of the executive officer of the Corporation as
of December 31, 1996, is set forth on page 6 of the Proxy Statement dated
February 26, 1997 under the caption "Principal Officers" and is incorporated
herein by reference. Officers are generally elected annually by the Board of
Directors at the meeting of directors immediately following the annual meeting
of stockholders. The disclosure of family relationships between the executive
officer and directors of the Corporation is set forth on page 4 of the Proxy
Statement dated February 26, 1997 and is incorporated herein by reference.
There are no arrangements or understandings between the executive officer and
any other person pursuant to which the executive officer was selected.
No Director or executive officer of the Corporation has received any
remuneration from the Bank or the Corporation in his capacity as a director or
executive officer of the Corporation.
The executive officer of the Corporation has been an officer of the Bank
for five years or more.
Directors and the executive officer as a group beneficially owned 15,264
shares or 9.47% of the shares outstanding. Shares owned directly total 13,964
and shares held by directors, executive officer, or their spouses in a
fiduciary capacity or by their spouses individually total 1,300.
(c) Significant Employees
Not applicable
(d) Family Relationship
Disclosed in Item 10 (a) - Directors
(e) Business Experience
Disclosed in Item 10 (a) and 10 (b)
(f) None
(g) None
Item 11. Executive Compensation
(a) Cash 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" in registrants definitive proxy statement on page 6 and is
incorporated herein by reference.
During the year ended December 31, 1996, officers of the Corporation did not
receive any compensation from the Corporation for services rendered in such
capacity. All of the above compensation was paid by the Bank for services
rendered in the course of their employment with the bank.
(b) Compensation Pursuant to Plans
The Bank has a non-contributory, profit sharing plan covering substantially all
full-time employees who have completed one year of service, subject to a
minimum number of hours of service with the Bank. Contributions to the profit
sharing plan by the Bank are allocated among eligible participants in the
proportion that each participant's "points" for the calendar year bear to the
total "points" awarded for the calendar year. Participants are awarded one
point for each full calendar year of employment and one point for each $100 of
compensation paid such participant during that year. Voluntary contributions
may be made and invested in a separate "Voluntary Account" in which the
participant is always fully vested. Participants become fully-vested with non-
contributory allocations upon: reaching the age of 65, disability, death, or
7 years of service as defined by the plan. If employment is otherwise
terminated, partial vesting will be accorded depending upon the participant's
years of service. Retirement and death benefits may be distributed in a cash
lump sum or a series of equal installments, payable at least annually, over a
period selected by the Profit Sharing Plan Committee. The amounts contributed
to the profit sharing plan by the Bank in 1996, 1995, and 1994 were $658,000,
$639,000, and $641,000 respectively.
The Corporation has an Employee Stock Ownership Plan (ESOP) for employees of
its wholly-owned subsidiary, and executive officers are members of the plan.
Contributions to the ESOP are allocated among eligible participants in the
proportion that each participant's gross compensation bears to total
compensation of all participants. Contributions to the plan for 1996, 1995,
and 1994 were $52,000, $46,000, and $33,900 respectively.
The Corporation has an incentive stock plan for senior management of the
Corporation. Annual contributions are made based on performance factors
established by the board of directors. The Corporation has accrued a liability
of $849,000 as of December 31, 1996 representing its obligation under the plan.
Expenses of the plan amounted to $371,000, $155,000, and $115,000 for the
years ended December 31, 1996, 1995 and 1994 and were paid by the Bank.
The following table sets forth the amount of profit sharing benefits set aside
or accrued by the Bank, directly or indirectly, under the Profit Sharing Plan
for the year ended December 31, 1996 for all executive officers of the Bank.
Amount Set Aside
or Accrued for Cumulative
Name of the Year Ended Accrued
Individual December 31, 1995 Benefit
- ------------------------------------------------------------------------
George W. Hamlin, IV $22,334 $678,204
The following table sets forth the amount of ESOP benefits set aside or accrued
by the Bank, directly or indirectly, under the ESOP for the year ended December
31, 1995 for all executive officers of the Bank.
