v2.3.0.11
Document and Entity Information
9 Months Ended
Sep. 30, 2011
Dec. 23, 2011
Entity Information [Line Items]    
Entity Registrant Name CITY NATIONAL BANCSHARES CORP  
Entity Central Index Key 0000714980  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Document Type 10-Q  
Document Period End Date Sep. 30, 2011
Document Fiscal Year Focus 2011  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   131,326
v2.3.0.11
Consolidated Balance Sheets (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Assets    
Cash and due from banks $ 6,381 $ 7,228
Federal funds sold 18,000 13,550
Interest bearing deposits with banks 2,135 3,289
Investment securities available for sale 96,343 105,420
Loans 218,504 244,955
Less: Allowance for loan losses 10,603 10,626
Net loans 207,901 234,329
Premises and equipment 2,718 2,974
Accrued interest receivable 1,772 1,933
Bank-owned life insurance 5,872 5,730
Other real estate owned 1,524 1,997
Other assets 6,521 10,817
Total assets 349,167 387,267
Deposits:    
Demand 35,185 35,132
Savings 111,680 130,663
Time 157,618 172,756
Total deposits 304,483 338,551
Accrued expenses and other liabilities 4,542 6,620
Short-term portion of long-term debt 5,000 5,000
Long-term debt 14,200 14,200
Total liabilities 328,225 364,371
Commitments and contingencies    
Stockholders’ equity    
Surplus 1,115 1,115
Retained earnings (3,883) 514
Accumulated other comprehensive loss 1,930 (127)
Treasury stock, at cost — 3,204 and 3,240 common shares in 2011 and 2010, respectively (226) (228)
Total stockholders’ equity 20,942 22,896
Total liabilities and stockholders’ equity 349,167 387,267
Series A Preferred Stock [Member]
   
Stockholders’ equity    
Preferred Stock 200 200
Series C Preferred Stock [Member]
   
Stockholders’ equity    
Preferred Stock 27 27
Series D Preferred Stock [Member]
   
Stockholders’ equity    
Preferred Stock 820 820
Series E Preferred Stock [Member]
   
Stockholders’ equity    
Preferred Stock 2,450 2,450
Series F Preferred Stock [Member]
   
Stockholders’ equity    
Preferred Stock 6,790 6,790
Series G Preferred Stock [Member]
   
Stockholders’ equity    
Preferred Stock 10,374 9,990
Common Stock [Member]
   
Stockholders’ equity    
Common Stock $ 1,345 $ 1,345
v2.3.0.11
Consolidated Balance Sheets (Parentheticals) (USD $)
Sep. 30, 2011
Dec. 31, 2010
Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Par or Stated Value Per Share $ 0.00 $ 0.00
Preferred Stock, Shares Authorized 100,000 100,000
Series A Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Shares Issued 8 8
Preferred Stock, Shares Outstanding 8 8
Series C Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Shares Issued 108 108
Preferred Stock, Shares Outstanding 108 108
Series D Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Shares Issued 3,280 3,280
Preferred Stock, Shares Outstanding 3,280 3,280
Series E Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Par or Stated Value Per Share $ 0.00 $ 0.00
Preferred Stock, Shares Authorized 200 200
Preferred Stock, Shares Issued 49 49
Preferred Stock, Shares Outstanding 49 49
Series F Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Par or Stated Value Per Share $ 0 $ 0
Preferred Stock, Shares Authorized 7,000 7,000
Preferred Stock, Shares Issued 7,000 7,000
Preferred Stock, Shares Outstanding 7,000 7,000
Series G Preferred Stock [Member]
   
Stockholders' equity:    
Preferred Stock, Par or Stated Value Per Share $ 0 $ 0
Preferred Stock, Shares Authorized 9,439 9,439
Preferred Stock, Shares Issued 9,439 9,439
Preferred Stock, Shares Outstanding 9,439 9,439
Common Stock [Member]
   
Stockholders' equity:    
Common stock, par value $ 10 $ 10
Common stock, shares authorized 400,000 400,000
Common stock, shares issued 134,530 134,530
Common stock, shares outstanding 131,326 131,290
Treasury Stock [Member]
   
