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CNB COMMUNITY BANCORP, INC. REPORTS SECOND QUARTER 2019 RESULTS

July 12, 2019 | 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 six months ended June 30, 2019. Earnings during the second quarter of 2019 for CNB Community Bancorp, Inc. (the “Company”) totaled $2.4 million, which were consistent with the $2.4 million earned during the three months ended June 30, 2018. Basic earnings per share (“EPS”) equaled $1.14 during the three months ended June 30, 2019, thus remaining the same with the EPS from the second quarter of 2018. For the six months ended June 30, 2019, the Company reported record net income of $4.6 million, an increase of $462,000 from the $4.2 million earned during the six months ended June 30, 2018. Basic earnings per share increased to $2.21 for the six months ended June 30, 2019 up $0.20 from the $2.01 earned during the first six months of 2018.

The annualized return on average assets (ROA) was 1.37% for the three months ended June 30, 2019, down 11 basis points from 1.48% for the three months ended June 30, 2018. The annualized return on average equity (ROE) was 16.19% during the current quarter, down 2.15% from 18.34% during the second quarter of 2018. ROA was 1.36% during the six months ended June 30, 2019, up five basis points from 1.31% during 2018. ROE was 16.10% during the first half of 2019 down 21 basis points from 16.31% during the six month period ended June 30, 2018. Book value per share increased to $28.72 at June 30, 2019, up $3.07 from $25.65 at June 30, 2018.

Craig S. Connor, Chairman and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “We are very pleased with our results from the first six months. We’re fortunate to have such great customers and dedicated employees contributing to our overall success.” Furthermore, County National Bank President John R. Waldron stated, “Our record earnings for the first half of 2019 are truly representative of the success of our bank under the leadership of Craig Connor. With these employees  in place, we will work together to continue this success as Craig begins to enjoy his well-earned retirement.”

Financial Highlights

June 30, 2019 compared to June 30, 2018 Balance Sheet

  • Total assets increased $36.9 million, or 5.7%, to $686.8 million.
  • Net loans increased $34.6 million, or 6.3%, to $581.3 million at June 30, 2019 compared to
  • $546.7 million at June 30, 2018.
  • Total deposits increased $34.9 million, or 6.1%, to $604.9 million at June 30, 2019.
  • Other borrowings decreased $6.1 million to $18.3 million at June 30, 2019.
  • Total equity increased $7.0 million to $60.2 million.
  • Book value per share increased $3.07, or 12.0%, to $28.72 at June 30, 2019, up from
  • $25.65 at June 30, 2018.

Asset Quality

  • Net charge-offs increased $91,000 to $151,000 for the first six months of 2019 compared to
  • net charge-offs of $60,000 in the first six months of 2018.
  • Net charges-offs as a percent of average loans increased to 0.03% in 2019 from 0.01% in 2018.
  • The ratio of nonperforming loans to total loans decreased to 0.38% at June 30, 2019 from
  • 0.43% at June 30, 2018 and the ratio of nonperforming assets to total assets decreased to 0.33% from 0.44% for the same periods.

Income Statement

Quarter ended June 30, 2019 compared to June 30, 2018

  • Net income decreased $4,000, or 0.2%, to $2.4 million and basic EPS stayed consistent at
  • $1.14.
  • Net interest income increased $774,000 to $7.1 million.
  • The provision for loan losses increased by $44,000 to $100,000.
  • Return on average equity decreased to 16.2% from 18.3%.
  • Return on average assets decreased to 1.37% from 1.48%.
  • The Company’s efficiency ratio increased to 66.3% from 63.3%.

Six months ended June 30, 2019 compared to June 30, 2018

  • Net income increased $462,000, or 11.1%, to $4.6 million and basic EPS increased $0.20,
  • or 10.0%, to $2.21 from $2.01.
  • Net interest income increased $1.7 million to $14.0 million.
  • The provision for loan losses increased by $107,000 to $201,000.
  • Return on average equity decreased to 16.1% from 16.3%.
  • Return on average assets increased to 1.36% from 1.31%.
  • The Company’s efficiency ratio improved to 65.4% from 66.5%.

