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CNB Community Bancorp, Inc. Reports Third Quarter 2018 Results

October 12, 2018 | Return to News & Updates

CNB Community Bancorp, Inc. (OTC:CNBB), the parent company of County National Bank, today announced its earnings for the three and nine months ended September 30, 2018. Earnings during the third quarter of 2018 for CNB Community Bancorp, Inc. (the “Company”) totaled $2.3 million, an increase of $596,000, or 35.0%, from $1.7 million earned during the three months ended September 30, 2017. Basic earnings per share increased to $1.10 during the three months ended September 30, 2018, up $0.27 from $0.83 earned during the third quarter of 2017.  For the nine months ended September 30, 2018, the Company reported net income of $6.5 million, an increase of $1.9 million from the $4.6 million earned during the nine months ended September 30, 2017.  Basic earnings per share increased to $3.11 for the nine months ended September 30, 2018 up $0.87 from the $2.24 earned during the first nine months of 2017. 
 
The annualized return on average assets (ROA) increased to 1.40% for the three months ended September 30, 2018, up from 1.08% for the three months ended September 30, 2017. The annualized return on average equity (ROE) increased to 16.73% during the current quarter, up from 14.05% during the third quarter of 2017. ROA increased to 1.41% during the nine months ended September 30, 2018, up from 1.03% during 2017. ROE increased to 16.09% during the nine months ended September 30, 2018 up from 12.99% during the nine month period ended September 30, 2017.  Book value per share increased to $26.27 at September 30, 2018, up $2.22 from $24.05 at September 30, 2017. 
 
Craig S. Connor, Chairman and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “We are very pleased with our growth and strong financial performance through the first nine months of 2018. This positions our bank to continue making a positive difference for our stakeholders, who are comprised of our customers, shareholders, staff and the communities we serve.”   Furthermore, County National Bank President John Waldron stated, “These tremendous communities have worked hard for their prosperity and CNB is proud to be able to aid in that progress. I am consistently humbled by the results of the tremendous number of relationships being built by our staff and the record earnings of the bank.” 
 
Financial Highlights
September 30, 2018 compared to September 30, 2017
Balance Sheet

  • Total assets increased $37.3 million, or 6.0%, to $655.7 million.
  • Net loans increased $40.4 million, or 7.8%, to $558.7 million at September 30, 2018 compared to $518.3 million at September 30, 2017.
  • Total deposits increased $32.8 million, or 6.1%, to $574.5 million at September 30, 2018.
  • Other borrowings decreased $1.1 million to $24.1 million at September 30, 2018. 
  • Total equity increased $5.6 million to $55.1 million.
  • Book value per share increased $2.22, or 9.2%, to $26.27 at September 30, 2018, up from $24.05 at September 30, 2017.


Asset Quality

  • Net charge-offs increased $179,000 to $81,000 compared to net recoveries of $98,000 for the nine months ended September 30, 2017. 
  • Net charge-offs as a percent of average loans increased to 0.01% compared (0.02%) for the nine months ended September 30, 2017.
  • The ratio of nonperforming loans to total loans decreased to 0.49% at September 30, 2018 from 0.56% at September 30, 2017 and the ratio of nonperforming assets to total assets decreased to 0.46% from 0.53%, respectively, for the same periods.

 
Income Statement
Quarter ended September 30, 2018 compared to September 30, 2017

  • Net income increased $596,000, or 35.0%, to $2.3 million and basic EPS increased $0.27, or 32.5%, to $1.10 from $0.83 in the third quarter of 2017.
  • Net interest income increased $597,000 to $6.7 million.
  • The provision for loan losses increased by $7,000 to $56,000.
  • Return on average equity increased to 16.7% from 14.0%.
  • Return on average assets increased to 1.40% from 1.08%.
  • The Company’s efficiency ratio improved to 66.5% from 67.8%.

 
 Nine months ended September 30, 2018 compared to September 30, 2017

  • Net income increased $1.9 million, or 40.8%, to $6.5 million and basic EPS increased $0.87, or 38.8%, to $3.11 from $2.24.
  • Net interest income increased $1.4 million to $19.0 million.
  • The provision for loan losses decreased by $110,000 to $150,000.
  • Return on average equity increased to 16.1% from 13.0%.
  • Return on average assets increased to 1.41% from 1.03%.
  • The Company’s efficiency ratio improved to 65.7% from 70.5%.

Loans, Deposits, Investments and Cash 
 
Net loans increased $40.4 million, or 7.8%, from $518.3 million at September 30, 2017 to $558.7 million at September 30, 2018. The increase in loan balances includes approximately $37.0 million in commercial real estate loans, $9.0 million in commercial loans, $3.0 million in consumer loans. These increases were partially offset by a decline of approximately $7.3 million in residential real estate loans and $1.3 million 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 $32.8 million from $541.7 million at September 30, 2017 to $574.5 million at September 30, 2018.  Noninterest-bearing deposits have remained steady with a $233,000 decrease from $70.0 million to $69.8 million at September 30, 2018.  Interest-bearing deposits have increased from $471.7 million at September 30, 2017 to $504.7 million at September 30, 2018, growth of $33.0 million.   
 