Amount Set Aside
or Accrued for Cumulative
Name of the Year Ended Accrued
Individual December 31, 1995 Benefit
- --------------------------------------------------------------------------
George W. Hamlin, IV $ 1,606 $ 16,921
(c) Other Compensation - Option/SAR Grants Table
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" in registrants definitive proxy statement on page 7 and is
incorporated herein by reference.
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value
Table
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" in registrants definitive proxy statement on page 6 and is
incorporated herein by reference.
(e) Long-Term Incentive Plan Awards Table
NONE
(f) Defined Benefit or Actuarial Plan Disclosure
NONE
(g) Compensation of Directors
For the years 1996, 1995, and 1994 no compensation was paid to members of the
Board of Directors of Canandaigua National Corporation. For the years of 1996,
1995, and 1994 members of the Board of Directors of The Canandaigua National
Bank and Trust Company were compensated at the rate of $300 per meeting.
(h) Employment Contracts and Termination of Employment and Change-In-
Control Arrangements
NONE
(i) Report on Repricing of Options/SARS
NONE
(j) Compensation Committee Interlocks
NONE
(k) Board Compensation Committee Report on Executive Compensation
The information required to be set forth for this item is set forth in
Registrant's definitive proxy statement at page 7 and incorporated herein by
reference.
(l) Performance Graph
The information required to be set forth for this item is set forth in
Registrant's definitive proxy statement at page 8 and incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a), (b) The information required by Item 403 (a) and (b) of Regulation S-K is
included with the information given on pages 1 through 3 of the Proxy
Statement and is incorporated herein by reference.
(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 Corporation 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 1995. 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, 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) 1. Financial Statements
The following consolidated financial statements of Canandaigua National
Corporation and subsidiary have been incorporated by reference in Item 8 on
Page 26: Pages*
Independent Auditors' Report 8
Consolidated Balance Sheets As of December 31, 1996 and 1995 9
Consolidated Statements of Income For Each of the Years in the 3-Year
Period ended December 31, 1996 10
Consolidated Statements of Changes In Stockholders' Equity for Each
of the Years in the 3-Year Period ended December 31, 1996 11
Consolidated Statements of Cash Flows For Each of the Years in the
3-Year Period ended December 31, 1996 ...........................12
Notes to Consolidated Financial Statements......................... 13-29
* 1996 Annual Report to Stockholders
(a) 2. Financial Statement Schedules
Schedules are omitted since the required information is either not applicable,
not deemed material, or is shown elsewhere in the financial statements or notes
thereto.
(a) 3. Exhibits Table
(11) The information required by Item 601(a)(3)(11) of Regulation S-K is set
forth on page 7 and 13 of the 1996 Annual Report to the Stockholders and is
incorporated herein by reference.
(13) A copy of the 1996 Annual Report to Stockholders is attached hereto as
Exhibit A.
(19) A copy of the definitive proxy statement mailed to Stockholders is
attached hereto as Exhibit B.
(22)The Canandaigua National Bank and Trust Company is wholly owned by the
Registrant. The Bank is incorporated under the laws of The United States of
America. Registrant also owns all outstanding stock in Greater Funding of New
York, Inc. a New York State licensed mortgage company.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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
By:
George W. Hamlin, IV
President
Date: 3/31/97
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
President/Director
George W. Hamlin, IV
Secretary/Director
Robert G. Sheridan
Treasurer
Gregory S. MacKay
Director
Patricia Boland
Director
Frank H. Hamlin
Director
Stephen D. Hamlin
Director
Paul R. Kellogg
Director
Eldred M. Sale
Director
Caroline C. Shipley
Director
Alan J. Stone
Director
David Hamlin, Jr.
Director
Daniel P. Fuller