Stockholders' equity:    
Treasury Stock, Shares 3,204 3,240
v2.3.0.11
Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Share data
3 Months Ended 9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Sep. 30, 2011
Sep. 30, 2010
Interest income        
Interest and fees on loans $ 2,725 $ 3,426 $ 8,670 $ 10,905
Interest on Federal funds sold 3 11 22 32
Interest on deposits with banks 59 8 177 22
Interest and dividends on investment securities:        
Taxable 880 1,286 2,808 4,044
Tax-exempt 62 133 185 656
Total interest income 3,729 4,864 11,862 15,659
Interest expense        
Interest on deposits 1,025 1,406 3,220 4,447
Interest on long-term debt 203 433 604 1,285
Total interest expense 1,228 1,839 3,824 5,732
Net interest income 2,501 3,025 8,038 9,927
Provision for loan losses 500 2,825 2,514 5,216
Net interest income after provision for loan losses 2,001 200 5,524 4,711
Other operating income        
Service charges on deposit accounts 324 303 895 1,005
ATM fees 71 89 222 279
Award income 25 25 75 1,075
Other income 225 160 708 552
Net gains on securities transactions (Notes 4 and 5) 0 137 0 666
Total other operating income 645 714 1,900 3,577
Salaries and other employee benefits 1,527 1,503 4,445 4,646
Occupancy expense 285 503 911 1,340
Equipment expense 119 131 364 431
Data processing expense 96 83 284 260
Professional fees 211 129 590 585
Marketing expense 104 60 226 225
Management consulting fees 437 378 1,476 732
Regulatory expense 259 219 949 827
Amortization of core deposit intangible 0 491 0 566
OREO expense 482 43 725 79
Other expenses 443 644 1,412 1,681
Total other operating expenses 3,963 4,184 11,382 11,372
Loss before income tax expense (1,317) (3,270) (3,958) (3,084)
Income tax expense 25 74 56 142
Net loss $ (1,342) $ (3,344) $ (4,014) $ (3,226)
Net loss per common share        
Basic $ (11.20) $ (26.43) $ (33.48) $ (27.37)
Diluted (11.20) (26.43) (33.48) (27.37)
Basic average common shares outstanding 131,326 131,290 131,318 131,290
Diluted average common shares outstanding 131,326 131,290 131,318 131,290
v2.3.0.11
Consolidated Statement of Cash Flows (Unaudited) (USD $)
9 Months Ended
Sep. 30, 2011
Sep. 30, 2010
Operating activities    
Net loss $ (4,014,000) $ (3,226,000)
Adjustments to reconcile net income to net cash from operating activities:    
Depreciation and amortization 304,000 309,000
Provision for loan losses 2,514,000 5,216,000
Premium amortization of investment securities 93,000 124,000
Amortization of intangible assets 0 566,000
Net gains on securities transactions 0 (666,000)
Net gains on sales of loans held for sale 0 (6,000)
Net gains on other real estate owned 0 (17,000)
Writedowns of OREO properties 613,000 60,000
Proceeds from sales and principal payments from loans held for sale 0 196,000
(Increase) decrease in accrued interest receivable 161,000 477,000
Deferred taxes 0 845,000
Increase in bank-owned life insurance (142,000) (145,000)
Decrease (increase) in other assets 4,251,000 496,000
(Decrease) increase in accrued expenses and other liabilities (2,078,000) 479,000
Net cash provided by operating activities 1,702,000 4,708,000
Investing activities    
Decrease in loans, net 23,774,000 18,926,000
Decrease in interest-bearing deposits with banks 1,154,000 60,000
Proceeds from maturities of investment securities available for sale, including principal repayments and early redemptions 14,614,000 35,126,000
Proceeds from maturities of investment securities held to maturity, including principal repayments and early redemptions 0 1,247,000
Proceeds from sales of investment securities available for sale 0 18,498,000
Purchases of investment securities available for sale (3,527,000) (23,385,000)
Proceeds from sales other real estate owned 0 556,000
Purchases of premises and equipment (48,000) (427,000)
Net cash provided by investing activities 35,967,000 50,601,000
Financing activities    
Decrease in deposits (34,068,000) (15,439,000)
Increase in short-term borrowings 0 770,000
Decrease in long-term debt 0 (2,000,000)
Issuance of treasury stock 2,000 0
Net cash provided by financing activities (34,066,000) (16,669,000)
Net increase in cash and cash equivalents 3,603,000 38,640,000
Cash and cash equivalents at beginning of period 20,778,000 12,308,000
Cash and cash equivalents at end of period CLONE 24,381,000 50,948,000
Cash paid during the year    
Interest 3,675,000 5,416,000
Income taxes 99,000 60,000
Non-cash transactions    
Transfer of held to maturity investment portfolio to available for sale portfolio 0.000 39,144,000.000
Transfer of loans to other real estate owned $ 140,000 $ 0
v2.3.0.11
Principles of consolidation
9 Months Ended
Sep. 30, 2011
Principles of consolidation [Abstract]  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
Principles of consolidation
The accompanying consolidated financial statements include the accounts of City National Bancshares Corporation (the "Corporation or CNBC") and its subsidiaries, City National Bank of New Jersey (the "Bank" or “CNB”) and City National Bank of New Jersey Capital Trust II. All intercompany accounts and transactions have been eliminated in consolidation.
v2.3.0.11
Basis of presentation
9 Months Ended
Sep. 30, 2011
Basis of presentation [Abstract]  
Basis of Presentation and Significant Accounting Policies [Text Block]
Basis of presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and assuming the Corporation and Bank will continue as going concerns. See Note 3. Accordingly, they do not include all the information required by U.S. generally accepted accounting principles for complete financial statements. These consolidated financial statements should be reviewed in conjunction with the financial statements and notes thereto included in the Corporation's December 31, 2010 Annual Report to Stockholders.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial statements have been included. Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ended December 31, 2011. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities as of the date of the balance sheet and revenues and expenses for related periods. Actual results could differ significantly from those estimates.
v2.3.0.11
Going concern/regulatory compliance
9 Months Ended
Sep. 30, 2011
Going concern/regulatory compliance [Abstract]  
Going concern/regulatory compliance [Text Block]
Going concern/regulatory compliance
The consolidated financial statements of the Corporation as of and for the three months and nine months ended September 30, 2011 have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
The Bank was subject to a Formal Agreement with the OCC (“Office of the Comptroller of the Currency”) entered into on June 29, 2009 (the “Formal Agreement”). The Consent Order required, among other things, the enhancement and implementation of certain programs to reduce the Bank's credit risk, along with the development of a capital and profit plan, the development of a contingency funding plan and the correction of deficiencies in the Bank's loan administration. The Bank failed to comply with certain provisions of the Formal Agreement and failed to comply with the higher leverage ratio of 8% required to be maintained.
Due to the Bank's condition, the OCC has required that the Board of Directors of the Bank (the “Bank Board”) sign a formal enforcement action with the OCC, which mandates specific actions by the Bank to address certain findings from the OCC's examination and to address the Bank's current financial condition. The Bank entered into a Consent Order (“Order” or “Consent Order”) with the OCC on December 22, 2010, which contains a list of requirements.  The Order supersedes and replaces a Formal Agreement. The Order also contains restrictions on future extensions of credit and requires the development of various programs and procedures to improve the Bank's asset quality as well as routine reporting on the Bank's progress toward compliance with the Order to the Bank Board and the OCC. As a result of the Order, the Bank may not be deemed “well capitalized.” The description of the Consent Order is only a summary.
