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CNB Community Bancorp, Inc. Reports First Quarter 2018 Results

April 13, 2018 | Return to News & Updates

CNB COMMUNITY BANCORP, INC. REPORTS FIRST QUARTER 2018 RESULTS


CNB Community Bancorp, Inc. (OTC:CNBB), the parent company of County National Bank, today announced earnings for the three months ended March 31, 2018. Earnings during the first quarter of 2018 for CNB Community Bancorp, Inc. (the “Company”) totaled $1.8 million, an increase of $382,000, or 27.1%, from $1.4 million earned during the three months ended March 31, 2017. Basic earnings per share increased to $0.86 during the three months ended March 31, 2018, up $0.17 from $0.69 earned during the first quarter of 2017.


The annualized return on average assets (ROA) increased to 1.16% for the three months ended March 31, 2018, up from 0.98% for the three months ended March 31, 2017. The annualized return on average equity (ROE) increased to 15.1% during the current quarter, up from 12.2% during the first quarter of 2017. Book value per share increased to $24.46 at March 31, 2018, up $1.67 from $22.79 at March 31, 2017.


Craig S. Connor, President and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “We are very pleased with our first quarter growth and performance. The collective efforts of our talented employees and our very valuable customers have given us a great start to 2018. Our focus remains on the local communities. We’ve been proud to serve them for eighty-four years and the goal of mutual success will continue to be our priority.”


Financial Highlights
March 31, 2018 compared to March 31, 2017
Balance Sheet
● Total assets increased $51.7 million, or 8.9%, to $632.3 million.
● Net loans increased $36.8 million, or 7.4%, to $535.8 million at March 31, 2018 compared to $499.0 million at March 31, 2017.
● Total deposits increased $44.5 million, or 8.7%, to $554.0 million at March 31, 2018.
● Other borrowings increased $2.2 million to $24.7 million at March 31, 2018.
● Total equity increased $4.5 million to $51.3 million.
● Book value per share increased $1.67, or 7.3%, to $24.46 at March 31, 2018, up from $22.79 at March 31, 2017.

Asset Quality
● Net charge-offs increased $42,000 to $67,000 compared to net charge-offs of $25,000 in the first quarter of 2017.
● Net charges-offs as a percent of average loans remained consistent at 0.01%.
● The ratio of nonperforming loans to total loans decreased to 0.42% from 0.54% and the ratio of nonperforming assets to total assets decreased to 0.46% from 0.47%.

Income Statement
Quarter ended March 31, 2018 compared to March 31, 2017
● Net income increased $382,000, or 27.1%, to $1.8 million and basic EPS increased $0.17, or 24.6%, to $0.86 from $0.69 in the first quarter of 2017.
● Net interest income increased $296,000 to $6.0 million.
● The provision for loan losses decreased by $109,000 to $38,000.
● Return on average equity increased to 15.1% from 12.2%.
● Return on average assets increased to 1.16% from 0.98%.
● The Company’s efficiency ratio improved to 69.4% from 71.4%.


Loans, Deposits, Investments and Cash
Net loans increased $36.8 million, or 7.4%, from $499.0 million at March 31, 2017 to $535.8 million at March 31, 2018. The increase in loan balances includes approximately $31.6 million in commercial real estate loans, $12.8 million in commercial loans and $1.3 million in consumer loans. These increases were partially offset by a decline of approximately $8.2 million in residential real estate loans and $560,000 in loans held for sale. Loan growth has been a product of the hard work by all personnel at the Bank with special recognition to the efforts of the commercial lenders.

Total deposits increased $44.5 million from $509.5 million at March 31, 2017 to $554.0 million at March 31, 2018. Deposit growth has been solid in 2018 as evidenced by increases of $36.1 million in savings accounts and $24.1 million in time deposits partially offset by a reduction of $16 million in non-savings transactional accounts.


Total investment securities decreased by $2.8 million to $35.1 million at March 31, 2018, down from $38.0 million at March 31, 2017. This decrease was largely a result of maturities in 2018 combined with normal amortization of purchase premiums and paydowns. A partial offset was the purchase of a single federal government bond of $1.2 million late in the first quarter of 2018.
Cash and due from banks increased $15.6 million from $24.0 million at March 31, 2017 to $39.6 million at March 31, 2018.


