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CNB COMMUNITY BANCORP, INC. REPORTS FIRST QUARTER 2019 RESULTS

April 12, 2019 | Return to News & Updates

CNB Community Bancorp, Inc. (OTC:CNBB), the parent company of County National Bank, today announced earnings for the three months ended March 31, 2019. Earnings during the first quarter of 2019 for CNB Community Bancorp, Inc. (the “Company”) totaled $2.3 million, an increase of $466,000, or 26.0%, from $1.8 million earned during the three months ended March 31, 2018. Basic earnings per share increased to $1.08 during the three months ended March 31, 2019, up $0.22 from $0.86 earned during the first quarter of 2018.

The annualized return on average assets (ROA) increased to 1.36% for the three months ended March 31, 2019, up from 1.16% for the three months ended March 31, 2018. The annualized return on average equity (ROE) increased to 16.01% during the current quarter, up from 14.25% during the first quarter of 2018. Book value per share increased to $27.81 at March 31, 2019, up $3.06 from $24.75 at March 31, 2018.

Craig S. Connor, Chairman and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “2019 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.”  Additionally, County National Bank President John Waldron stated, “My expectations for our bank have not changed since my arrival in 2002.  County National Bank’s focus is to meet the credit and deposit needs of South Central Michigan while exceeding their customer service expectations.  By all standards of measurement, this occurs daily and we look forward to continuing to do so.” 

 

Financial Highlights

March 31, 2019 compared to March 31, 2018

Balance Sheet

  • Total assets increased $59.5 million, or 9.4%, to $691.7 million.
  • Net loans increased $37.2 million, or 6.9%, to $573.0 million at March 31, 2019 compared to $535.8 million at March 31, 2018.
  • Total deposits increased $53.0 million, or 9.6%, to $607.0 million at March 31, 2019.
  • Other borrowings decreased $1.1 million to $23.6 million at March 31, 2019.
  • Total equity increased $7.0 million to $58.3 million.
  • Book value per share increased $3.06, or 12.4%, to $27.81 at March 31, 2019, up from $24.75 at March 31, 2018.

Asset Quality

  • Net charge-offs increased $82,000 to $149,000 compared to net charge-offs of $67,000 in the first quarter of 2018.
  • Net charges-offs as a percent of average loans increased to 0.03% at March 31, 2019, up from 0.01% through the first quarter of 2018.
  • The ratio of nonperforming loans to total loans decreased to 0.39% from 0.42% and the ratio of nonperforming assets to total assets decreased to 0.33% from 0.46%.

Income Statement

Quarter ended March 31, 2019 compared to March 31, 2018

  • Net income increased $466,000, or 26.0%, to $2.3 million and basic EPS increased $0.22, or 25.6%, to $1.08 from $0.86 in the first quarter of 2018.
  • Net interest income increased $903,000 to $6.9 million.
  • The provision for loan losses increased by $63,000 to $101,000.
  • Return on average equity increased to 16.0% from 14.3%.
  • Return on average assets increased to 1.36% from 1.16%.
  • The Company’s efficiency ratio improved to 66.7% from 69.9%.

Loans, Deposits, Investments and Cash 

Net loans increased $37.2 million, or 6.9%, from $535.8 million at March 31, 2018 to $573.0 million at March 31, 2019. The increase in loan balances includes approximately $24.9 million in commercial real estate loans, $8.6 million in commercial loans and $7.4 million in consumer loans. These increases were partially offset by a decline of approximately $3.0 million in residential real estate loans and $750,000 in loans held for sale. Loan growth has been a product of the hard work by all personnel at the Bank across all lines of business.   

Total deposits increased $53.0 million from $554.0 million at March 31, 2018 to $607.0 million at March 31, 2019. Deposit growth has been very good over the previous twelve months as evidenced by increases of $24.6 million in Non-Interest Bearing deposits and $28.4 million in Interest Bearing Deposits of which $12.8 million were time deposits.

