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CNB COMMUNITY BANCORP, INC. REPORTS FOURTH QUARTER 2018 RESULTS

January 17, 2019 | Return to News & Updates

CNB Community Bancorp, Inc. (OTC:CNBB), the parent company of County National Bank, today announced earnings for the three and twelve months ended December 31, 2018. Earnings during the fourth quarter of 2018 totaled $2.00 million, an increase of $550,000, or 37.9%, from $1.45 million during the three months ended December 31, 2017. Basic earnings per share increased to $0.95 during the three months ended December 31, 2018, up $0.25 from $0.70 during the fourth quarter of 2017. For the year ended December 31, 2018, CNB Community Bancorp, Inc. (the “Company”) reported net income of $8.47 million, an increase of $2.42 million, or 40.1%, from $6.05 million during the year ended December 31, 2017. Basic earnings per share increased to $4.06 during the year ended December 31, 2018, up $1.13 from $2.93 during 2017.

The annualized return on average assets (ROA) increased to 1.20% for the three months ended December 31, 2018, up from 0.93% for the three months ended December 31, 2017. The annualized return on average equity (ROE) increased to 14.2% during the current quarter, up from 11.6% during the fourth quarter of 2017. ROA increased to 1.31% during the year ended December 31, 2018, up from 1.01% during 2017. ROE increased to 15.8% during 2018, up from 12.7% during the year ended December 31, 2017. Book value per share increased to $26.97 at December 31, 2018, up $2.87 from $24.10 at December 31, 2017.

Craig S. Connor, Chairman and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “2018 has proven out to be an outstanding year for CNB, both in terms of growth and earnings.  It’s been especially rewarding watching our hard working and talented staff contribute so mightily to our very strong year.”  Furthermore, County National Bank President John Waldron stated, “Communities such as the ones here in South Central Michigan have been the backbone of our nation since before its inception and they continue to provide the support that America needs to be successful.  Our bank has been committed to these communities through a number of services such as personal and small business banking for these last eighty-four years.  I look at 2018 with pride and thankfulness while focusing on continuing to work with our communities in 2019 and beyond.” 

Financial Highlights

December 31, 2018 compared to December 31, 2017

Balance Sheet

 

Total assets increased $40.6 million, or 6.5%, to $662.1 million.

 

Net loans increased $54.0 million, or 10.5%, to $567.6 million at December 31, 2018 compared to $513.6 million at December 31, 2017.

 

Total deposits increased $34.9 million, or 6.4%, to $578.9 million at December 31, 2018.

 

Other borrowings decreased $1.1 million to $23.9 million at December 31, 2018.

 

Total equity increased $6.5 million to $56.5 million.

 

Book value per share increased by $2.87, or 11.9%, to $26.97 at December 31, 2018, up from $24.10 at December 31, 2017.

Asset Quality

 

Net charge-offs increased $166,000 due to charge-offs of $84,000 compared to recoveries of $82,000 in 2017.

 

Net charges-offs as a percent of average loans increased to 0.02% from -0.02%.

 

The ratio of nonperforming loans to total loans decreased to 0.42% from 0.49% and the ratio of nonperforming assets to total assets decreased to 0.40% from 0.48%.

Income Statement

     Three months ended December 31, 2018 compared to December 31, 2017

 

Net income increased $550,000, or 37.9%, to $2.00 million and basic EPS increased $0.25, or 35.7%, to $0.95 from $0.70.

 

Net interest income increased $947,000 to $6.96 million.

 

Return on average equity increased to 14.2% from 11.6%.

 

Return on average assets increased to 1.20% from 0.93%.

                            Year ended December 31, 2018 compared to December 31, 2017

 

Net income increased $2.42 million, or 40.1%, to $8.47 million and basic EPS increased $1.13, or 38.6%, to $4.06 from $2.93.

 

Net interest income increased by $2.49 million to $26.00 million.

 

The provision for loan losses decreased by $73,000 to $206,000.

 

Return on average equity increased to 15.8% from 12.7%.

 

Return on average assets increased to 1.31% from 1.01%.

 

The Company’s efficiency ratio improved to 66.8% from 70.9%.

Loans, Deposits, Investments and Cash 

Net loans increased $54.0 million, or 10.5%, from $513.6 million at December 31, 2017 to $567.6 million at December 31, 2018. The increase in loan balances includes approximately $40.1 million in commercial real estate loans, $9.1 million in commercial loans and $5.7 million in consumer loans. These increases were partially offset by a decline of approximately $670,000 in loans held for sale and $370,000 in residential real estate loans. 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 $34.9 million from $544.0 million at December 31, 2017 to $578.9 million at December 31, 2018. Deposit growth in dollars was equal between non-interest bearing and interest bearing in 2018. This equality in growth kept the cost of funds to an increase of only 21% to 40 basis points in 2018 from 33 basis points in 2017.

Total investment securities decreased by $5.8 million to $28.6 million at December 31, 2018, down from $34.4 million at December 31, 2017. This decrease was largely a result of maturities in 2018 of $13.7 million combined with normal amortization of purchase premiums and paydowns of $406,000 partially offset by purchases of $5.7 million in debt securities and $2.6 million in certificates of deposit.