Specifically, the Order imposes the following requirements on the Bank:
within five (5) days of the Order, the Bank Board must appoint a Compliance Committee to be comprised of at least three directors, none of whom may be an employee, former employee or controlling shareholder of the Bank or any of its affiliates, to monitor and coordinate the Bank's adherence to the Order.
within ninety (90) days of the Order, the Bank Board must develop and submit to the OCC for review a written strategic plan covering at least a three-year period, establishing objectives for the overall risk profile, earnings performance, growth, balance sheet mix, off-balance sheet activities, liability structure, capital adequacy, reduction in the volume of nonperforming assets, product line development, and market segments that the Bank intends to promote or develop, together with strategies to achieve those objectives.  
by March 31, 2011, and thereafter the Bank must maintain total capital at least equal to 13% of risk-weighted assets and Tier 1 capital at least equal to 9% of adjusted total assets; this requirement means that the Bank may not be considered “well capitalized” as otherwise defined in applicable regulations.
within ninety (90) days of the Order, the Bank Board must submit to the OCC a written capital plan for the Bank covering at least a three-year period, including specific plans for the achievement and maintenance of adequate capital and projections for growth and capital requirements, based upon a detailed analysis of the Bank's assets, liabilities, earnings, fixed assets and off-balance sheet activities; identification of the primary sources from which the Bank will maintain an appropriate capital structure to meet the Bank's future needs, as set forth in the strategic plan; specific plans detailing how the Bank will comply with restrictions or requirements set forth in the Order and with the restrictions against brokered deposits in 12 C.F.R. § 337.6; contingency plans that identify alternative methods to strengthen capital, should the primary source(s) not be available; and a prohibition on the payment of director fees unless the Bank is in compliance with the minimum capital ratios previously identified in the prior paragraph or express written authorization is provided by the OCC.
the Bank is restricted on the payment of dividends.
to ensure the Bank has competent management in place at all times, including: within ninety (90) days of the Order, the Bank Board shall provide to the OCC qualified and capable candidates for the positions of President, Senior Credit Officer, Consumer Compliance Officer and Bank Secrecy Officer; within ninety (90) days of the date of the Order, the Bank Board (with the exception of Bank executive officers) shall prepare a written assessment of the Bank's executive officers to perform present and anticipated duties; prior to appointment of any individual to an executive position provide notice to the OCC, who shall have the power to veto such appointment; and the Bank Board shall at least annually perform a written performance appraisal for each Bank executive officer.
within sixty (60) days of the Order, the Bank Board shall develop and the Bank shall implement, and thereafter ensure compliance with, a written credit policy to ensure the Bank's compliance with written programs to improve the Bank's loan portfolio management.  
within ninety (90) days of the Order the Bank Board shall develop, implement and thereafter ensure Bank adherence to a written program to improve the Bank's loan portfolio management, including: requiring that extensions of credit are granted, by renewal or otherwise, to any borrower only after obtaining, performing, and documenting a global analysis of current and satisfactory credit information; requiring that existing extensions of credit structured as single pay notes are revised upon maturity to conform to the Bank's revised loan policy; ensuring satisfactory and perfected collateral documentation; tracking and analyzing credit, collateral, and policy exceptions; providing for accurate risk ratings consistent with the classification standards contained in the Comptroller's Handbook on "Rating Credit Risk"; providing for identification, measurement, monitoring, and control of concentrations of credit; ensuring compliance with Call Report instructions, the Bank's lending policies, and laws, rules, and regulations pertaining to the Bank's lending function; ensuring the accuracy of internal management information systems; and providing adequate training of Bank personnel performing credit analyses in cash flow analysis, particularly analysis using information from tax returns, and implement processes to ensure that additional training is provided as needed.
within sixty (60) days of the Order, the Bank Board must establish a written performance appraisal and salary administration process for loan officers that adequately consider performance relative to job descriptions, policy compliance, documentation standards, accuracy in credit grading, and other loan administration matters.
the Bank must implement and maintain an effective, independent, and ongoing loan review program to review, at least quarterly, the Bank's loan and lease portfolios, to assure the timely identification and categorization of problem credits.
the Bank is also required to implement and adhere to a written program for the maintenance of an adequate Allowance for Loan and Lease Losses, providing for review of the allowance by the Bank Board at least quarterly.
within sixty (60) days of the Order, the Bank Board shall adopt and the Bank (subject to Bank Board review and ongoing monitoring) shall implement and thereafter ensure adherence to a written program designed to protect the Bank's interest in those assets criticized in the most recent Report of Examination ("ROE") by the OCC, in any subsequent ROE, by any internal or external loan review, or in any list provided to management by the national bank examiners during any examination as "doubtful," "substandard," or "special mention."
within one hundred twenty (120) days of the Order, the Bank Board must revise and maintain a comprehensive liquidity risk management program, which assesses, on an ongoing basis, the Bank's current and projected funding needs, and ensures that sufficient funds or access to funds exist to meet those needs, and that includes effective methods to achieve and maintain sufficient liquidity and to measure and monitor liquidity risk.
within ninety (90) days of the Order, the Bank Board shall identify and propose for appointment a minimum of two (2) new independent directors that have a background in banking, credit, accounting, or financial reporting, and such appointment will be subject to veto power of the OCC.
within ninety (90) days of the Order, the Bank Board shall adopt, implement, and thereafter ensure adherence to a written consumer compliance program designed to ensure that the Bank is operating in compliance with all applicable consumer protection laws, rules, and regulations.