Total investment securities decreased by $7.2 million to $27.9 million at March 31, 2019, down from $35.1 million at March 31, 2018. This decrease was largely a result of maturities over the previous twelve months combined with normal amortization of purchase premiums and paydowns.   

Cash and due from banks increased $28.9 million from $39.7 million at March 31, 2018 to $68.6 million at March 31, 2019.

CNB Community Bancorp, Inc.’s outstanding note payable decreased $1.1 million from $8.9 million at March 31, 2018 to $7.8 million at March 31, 2019 as the Company made contractual principal and interest payments. 

Asset Quality

Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at March 31, 2019 were $2.3 million, down from $2.9 million at March 31, 2018. Nonperforming assets as a percentage of total assets decreased to 0.33% at March 31, 2019 from 0.46% at March 31, 2018. OREO decreased to $39,000 at March 31, 2019 from $642,000 at March 31, 2018. Nonperforming loans at March 31, 2019 were $2.2 million, a decrease of $36,000, or 1.6%, from the $2.3 million balance at March 31, 2018. Nonperforming loans as a percentage of total loans decreased to 0.39% at March 31, 2019, as compared to 0.42% at March 31, 2018.

During the quarter ended March 31, 2019 there was recorded a provision for loan losses of $101,000, which is an increase of $63,000 from a provision of $38,000 during the quarter ended March 31, 2018. Net charge-offs totaled $149,000 during the three months ended March 31, 2019 compared to net charge-offs of $67,000 during the same period in 2018. Net charge-offs as a percentage of average loans increased to 0.03% at March 31, 2019 from 0.01% in 2018. The allowance for loan losses totaled $7.0 million at March 31, 2019 and $6.9 million at March 31, 2018. The allowance for loan losses as a percentage of total loans decreased from 1.27% at March 31, 2018 to 1.21% at March 31, 2019.  The decline in the required allowance for loan losses is directly attributable to continued economic development as we have experienced growth of quality credits and a decline in specific impairments.

 Shareholders’ Equity

Total shareholders’ equity increased $7.0 million from $51.3 million at March 31, 2018 to $58.3 million at March 31, 2019. The $7.0 million increase was mainly related to earnings over those 12 months of $8.9 million that was partially offset by a $1.14 per share cash dividend totaling $2.4 million.

Net Interest Income and Net Interest Margin

Net interest income, on a nontax-equivalent basis, was $6.9 million for the quarter ended March 31, 2019, up $903,000, or 15.0%, from $6.0 million for the quarter ended March 31, 2018. Interest income increased $1.2 million, or 17.9%, from $6.6 million during the quarter ended March 31, 2018 to $7.8 million during the current year primarily due to an increase in average loan balances. Interest expense increased $280,000, which is primarily related to increasing deposit rates.  The cost of funds increased 47% from 0.36% to 0.53%.  Net interest margin is net interest income expressed as a percentage of average interest-earning assets at the subsidiary level. Despite the increase in the cost of funds, the earning assets increased their yield to 4.94% and thus an increase in the net interest margin at the Bank to 4.45% from 4.16% during 2018.

Noninterest Income/Expense

During the quarter ended March 31, 2019, noninterest income increased $261,000 or 18.7% from the $1.4 million earned for the quarter ended March 31, 2018. The significant items were increases in gain on sale of loans of $105,000 as well as an increase in Trust fees of $113,000 as the Trust Department has made adjustments to its fee structure and composition of accounts.

Noninterest expense totaled $5.6 million during the three months ended March 31, 2019 an increase of $482,000 from the first quarter of 2018. There were multiple smaller items making up this total; however, the material items were an increase in personnel expense of $436,000 due to normal merit increases and an increase in personal as we expand our footprint within the markets that we serve and an increase in occupancy expense of $61,000 from improvements to our existin branch infrastructure.

 

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 $691 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 517-439-6115 | L. Michelle Heminger 517-439-0401

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