Total investment securities decreased by $4.3 million to $30.0 million at September 30, 2018, down from $34.3 million at September 30, 2017. This decrease was largely a result of maturities in 2018 of municipals and certificate of deposits at other banks combined with normal amortization of purchase premiums and paydowns.  The Bank continues to offset some of the decrease with purchases of zero risk-weighted government securities. 
 
Cash and due from banks decreased $1.0 million from $45.8 million at September 30, 2017 to $44.8 million at September 30, 2018. 
 
CNB Community Bancorp, Inc.’s outstanding note payable decreased $1.1 million from $9.5 million at September 30, 2017 to $8.4 million at September 30, 2018 as the Company made principal and interest payments at the holding company.
 
Asset Quality
 
Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at September 30, 2018 were $3.0 million, down from $3.3 million at September 30, 2017. Nonperforming assets as a percentage of total assets decreased to 0.46% at September 30, 2018 from 0.53% at September 30, 2017. OREO decreased to $282,000 at September 30, 2018 from a $322,000 balance at September 30, 2017. Nonperforming loans at September 30, 2018 were $2.76 million, a decrease of $183,000, or 3.5%, from the $2.9 million balance at September 30, 2017. Nonperforming loans as a percentage of total loans decreased to 0.49% at September 30, 2018, as compared to 0.56% at September 30, 2017. 
 
During the quarter ended September 30, 2018 there was recorded a provision for loan losses of $56,000, which is an increase of $7,000 from a provision of $49,000 during the quarter ended September 30, 2017. Net charge-offs totaled $21,000 during the three months ended September 30, 2018 compared to net recoveries of $103,000 during the same period in 2017. 

Net charge-offs as a percentage of average loans was 0.01% for the nine months ended September 30, 2018, which was an increase from the (0.02%) for the nine months ended September 30, 2017. The allowance for loan losses totaled $7.0 million at September 30, 2018 and $6.9 million at September 30, 2017. The allowance for loan losses as a percentage of total loans decreased from 1.32% at September 30, 2017 to 1.24% at September 30, 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 $5.5 million from $49.5 million at September 30, 2017 to $55.0 million at September 30, 2018. The $5.5 million increase was mainly related to earnings over those 12 months of $7.9 million that was partially offset by a $1.06 per share cash dividend totaling $2.2 million. 
 
Net Interest Income and Net Interest Margin
 
Net interest income, on a nontax-equivalent basis, was $6.7 million for the quarter ended September 30, 2018, up $597,000, or 9.8%, from $6.1 million for the quarter ended September 30, 2017. Interest income increased $890,000, or 13.7%, from $6.5 million during the quarter ended September 30, 2017 to $7.4 million during the current year primarily due to an increase in average loan balances and three 25 basis point increases in the federal funds rate (March 21, 2018, June 13, 2018 and September 26, 2018).  Interest expense increased $293,000 that is related to the aforementioned increases in the federal funds rate and average deposit balances.  Net interest margin is net interest income expressed as a percentage of average interest-earning assets at the subsidiary level.  The net interest margin at the Bank for the three months ended September 30, 2018 increased to 4.35%, from 4.24% during the three months ended September 30, 2017.
 
Net interest income, on a nontax-equivalent basis, for the nine months ended September 30, 2018 was $19.0 million, an increase of $1.4 million from the $17.6 million earned during the same period in 2017. Driven mostly by an increase in average loan balances as well as the increasing rates on current and new credits, interest income increased by $2.3 million while interest expense increased by $870,000 due to the increase in deposits and rates. Net interest margin for the nine months ended September 30, 2018 increased 2 basis points to 4.19%, up from 4.17% for the same period in 2017.

Noninterest Income/Expense
 
During the quarter ended September 30, 2018 noninterest income decreased $24,000 or 1.5% from the $1.7 million earned for the quarter ended September 30, 2017. Predominately the decrease was comprised of a reduction in the gain on sale of loans of $106,000 partially offset by increases in ATM service charges of $30,000 and trust fees of $29,000. 
 
During the nine months ended September 30, 2018, noninterest income totaled $4.7 million, an increase of $184,000 from the nine months ended September 30, 2017. The largest component of this increase was a $95,000 increase in earnings from the Trust Department followed by increases of $71,000 in ATM service charges and $39,000 in servicing fees partially offset by a decrease in income from service charges on deposits of $42,000.

Noninterest expense totaled $5.5 million during the three months ended September 30, 2018 an increase of $279,000 from the third quarter of 2017. There were multiple items making up this total none of which were individually material. During the nine months ended September 30, 2018, total non-interest expense increased $277,000 from $15.4 million at September 30, 2017 to $15.7 million.
 

 

 


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 erik.lawson@countynationalbank.com 517-439-6115
L. Michelle Heminger michelle.heminger@countynationalbank.com 517-439-0401

Media Contact:
Craig S. Connor, Chairman & CEO
John R. Waldron, President