within ninety (90) days of the Order, the Bank Board shall develop, implement, and thereafter ensure Bank adherence to a written program of policies and procedures to provide for compliance with the Bank Secrecy Act, as amended (31 U.S.C. §§ 5311 et seq.), the regulations promulgated thereunder and regulations of the Office of Foreign Assets Control ("OFAC"), 31 C.F.R. Chapter V, as amended (collectively referred to as the "Bank Secrecy Act" or "BSA") and for the appropriate identification and monitoring of transactions that pose greater than normal risk for compliance with the BSA.
within ninety (90) days of the Order, the Bank Board shall develop, implement, and thereafter ensure Bank adherence to an independent, internal audit program sufficient to detect irregularities and weak practices in the Bank's operations; determine the Bank's level of compliance with all applicable laws, rules, and regulations; assess and report the effectiveness of policies, procedures, controls, and management oversight relating to accounting and financial reporting; evaluate the Bank's adherence to established policies and procedures, with particular emphasis directed to the Bank's adherence to its loan, consumer compliance, and BSA policies and procedures; evaluate and document the root causes for exceptions; and establish an annual audit plan using a risk-based approach sufficient to achieve these objectives.
within ninety (90) days of the Order, the Bank Board must develop and implement a comprehensive compliance audit function to include an independent review of all products and services offered by the Bank, including without limitation, a risk-based audit program to test for compliance with consumer protection laws, rules, and regulations that includes an adequate level of transaction testing; procedures to ensure that exceptions noted in the audit reports are corrected and responded to by the appropriate Bank personnel; and periodic reporting of the results of the consumer compliance audit to the Bank Board or a committee thereof.
the Bank Board shall require and the Bank shall immediately take all necessary steps to correct each violation of law, rule, or regulation cited in any ROE, or brought to the Bank Board's or Bank's attention in writing by management, regulators, auditors, loan review, or other compliance efforts.
The Order permits the OCC to extend the time periods under the Order upon written request. Any material failure to comply with the Order could result in further enforcement actions by the OCC. In addition, if the OCC does not accept the capital plan or the Bank fails to achieve and maintain the minimum capital levels, the Order specifically states that the OCC may require the Corporation to sell, merge, or liquidate the Bank.
As a result of the Consent Order, the Bank may not accept, renew, or roll over any brokered deposit. This affects the Bank's ability to obtain funding. In addition, the Bank may not solicit deposits by offering an effective yield that exceeds by more than 75 basis points the prevailing effective yields on insured deposits of comparable maturity in such institution's normal market area or in the market area in which such deposits are being solicited.
As of September 30, 2011, when considering deadline extensions granted, the Corporation believes it has substantially complied with the requirements of the Consent Order as of such date with the exception of the capital ratio requirements and the appointment of outside director.
On December 14, 2010, the Corporation entered into a written agreement (the “FRBNY Agreement”) with the Federal Reserve Bank of New York (“FRBNY”). The following is only a summary of the FRBNY Agreement. Pursuant to the FRBNY Agreement, the Corporation's board of directors is to take appropriate steps to utilize fully the Corporation's financial and managerial resources to serve as a source of strength to the Bank, including causing the Bank to comply with the Formal Agreement (now superseded) and any other supervisory action taken by the OCC, such as the Order.
In the FRBNY Agreement, the Corporation agreed that it would not declare or pay any dividends without prior written approval of the FRBNY and the Director of the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System (the “Banking Director”). It further agreed that it would not take dividends or any other form of payment representing a reduction in capital from the Bank without the FRBNY's prior written approval. The FRBNY Agreement also provides that neither the Corporation nor its nonbank subsidiary will make any distributions of interest, principal or other amounts on subordinated debentures or trust preferred securities without the prior written approval of the FRBNY and the Banking Director.
The FRBNY Agreement further provides that the Corporation shall not incur, increase or guarantee any debt without FRBNY approval. In addition, the Corporation must obtain the prior approval of the FRBNY for the repurchase or redemption of its shares of stock.
The FRBNY Agreement further provides that in appointing any new director or senior executive officer or changing the responsibilities of any senior executive officer so that the officer would assume a different senior position, the Corporation must notify the Board of Governors of the Federal Reserve System and such board or the FRBNY or the OCC may veto such appointment or change.
The FRBNY Agreement further provides that the Corporation is restricted in making certain severance and indemnification payments.
The failure of the Corporation to comply with the FRBNY Agreement could have severe adverse consequences on the Bank and the Corporation.
The Corporation recorded a net loss of $4.0 million in the 2011 first nine months compared to a net loss of $3.2 million in the comparable 2010 period primarily due to significant declines in net interest income and other operating income, along with higher costs for consultants retained to achieve compliance with the provisions of the Consent Order, offset by a reduction in the provision for loan losses. However, we are currently not generating sufficient operating income to cover operating expenses before consideration of the provision for loan losses, a condition which is worsening.
The decrease in real estate values and instability in the Bank's market, as well as other macroeconomic factors such as unemployment levels, have contributed to a decrease in credit quality and continued elevated loan loss provisions. While the Bank and Corporation are implementing steps to improve their financial performance, there can be no assurance they will be successful. These deteriorating financial results and the failure of the Bank to comply with the OCC's higher mandated capital ratios under the Consent Order, and the actions that the OCC may take as a result thereof, raise substantial doubt about the Corporation's and the Bank's ability to continue as going concerns. Management has developed a plan to address the compliance matters raised by the OCC and the ability to maintain future financial viability and submitted the plan to the OCC for approval. The plan provides for the addition of new lines of business and strategic growth initiatives, a restructuring of staff where necessary, and the preparation and use of an Investor Presentation to assist in a capital raise. We have formed a strategic alliance with a third-party online deposit vendor, which we believe will attract new sources of deposits, and have completed the staff restructuring. We are also in process of our capital raise and expect to expand into new lines of business upon completion of the capital raise in 2012. However, there can be no assurances that this plan can be successfully achieved
v2.3.0.11
Net loss per common share
9 Months Ended
Sep. 30, 2011
Net loss per common share [Abstract]  
Earnings Per Share [Text Block]
Net loss per common share
The following table presents the computation of net loss per common share.