Cash and due from banks decreased $8.3 million from $52.3 million at December 31, 2017 to $44.0 million at December 31, 2018.

CNB Community Bancorp, Inc.’s outstanding note payable decreased $1.1 million from $9.2 million at December 31, 2017 to $8.1 million at December 31, 2018 as the Company paid down principal along with interest in the normal course of amortization.  

Asset Quality

Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at December 31, 2018 were $2.6 million, down from $3.0 million at December 31, 2017. Nonperforming assets as a percentage of total assets decreased to 0.40% at December 31, 2018 from 0.48% at December 31, 2017. OREO decreased $225,000, or 50%, to $223,000 at December 31, 2018. Nonperforming loans at December 31, 2018 were $2.4 million, a decrease of $155,000, or 6.1%, from the $2.6 million balance at December 31, 2017. Nonperforming loans as a percentage of total loans decreased to 0.42% at December 31, 2018, as compared to 0.49% at December 31, 2017.

During the year ended December 31, 2018 there was recorded a provision for loan losses of $206,000, which is a decline of $73,000 from a provision of $279,000 during the year ended December 31, 2017. Net charge-offs totaled $84,000 during the twelve months ended December 31, 2018 compared to net recoveries of $82,000 during the same period in 2017. Net charge-offs as a percentage of average loans increased from

-0.02% during 2017 to 0.02% during the year ended December 31, 2018. The allowance for loan losses totaled $7.1 million at December 31, 2018 and $6.9 million at December 31, 2017. The allowance for loan losses as a percentage of total loans decreased from 1.33% at December 31, 2017 to 1.23% at December 31, 2018.

Shareholders’ Equity

Total shareholders’ equity increased $6.5 million from $50.0 million at December 31, 2017 to $56.5 million at December 31, 2018. The $6.5 million increase was mainly related to earnings during 2018 of $8.5 million and $520,000 of equity compensation, both of which were partially offset by a $1.11 per share cash dividend totaling $2.4 million and a change in other comprehensive income of $123,000.

Net Interest Income and Net Interest Margin

Net interest income, on a nontax-equivalent basis, was $26.00 million for the year ended December 31, 2018, up $2.49 million, or 10.6%, from $23.51 million during 2017. Interest income increased $3.55 million, or 14.1%, from $25.10 million during 2017 to $28.65 million during the current year primarily due to an increase in average loan balances booked at market rates. Interest expense increased $1.06 million primarily related to the increase in 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. As a result of the changes noted above, the net interest margin for 2018 increased to 4.24%, from 4.06% during 2017.

Net interest income, on a nontax-equivalent basis, for the three months ended December 31, 2018 was $6.96 million, an increase of $947,000 from the $6.01 million earned during the same period in 2017. Similar to the twelve month comparison, the largest component of the increase in net interest income was an increase in average loan balances. Interest expense increased from $531,000 during the three months ended December 31, 2017 to $722,000 during the quarter ended December 31, 2018 related to increases in deposit yield and overall deposit balances.  Net interest margin for the three months ended December 31, 2018 increased to 4.42%, from 4.04% during the fourth quarter of 2017.

Noninterest Income/Expense

During the year ended December 31, 2018 noninterest income totaled $6.23 million, an increase of $226,000 from the $6.00 million during 2017.  Increases in ATM service charge revenue of approximately $110,000 and Trust Department gross income of $102,000 drove the year-over-year increase.

During the three months ended December 31, 2018 noninterest income totaled $1.52 million, an increase of $172,000 from the three months ended December 31, 2017.  Increases in Trust Department gross income of approximately $106,000 and ATM service charge revenue of $40,000 drove the quarter-over-quarter increase.

Noninterest expense increased $915,000, or 4.4%, to $21.57 million during the twelve months ended December 31, 2018, up from $20.66 million during 2017. Noninterest expense totaled $5.94 million during the three months ended December 31, 2018 an increase of $638,000 from the fourth quarter of 2017. The largest components of these increases in noninterest expense were increases in salary and benefit expense of $640,000 on a quarter-over-quarter basis and $535,000 on a year-over-year basis.   Further, occupancy and software/IT expenses were up $44,000 over the three months ended December 31, 2018 versus the last quarter of 2017 and were up $178,000 on a year-over-year basis for the period ending December 31, 2018.

About CNB Community Bancorp Inc.
CNB Community Bancorp Inc. (OTC:CNBB) is a one-bank holding company.  Its subsidiary bank, Hillsdale County National Bank (“CNB”), is a nationally chartered full service community bank that includes Trust and Investment service divisions, which has been serving South Central Michigan since 1934. CNB has grown to over $662 million in assets and is headquartered in Hillsdale, Michigan.  CNB provides a wide array of financial products and services in its 12 full-service offices and 18 ATMs.

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

Safe Harbor Statement
This news release and other releases and reports issued by the Company may contain "forward-looking statements." The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company is including this statement for purposes of taking advantage of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.