Financial Information

To Our Shareholders, Customers, and Friends:

           

            The year 2008 was historic for the banking industry with unprecedented crises among all sectors.  However, we are pleased to report to you that the financial performance of Citizens National Bank of Albion was very good this past year.  Many factors contributed to the bank’s continued strength, including the oversight of our Board of Directors, and the implementation by management of sound lending and financial practices.  We also recognize the hard work of our employees and directors and thank them for their dedication.

            Available in the following pages is comparative data for the years 2007 and 2008, as audited by Crowe Horwath, our external auditors.  The size of the bank reached a new milestone, with year-end total assets of  $207,961,231.00.  A large part of this increase in total assets is the loan portfolio, which grew $17,384,970.00.  Loans at year-end were an all-time high of $136,367,726.00.  With our local economy being heavily dependent upon agriculture, we experienced more demand in the areas of commercial loans, agricultural loans, and real estate loans.  The funding source for the loan growth was our customers’ deposits.  We thank our customers for the confidence they have shown in the bank by maintaining and increasing their level of deposits.

            Profitability was not sacrificed in growing the bank.  Net income for the past year was $2,300,229.00.  This is an increase of $182,000.00, or 8% from the prior year.  Net interest income was greater in 2008 due to the loan growth.  The bank remains very efficient in controlling non-interest expenses, which rose only 1.2%.

            We realize that, for shareholders, stock value and dividend payout are of utmost concern in today’s banking environment.  Mostly due to higher bank profits, total shareholder equity grew to $35,449,419.00 at year’s end.  Dividend payout to our stockholders was also increased to $800,000.00.  Many of you have inquired whether the bank participated in the government’s Troubled Asset Relief Program (TARP).  We did not have to accept any of the “bailout funds” because of our strong capital position and sound profitability.  Evidenced by our loan and deposit growth, we assure you we are attempting to do our part in providing stable sources of credit and savings for the communities we serve.

            For the agricultural industry, there were good crop yields this past year, although last spring’s planting was delayed by excessive rains.  However, after record commodity prices in 2008, crude oil and agricultural commodity prices have fallen sharply, while input prices have gone up.  As we plan ahead for the next 12 months, we remain cautious.  We realize that the performance of the bank correlates closely to the success of our agricultural customers.  As unemployment rates have risen, the local economy overall is a significant concern.  It is our intent to work with our customers whenever possible during these difficult times. 

In all this pessimism, we must be prepared, as new opportunities will arise.  We look forward to the challenges before us, and we thank everyone for their support.

                                                                                    Sincerely,

                                                                                    Jan D. Ridgely
                                                                                    President & CEO

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