 
Three Months Ended September 30,
Nine Months Ended September 30,
In thousands, except per share data
2011
2010
2011
2010
Net loss
$
(1,342
)
$
(3,344
)
$
(4,014
)
$
(3,226
)
Dividends on preferred stock
129

127

383

368

Net loss applicable to basic
  common shares
(1,471
)
(3,471
)
(4,397
)
(3,594
)
Dividends applicable to convertible preferred stock




Net loss applicable to diluted common shares
$
(1,471
)
$
(3,471
)
$
(4,397
)
$
(3,594
)

Number of average common shares
 
 
 
 
Basic
131,326

131,290

131,318

131,290

Diluted
131,326

131,290

131,318

131,290

Net loss per common share
 
 
 
 
Basic
$
(11.20
)
$
(26.43
)
$
(33.48
)
$
(27.37
)
Diluted
(11.20
)
(26.43
)
(33.48
)
(27.37
)

Basic loss per common share is calculated by dividing net loss plus dividends paid on preferred stock by the weighted average number of common shares outstanding. On a diluted basis, both net loss and common shares outstanding are adjusted to assume the conversion of the convertible preferred stock, if conversion is deemed dilutive. For all periods shown for 2011 and 2010, the assumption of the conversion would have been antidilutive.
On April 10, 2009, the Corporation issued 9,439 shares of fixed-rate cumulative perpetual preferred stock to the U.S. Department of Treasury in connection with the Corporation's participation in the Treasury's TARP Capital Purchase Program. These shares pay cumulative dividends at a rate of five percent per annum until the fifth anniversary of the date of issuance, after which the rate increases to nine percent per annum. Dividends are paid quarterly in arrears and unpaid dividends are accrued over the period the preferred shares are outstanding.
During 2010 and the first nine months of 2011, City National Bancshares Corporation deferred the payment of its regular quarterly cash dividend on its Series G fixed-rate cumulative perpetual preferred stock issued to the U.S. Treasury.   In addition, the Corporation deferred its regularly scheduled quarterly interest payments on its junior subordinated debentures issued by the City National Bank of New Jersey Capital Statutory Trust II (the “Trust”) for the same periods.
The Series G preferred stock and the junior subordinated debentures issued in favor of the Trust provide for cumulative dividends and interest, respectively.  Accordingly, the Corporation may not pay dividends on any of its common or preferred stock until the dividends on Series G preferred stock and the interest on such debentures are paid-up currently. There were no dividend payments made on preferred stock in 2010 or 2011, although such dividends have been accrued because they are cumulative.
The Corporation did not pay a dividend in 2010 and is currently unable to determine when dividend payments may be resumed, and does not expect to pay common stock dividends for the foreseeable future. Whether cash dividends will be paid in the future depends upon various factors, including the earnings and financial condition of the Bank and the Corporation at the time. Additionally, federal and state laws and regulations contain restrictions on the ability of the Bank and the Corporation to pay dividends. Finally, the Consent Order stipulates that the Bank may not pay dividends until it is in compliance with the provisions of the capital plan.
Subject to applicable law, the Board of Directors of the Bank and of the Corporation may provide for the payment of dividends when it is determined that dividend payments are appropriate, taking into account factors including net income, capital requirements, financial condition, alternative investment options, tax implications, prevailing economic conditions, industry practices, and other factors deemed to be relevant at the time. Because CNB is a national banking association, it is subject to regulatory limitation on the amount of dividends it may pay to its parent corporation, CNBC. Prior approval of the Office of the Comptroller of the Currency ("OCC") is required if the total dividends declared by the Bank in any calendar year exceeds net profit, as defined, for that year combined with the retained net profits from the preceding two calendar years, although currently such approval is required to declare any dividend. Based upon this limitation, no funds were available for the payment of dividends to the parent corporation at September 30, 2011.
v2.3.0.11
Comprehensive (loss) income
9 Months Ended
Sep. 30, 2011
Comprehensive (loss) income [Abstract]  
Comprehensive Income (Loss) Note [Text Block]
Comprehensive loss
Total comprehensive loss includes net income or loss and other comprehensive income or loss, which is comprised of unrealized gains and losses on investment securities available for sale, net of taxes. The Corporation's total comprehensive loss for the three months ended September 30, 2011 and 2010 was $(440,000) and $(3,737,000), respectively and for the nine months ended September 30, 2011 and 2010 was $(4,014,000) and $(1,927,000), respectively. The difference between the Corporation's net loss and total comprehensive loss for these periods relates to the change in net unrealized gains and losses on investment securities available for sale during the applicable period of time.
v2.3.0.11
Recent accounting pronouncements
9 Months Ended
Sep. 30, 2011
Recent accounting pronouncements [Abstract]  
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]
Recent accounting pronouncements
Accounting Standards Update (“ASU”) No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures About Fair Value Measurements,” requires new disclosures and clarifies certain existing disclosure requirements about fair value measurement. Specifically, the update requires an entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for such transfers. A reporting entity is required to present separately information about purchases, sales, issuances, and settlements in the reconciliation of fair value measurements using Level 3 inputs. In addition, the update clarifies the following requirements of the existing disclosures: (i) for the purposes of reporting fair value measurements for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets; and (ii) a reporting entity is required to include disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. The disclosures related to the gross presentation of purchases, sales, issuances and settlements of assets and liabilities included in Level 3 of the fair value hierarchy became effective on January 1, 2011. The other disclosure requirements and clarifications made by ASU No. 2010-06 became effective on January 1, 2010.
ASU No. 2010-29, “Business Combinations (Topic 805) – Disclosure of Supplementary Pro Forma Information for Business Combinations,” relates to disclosure of pro forma information for business combinations that have occurred in the current reporting period. It requires that an entity presenting comparative financial statements include revenue and earnings of the combined entity as though the combination had occurred as of the beginning of the comparable prior annual period only. This guidance was effective prospectively for business combinations for which the acquisition date was on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of this guidance did not have an impact on the consolidated financial statements.
ASU No. 2011-02, “Receivables (Topic 310) – A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring,” provides clarifying guidance intended to assist creditors in determining whether a modification of the terms of a receivable meets the criteria to be considered a troubled debt restructuring, both for purposes of recording an impairment loss and for disclosure of troubled debt restructurings. In evaluating whether a restructuring constitutes a troubled debt restructuring, a creditor must separately conclude, under the guidance clarified by ASU No. 2011-02, that both of the following exist: (i) the restructuring constitutes a concession to the debtor; and (ii) the debtor is experiencing financial difficulties. ASU No. 2011-02 applies retrospectively to restructurings occurring on or after January 1, 2011 and was effective on July 1, 2011. The adoption of ASU No. 2011-02 did not have a significant impact on the consolidated financial statements.
ASU No. 2011-04, “Fair Value Measurements (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” was issued as a result of the effort to develop common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). While ASU No. 2011-04 is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands the existing disclosure requirements for fair value measurements and clarifies the existing guidance or wording changes to align with IFRS No. 13. Many of the requirements for the amendments in ASU No. 2001-04 do not result in a change in the application of the requirements in Topic 820. ASU No. 2011-04 will be effective for all interim and annual periods beginning after December 15, 2011. The adoption of ASU No. 2011-04 is not expected to have a significant impact on its consolidated financial statements.
ASU No. 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income,” requires an entity to present components of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. ASU No. 2011-05 must be applied retrospectively and is effective for all interim and annual periods beginning on or after December 15, 2011. The adoption of ASU No. 2011-05 is not expected to have a significant impact on the consolidated financial statements.
ASU No. 2011-08, “Intangibles – Goodwill and Other (Topic 350) Testing Goodwill for Impairment,” provides the option of performing a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount, before applying the current two-step goodwill impairment test. If the conclusion is that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the entity would be required to conduct the current two-step goodwill impairment test. Otherwise, the entity would not need to apply the two-step test. ASU No. 2011-28 will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. The adoption of ASU No. 2011-05 is not expected to have a significant impact on its consolidated financial statements.
In April 2010, the FASB issued ASU 2010-18, which states that modifications of loans that are accounted for within a pool under ASC 310-30 do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change. The amendments do not affect the accounting for loans under the scope of ASC 310-30 that are not accounted for within pools. Loans accounted for individually under ASC 310-30 continue to be subject to the troubled debt restructuring accounting provisions within ASC 310-40, “Receivables-Troubled Debt Restructurings by Creditors.” The amendments were effective for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The adoption of this pronouncement did not have a material impact on the Corporation's financial condition, results of operations or financial statement disclosures.
In July 2010, the FASB issued ASU 2010-20 to provide financial statement users with greater transparency about an entity's allowance for credit losses and the credit quality of its financing receivables. The objective of the ASU is to provide disclosures that assist financial statement users in their evaluation of (1) the nature of an entity's credit risk associated with its financing receivables, (2) how the entity analyzes and assesses that risk in arriving at the allowance for credit losses and (3) the changes in the allowance for credit losses and the reasons for those changes. Disclosures provided to meet the objective above should be provided on a disaggregated basis. The disclosures as of the end of a reporting period were effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period were effective for interim and annual reporting periods beginning on or after December 15, 2010. The adoption of this pronouncement did not have a material impact on the Corporation's financial condition or results of operations.
v2.3.0.11
Investment securities available for sale
9 Months Ended
Sep. 30, 2011
Investment securities available for sale [Abstract]  
Investment [Text Block]
Investment securities available for sale
The amortized cost and fair values of investment securities available for sale were as follows:
September 30, 2011
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
In thousands
U.S. Treasury securities and obligations of U.S. government agencies
$
3,101

$
135

$

$
3,236

Obligations of U.S. government sponsored entities
13,456

175

32

13,599

Obligations of state and political subdivisions
9,586

492


10,078

Mortgage-backed securities
57,147

3,319


60,466

Other debt securities
8,364

26

2,168

6,222

Equity securities:



 
Marketable securities
774


17

757

Nonmarketable securities
115



115

Federal Reserve Bank and Federal Home Loan Bank stock
1,870



1,870

Total
$
94,413

$
4,147

$
2,217

$
96,343


December 31, 2010
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
In thousands
U.S. Treasury securities and obligations of U.S. government agencies
$
3,389

$
64

$
24

$
3,429

Obligations of U.S. government sponsored entities
15,447

100

267

15,280

Obligations of state and political subdivisions
9,604

194

285

9,513

Mortgage-backed securities
66,037

1,892

24

67,905

Other debt securities
8,358

37

1,839

6,556

Equity securities:
 
 
 
0
Marketable securities
748


21

727

Nonmarketable securities
115



115

Federal Reserve Bank and Federal Home Loan Bank stock
1,895



1,895

Total
$
105,593

$
2,287

$
2,460

$
105,420


The amortized cost and the fair value of investment securities available for sale are distributed by contractual maturity without regard to normal amortization, including mortgage-backed securities, which will have shorter estimated lives as a result of prepayments of the underlying mortgages.
September 30, 2011
Amortized
Cost
Fair
Value
In thousands
Due after one year but within five years:
 
 
U.S. Treasury securities and obligations of U.S. government agencies
$
32

$
32

Obligations of state and political subdivisions
2,230

2,381

Obligations of U.S. government sponsored entities
493

496

Mortgage-backed securities
454

476

Other debt securities
1,000

946

Due after five years but within ten years:
 
 
U.S. Treasury securities and obligations of U.S. government agencies
84

84

Obligations of state and political subdivisions
3,916

4,105

Obligations of U.S. government sponsored entities
3,395

3,487

Mortgage-backed securities
334

350

Due after ten years:
 
 
U.S. Treasury securities and obligations of U.S. government agencies
2,985

3,120

Obligations of state and political subdivisions
3,440

3,592

Obligations of U.S. government sponsored entities
9,568

9,616

Mortgage-backed securities
56,359

59,640

Other debt securities
7,364

5,276

Total debt securities
91,654

93,601

Equity securities
2,759

2,742

Total
$
94,413

$
96,343


Investment securities available for sale which have had continuous unrealized losses as of September 30, 2011 and December 31, 2010 are set forth below.
 
Less than 12 Months
12 Months or More
Total
September 30, 2011
 
Gross
Unrealized Losses
 
Gross
Unrealized Losses
 
Gross
Unrealized Losses
In thousands
Fair Value
Fair Value
Fair Value
U.S. Treasury securities and obligations of U.S. government agencies
$

$

$
63

$

$
63

$

Obligations of U.S. government sponsored entities
1,584

17

1,918

15

3,502

32

Other debt securities
883

52

4,778

2,116

5,661

2,168

Marketable equity securities


774

17

774

17

Total
$
2,467

$
69

$
7,533

$
2,148

$
10,000

$
2,217

 
Less than 12 Months
12 Months or More
Total
December 31, 2010
 
Gross
Unrealized Losses
 
Gross
Unrealized Losses
 
Gross
Unrealized Losses
In thousands
Fair Value
Fair Value
Fair Value
U.S. Treasury securities and obligations of U.S. government agencies
$
1,054

$
23

$
162

$
1

$
1,216

$
24

Obligations of U.S. government sponsored entities
6,733

254

2,080

13

8,813

267

Mortgaged-backed securities
6,219

24



6,219

24

Obligations of state and political subdivisions
5,147

285



5,147

285

Other debt securities


5,050

1,839

5,050

1,839

Equity securities


727

21

727

21

Total
$
19,153

$
586

$
8,019

$
1,874

$
27,172

$
2,460


The decline in investment securities with continuing unrealized losses was a result of improved valuations in our U.S. government agency, mortgage-backed securities and obligations of state and political subdivision portfolios.
In April 2009, FASB amended the impairment model for debt securities. The impairment model for equity securities was not affected. Under the new guidance, an other-than-temporary impairment loss must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost basis. However, even if an investor does not expect to sell a debt security, it must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event of a credit loss, only the amount of impairment associated with the credit loss is recognized in earnings. Amounts relating to factors other than credit losses are recorded in accumulated other comprehensive income. The guidance also requires additional disclosures regarding the calculation of credit losses as well as factors considered in reaching a conclusion that an investment is not other-than-temporarily impaired. The Corporation adopted the new guidance effective April 1, 2009. The Corporation recorded a $1 million pre-tax transition adjustment for the non-credit portion of other-than-temporarily impaired (“OTTI”) on securities held at April 1, 2009 that were previously considered other-than-temporarily impaired.
The following table presents a rollforward of the credit loss component of other-than-temporary impairment losses (“OTTI”) on debt securities for which a non-credit component of OTTI was recognized in other comprehensive income (loss). The beginning balance represents the credit loss component for debt securities for which OTTI occurred prior to April 1, 2009. OTTI recognized in earnings after that date for credit-impaired debt securities is presented as additions in two components, based upon whether the current period is the first time a debt security was credit-impaired (initial credit impairment) or is not the first time a debt security was credit impaired (subsequent credit impairment).
Changes in the credit loss component of credit-impaired debt securities were as follows:
 
For the Nine Months Ended
For the Nine Months Ended
In thousands
September 30, 2011
September 30, 2010
Balance, beginning of period
$

$
2,489

Add: Initial credit impairments


Additional credit impairments


Less: Sale of investment securities


Balance, end of period
$

$
2,489


During the first nine months of 2011 and 2010, respectively, we recorded no OTTI charges.
The Bank owns a collateralized debt obligation (“CDO”) with a carrying value of $996,000 and market value of $408,000 on which no impairment losses have been recorded because it is expected that this security will perform in accordance with its original terms and that the carrying value is fully recoverable based on the investment's payment performance, higher market valuations and a third-party consultant's conclusion that the investment will continue to be fully performing and be fully recoverable in accordance with the terms of the agreement. Additional information is presented below.