CNB Community Bancorp, Inc.’s outstanding note payable increased $2.2 million from $6.7 million at March 31, 2017 to $8.9 million at March 31, 2018 as the Company increased its borrowing facility $5 million. The borrowing was used to paydown a $1 million line of credit and downstream capital to its subsidiary.


Asset Quality
Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at March 31, 2018 were $2.9 million, up from $2.7 million at March 31, 2017. Nonperforming assets as a percentage of total assets decreased to 0.46% at March 31, 2018 from 0.47% at March 31, 2017. OREO increased to $642,000 at March 31, 2018 from a zero balance at March 31, 2017. Nonperforming loans at March 31, 2018 were $2.3 million, a decrease of $431,000, or 15.9%, from the $2.7 million balance at March 31, 2017. Nonperforming loans as a percentage of total loans decreased to 0.42% at March 31, 2018, as compared to 0.54% at March 31, 2017.


During the quarter ended March 31, 2018 there was recorded a provision for loan losses of $38,000, which is a decline of $109,000 from a provision of $147,000 during the quarter ended March 31, 2017. Net charge-offs totaled $67,000 during the three months ended March 31, 2018 compared to net charge-offs of $25,000 during the same period in 2017. Net charge-offs as a percentage of average loans remained flat at 0.01% at March 31, 2018. The allowance for loan losses totaled $6.9 million at March 31, 2018 and $6.6 million at March 31, 2017. The allowance for loan losses as a percentage of total loans decreased from 1.32% at March 31, 2017 to 1.27% at March 31, 2018. The decline in the required allowance for loan losses is directly attributable to improvements in the economy as we have experienced growth of high quality credits and a decline in specific impairments.


Shareholders’ Equity
Total shareholders’ equity increased $4.5 million from $46.9 million at March 31, 2017 to $51.4 million at March 31, 2018. The $4.5 million increase was mainly related to earnings over those 12 months of $6.4 million that was partially offset by a $1.00 per share cash dividend totaling $2.1 million.


Net Interest Income and Net Interest Margin
Net interest income, on a nontax-equivalent basis, was $6.0 million for the quarter ended March 31, 2018, up $296,000, or 5.2%, from $5.7 million for the quarter ended March 31, 2017. Interest income increased $566,000, or 9.4%, from $6.1 million during the quarter ended March 31, 2017 to $6.6 million during the current year primarily due to an increase in average loan balances. Interest expense increased $270,000 related to the Company’s increase in borrowings at the holding company consisting of a new $5.0 million borrowing offset by the repayment of a $1.0 million line of credit and principal paydowns. Also, impactful was the increase in the average yield on deposit accounts and an increase in overall deposits.
Net interest margin is net interest income expressed as a percentage of average interest-earning assets at the subsidiary level. As a result of the changes noted above, the net interest margin at the Bank for 2018 increased to 4.14%, from 4.08% during 2017.


Noninterest Income/Expense
During the quarter ended March 31, 2018 noninterest income decreased $79,000 or 5.4% from the $1.5 million earned for the quarter ended March 31, 2017. The impactful items were decreases in loan fees and gains on sale of loans of $87,000 as well as a decline in gains realized on securities sold of $23,000 that were partially offset by an increase in Trust fees of $25,000.
Noninterest expense totaled $5.1 million during the three months ended March 31, 2018 an increase of $56,000 from the first quarter of 2017. There were multiple smaller items making up this total; however, the material items were an increase in personnel expense of $23,000 and an increase in occupancy expense of $24,000.


About CNB Community Bancorp Inc. CNB Community Bancorp, Inc. (OTC:CNBB) is a one-bank holding company formed in 2005. Its subsidiary bank, Hillsdale County National Bank, is a nationally chartered full service bank, which has served its local communities since its founding in 1934. CNB Community Bancorp, Inc. is headquartered in Hillsdale, Michigan and through its subsidiary bank offers banking products along with trust and investment services to communities located throughout South Central Michigan.


Investor Contact:
Erik A. Lawson, CFO 517-439-6115
L. Michelle Heminger 517-439-0401


Media Contact:
Craig S. Connor, President & CEO