 
 
In thousands
September 30, 2011
Par value
$
1,000

Carrying value
$
996

Fair value
$
408

Unrealized loss
$
588

Number of original issuers
50

Number of currently underlying banks in issuance
35

Number of defaulting and deferring banks
12

Percentage of remaining banks expected to default or defer payment (annually)
1.2
%
Subordination
29.20
%

The 29.2% subordination means that the tranche that we own has excess collateral providing additional collateral support to the tranche. Additionally, the Bank owns a portfolio of six single-issuer trust preferred securities with a carrying value of $4.5 million and a market value of $3.3 million, compared to a market value of $3.4 million at the end of 2010. Finally, the Bank also owns corporate securities with a carrying value of $1.9 million and a market value of $1.6 million that are rated below investment grade. None of these securities are considered impaired as they are all fully performing and are expected to continue performing.
Available for sale securities in unrealized loss positions are analyzed as part of the Corporation's ongoing assessment of OTTI. When the Corporation intends to sell available-for-sale securities, the Corporation recognizes an impairment loss equal to the full difference between the amortized cost basis and fair value of those securities. When the Corporation does not intend to sell available for sale securities in an unrealized loss position, potential OTTI is considered based on a variety of factors, including the length of time and extent to which the fair value has been less than cost; adverse conditions specifically related to the industry, the geographic area or financial condition of the issuer or the underlying collateral of a security; the payment structure of the security; changes to the rating of the security by rating agencies; the volatility of the fair value changes; and changes in fair value of the security after the balance sheet date. For debt securities, the Corporation estimates cash flows over the remaining lives of the underlying collateral to assess whether credit losses exist and to determine if any adverse changes in cash flows have occurred. The Corporation's cash flow estimates take into account expectations of relevant market and economic data as of the end of the reporting period.
Other factors considered in determining whether a loss is temporary include the length of time and the extent to which fair value has been below cost; the severity of the impairment; the cause of the impairment; the financial condition and near-term prospects of the issuer; activity in the market of the issuer which may indicate adverse credit conditions; and the forecasted recovery period using current estimates of volatility in market interest rates (including liquidity and risk premiums).
Management's assertion regarding its intent not to sell or that it is not more likely than not that the Corporation will be required to sell the security before its anticipated recovery considers a number of factors, including a quantitative estimate of the expected recovery period (which may extend to maturity), and management's intended strategy with respect to the identified security or portfolio. If management does have the intent to sell or believes it is more likely than not that the Corporation will be required to sell the security before its anticipated recovery, the gross unrealized loss is charged directly to earnings in the Consolidated Statements of Operations.
As of September 30, 2011, the Corporation does not intend to sell the securities with an unrealized loss position in accumulated other comprehensive loss (“AOCL”), and it is not more likely than not that the Corporation will be required to sell these securities before recovery of their amortized cost basis. The Corporation believes that the securities with an unrealized loss in AOCL are not other than temporarily impaired as of September 30, 2011.
v2.3.0.11
Investment securities held to maturity
9 Months Ended
Sep. 30, 2011
Investment securities held to maturity [Abstract]  
Securities Held to Maturity [Text Block]
Investment securities held to maturity
The Bank transferred its entire held to maturity (“HTM”) portfolio to available for sale (“AFS”) in March 2010. This transfer was made in conjunction with a deleveraging program to reduce total asset levels and improve capital ratios. As a result, purchases of securities may not be classified as HTM through March 2012.
v2.3.0.11
Loans
9 Months Ended
Sep. 30, 2011
Loans [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
Loans
Loans, net of unearned discount and net deferred origination fees and costs were as follows:
In thousands
September 30,
2011
December 31,
2010
Commercial
$
31,456

$
38,225

Real estate
186,350

206,072

Installment
751

718

Total loans
218,557

245,015

Less: Unearned income
53

60

Loans
$
218,504

$
244,955


The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. For non-homogeneous loans, such as commercial and commercial real estate loans, the Corporation analyzes the loans individually by classifying the loans as to credit risk and assesses the probability of collection for each type of class. The Corporation uses the following definitions for risk ratings:
Pass - Pass assets are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.
Special Mention - A special mention asset has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution's credit position at some future date. Special mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.
Substandard - A substandard asset is inadequately protected by the current sound worth and paying capacity of the obligor or by the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.
Doubtful - An asset classified doubtful has all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.
Loss - An asset or portion thereof, classified loss is considered uncollectible and of such little value that its continuance on the institution's books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. This classification does not necessarily mean that an asset has no recovery or salvage value; but rather, there is significant doubt about whether, how much, or when the recovery will occur. As such, it is not practical or desirable to defer the write-off.
The risk category of loans by class of loans is as follows:
September 30, 2011
 
Special
Mention
 
 
 
 
In thousands
Pass
Substandard
Doubtful
Loss
Total
Commercial loans
$
28,226

$
1,263

$
1,899

$
68

$

$
31,456

Real estate loans
 
 
 
 
 
 
  Church
33,102

4,578

20,643



58,323

  Construction - other than
      third-party originated
2,975


7,392



10,367

  Construction - third-party
      originated


7,660

1,945


9,605

  Multifamily
10,760

542

1,133

273

 
12,708

  Other
45,854

4,427

20,184

959


71,424

  Residential
21,069


2,854



23,923

Installment
726

25




751

 
$
142,712

$
10,835

$
61,765

$
3,245

$

$
218,557


December 31, 2010
 
Special
Mention
 
 
 
 
In thousands
Pass
Substandard
Doubtful
Loss
Total
Commercial loans
$
35,776

$
916

$
1,384

$
149

$

$
38,225

Real estate loans
 
 
 
 
 
 
Church
38,785

8,893

15,106



62,784

Construction - other than third-party originated
1,879

598

10,593

579


13,649

Construction - third-party originated


9,514

4,017


13,531

Multifamily
11,742

1,578

1,240

273

 
14,833

Other
46,544

5,064

20,973

1,202


73,783

Residential
24,286


2,714

492


27,492

Installment
696

16

1

5


718

 
$
159,708

$
17,065

$
61,525

$
6,717

$

$
245,015


The following tables present the aging of the recorded investment in past due loans.

September 30, 2011
 
30-60
Days
60-90
Days
More than
90 Days
Total Past Due
 
 
In thousands
0-30 Days
Current
Total
Commercial loans
$
1,458

$
3,151

$
743

$
3,935

$
9,287

$
22,169

$
31,456

Real estate loans
 
 
 
 
 
 
 
  Church
3,274

7,596

6,592

5,511

22,973

35,350

58,323

  Construction - other than third-party
    originated

454


5,754

6,208

4,159

10,367

  Construction - third-party originated

612

780

8,213

9,605


9,605

  Multifamily

650

68

1,406

2,124

10,584

12,708

  Other
2,581

2,188

1,259

9,674

15,702

55,722

71,424

  Residential
223

712

128

2,344

3,407

20,516

23,923

  Installment
4

5

1


10

741

751

 
$
7,540

$
15,368

$
9,571

$
36,837

$
69,316

$
149,241

$
218,557


December 31, 2010
 
30-60
Days
60-90
Days
More than
90 Days
Total Past Due
 
 
In thousands
0-30 Days
Current
Total
Commercial loans
$
3,251

$
1,336

$
1,449

$
2,308

$
8,344

$
29,881

$
38,225

Real estate loans
 
 
 
 
 
 
 
Church
339

13,096

7,630

4,909

25,974

36,810

62,784

Construction - other than third-party originated
4,025



8,057

12,082

1,567

13,649

Construction - third-party originated
454

1,531

530

9,253

11,768

1,763

13,531

Multifamily
 
2,608

1,248

273

4,129

10,704

14,833

Other
2,837

2,109

4,861

6,375

16,182

57,601

73,783

Residential
564

809

118

2,333

3,824

23,668

27,492

Installment
31

17

 
6

54

664

718

 
$
11,501

$
21,506

$
15,836

$
33,514

$
82,357

$
162,658

$
245,015


The following tables present the recorded investment in impaired loans by class of loans.

September 30, 2011
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
In thousands
Commercial loans
$
351

$
360

$

Real estate loans
 
 
 
  Church
9,290

8,788

582

  Construction - other than third-party originated
5,663

7,055

464

  Construction - third-party originated
9,605

13,331

346

   Multifamily
1,308

1,951


  Other
11,819

11,575

323

  Residential
2,179

2,078

1

 Installment



 
$
40,215

$
45,138

$
1,716

December 31, 2010
Recorded Investment
Unpaid Principal
Balance
Related
Allowance
In thousands
Commercial loans
$
10

$
10

$

Real estate loans
 
 
 
Church
5,460

5,624


Construction - other than third-party originated
6,689

7,067

242

Construction - third-party originated
13,078

16,315

1,123

Multifamily
273

824

 
Other
7,024

7,798

102

Residential
2,227

2,394

35

Installment



 
$
34,761

$
40,032

$
1,502


Nonperforming loans include loans which are contractually past due 90 days or more for which interest income is still being accrued, and nonaccrual loans. Nonperforming loans were as follows:

In thousands
September 30,
2011
December 31,
2010
Nonaccrual loans
$
39,585

$
35,916

Loans with interest or principal 90 days or more past due and still accruing
3,313

2,343

Total nonperforming loans
$
42,898

$
38,259


Nonperforming assets are generally secured by residential and small commercial real estate properties, except for church loans, which are generally secured by the church buildings.
At September 30, 2011, there were no commitments to lend additional funds to borrowers for loans that were on nonaccrual or contractually past due in excess of 90 days and still accruing interest, or to borrowers whose loans have been restructured. A majority of the Bank's loan portfolio is concentrated in the New York City metropolitan area and is secured by commercial properties. The borrowers' abilities to repay their obligations are dependent upon various factors including the borrowers' income, net worth, cash flows generated by the underlying collateral, the value of the underlying collateral and priority of the Bank's lien on the related property. Such factors are dependent upon various economic conditions and individual circumstances beyond the Bank's control. Accordingly, the Bank may be subject to risk of credit losses.
Impaired loans totaled $40.2 million at September 30, 2011, up from $34.8 million at December 31, 2010. The related allocation of the allowance for loan losses amounted to $1.7 million and $1.5 million. Charge-offs of impaired loans in the first nine months of 2011 totaled $1.9 million. $32.8 million of impaired loans have no allowance allocated to them as sufficient collateral exists. The average balance of impaired loans in the third quarter and first nine months of 2011 was $39.5 million and $37.7 million, respectively, compared to $25.4 million and $20.7 million in the similar periods of 2010. Most of the impaired loans are secured by commercial real estate properties. There was no interest income recognized on impaired loans during the first nine months of either 2011 or 2010.
We may extend, restructure or otherwise modify the terms of existing loans on a case-by-case basis to remain competitive or to assist other customers who may be experiencing financial difficulty. If a concession has been made to a borrower experiencing financial difficulty, the loan is then classified as a troubled debt restructuring ("TDR"). The majority of concessions made for TDRs involve lowering the monthly payments on the loans either through a reduction in interest rate below a market rate, an extension of the term of the loan, or a combination of the two methods. They seldom result in the forgiveness of principal or accrued interest. In addition, we attempt to obtain additional collateral or guarantees when modifying such loans. If the borrower demonstrates the ability to perform under the restructured terms, the loan will continue to accrue interest. Nonaccruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are considered collectible.
As a result of the adoption of ASU 2011-02, CNB reassessed all loan restructurings that occurred on or after January 1, 2011 for potential identification as TDRs and has concluded that the adoption of ASU 2011-02 did not materially impact the number of TDRs or the specific reserves for such loans included in our allowance for loan losses at September 30, 2011.
Troubled debt restructured loans (“TDRs”) totaled $5.4 million at September 30, 2011 and $2.9 million at December 31, 2010, with a related allowance of $342,000 and no related allowance at December 31, 2010 and included seven borrowers at September 30, 2011. TDRs to four borrowers amounting to $3.7 million were accruing. The remainder are on nonaccrual status due to delinquent payments. All TDRs are included in the balance of impaired loans. Three TDRs totaling 1.8 million defaulted on the modified terms during 2011.
The following tables present loans by loan class modified as TDRs during the three and nine months ended September 30, 2011. The pre-modification and post-modification outstanding recorded investments disclosed in the tables below, represent carrying amounts immediately prior to the modification and at September 30, 2011, respectively. There were no chargeoffs resulting from loans modified as TDRs during the three and nine months ended September 30, 2011.
 
Three Months Ended September 30, 2011
Troubled Debt
Restructurings
Number of
Borrowers
 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
 
 
 
 
 
 
Churches
1

  
$
921

  
$
921

Commercial real estate

  

  

  Construction

  

  

Total commercial real estate
1

  
921

  
921

Residential mortgage

  

  

Total
1

  
$
921

  
$
921

 


 
Nine Months Ended September 30, 2011
Troubled Debt
Restructurings
Number of
Contracts
 
Pre-Modification
Outstanding
Recorded Investment
 
Post-Modification
Outstanding
Recorded Investment
 
 
 
 
 
 
Churches
1

  
$
921

  
$
921

Commercial real estate:
 
 
 
 
 
  Other
1

  
1,492

  
1,492

Total commercial real estate
2

  
2,413

  
2,413

Residential mortgage
2

  
389

  
389

Total
4

  
$
2,802

  
$
2,802



 




TDRs totaling $1.8 million defaulted as to the modified terms during the third quarter of 2011.
The following tables present the allowance for loan losses by portfolio segment along with the related recorded investment in loans based on impairment method.
 
 
 
 
 
 
 
 
Allowance for Loan Losses
Recorded Investments
September 30, 2011
Individually
Evaluated
Collectively
Evaluated
Total
Allowance
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