Loans, Deposits, Investments and Cash

Net loans increased $34.6 million, or 6.3%, from $546.7 million at June 30, 2018 to $581.3 million at June 30, 2019. The increase in loan balances includes approximately $22.2 million in commercial real estate loans,

$7.0 million in commercial loans and $6.4 million in consumer loans. These increases were partially offset by a decline of approximately $595,000 in residential real estate loans and $469,000 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 dedicated commercial lenders.

Total deposits increased $34.9 million from $570.0 million at June 30, 2018 to $604.9 million at June 30, 2019. Noninterest bearing deposits decreased by $8.5 million from $147.4 million to $138.9 million at June 30, 2019. Interest bearing deposits have increased from $422.7 million at June 30, 2018 to $466.1 million at June 30, 2019, growth of $43.4 million. Despite a rising rate environment and extensive competition for larger deposits, the efforts of the employees have enabled an increase in the core deposits.

Total investment securities decreased $7.0 million to $26.2 million at June 30, 2019, down from $33.2 million at June 30, 2018. This decrease was largely a result of maturities in 2019 of municipals and certificates of deposit at other banks combined with normal amortization of purchase premiums and paydowns. The Bank continues to offset some of the decrease with purchases of government securities and certificates of deposit.

Cash and due from banks increased $8.6 million from $47.8 million at June 30, 2018 to $56.4 million at June 30, 2019.

CNB Community Bancorp, Inc.’s outstanding note payable decreased $1.1 million from $8.7 million at June 30, 2018 to $7.6 million at June 30, 2019 as the Company continued paying down its borrowing facility.

Asset Quality

Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at June 30, 2019 were $2.3 million, down from $2.9 million at June 30, 2018. Nonperforming assets as a percentage of total assets decreased to 0.33% at June 30, 2019 from 0.44% at June 31, 2018. OREO decreased to $30,000 at June 30, 2019 from a $514,000 balance at June 30, 2018. Nonperforming loans at June 30, 2019 were $2.2 million, a decrease of $135,000, or 5.7%, from the $2.4 million balance at June 30, 2018. Nonperforming loans as a percentage of total loans decreased to 0.38% at June 30, 2019, as compared to 0.43% at June 30, 2018.

During the six months ended June 30, 2019 there was recorded a provision for loan losses of $201,000, which is an increase of $107,000 from a provision of $94,000 during the six months ended June 30, 2018. Net charge-offs totaled $151,000 during the six months ended June 30, 2019 compared to net charge-offs of

$60,000 during the same period in 2018. Net charge-offs as a percentage of average loans was 0.03% at June 30, 2019, which was an increase from the 0.01% at June 30, 2018. The allowance for loan losses totaled $7.1 million at June 30, 2019 and $7.0 million at June 30, 2018. The allowance for loan losses as a percentage of total loans decreased from 1.26% at June 30, 2018 to 1.21% at June 30, 2019. 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 $7.0 million from $53.2 million at June 30, 2018 to $60.2 million at June 30, 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 $2.8 million. As a result of these retained earnings, the Company’s return on average equity decreased to 16.2% from 18.3% a year ago.

Net Interest Income and Net Interest Margin

Net interest income, on a nontax-equivalent basis, was $7.1 million for the quarter ended June 30, 2019, up

$774,000, or 12.3%, from $6.3 million for the quarter ended June 30, 2018. Interest income increased $1.1 million, or 16.0%, from $7.0 million during the quarter ended June 30, 2018 to $8.1 million during the  current year primarily due to an increase in average loan balances. Interest expense in the second quarter increased $337,000 related to an increase in average deposits and cost of funds. 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 June 30, 2019 increased to 4.41%, from 4.21% during the three months ended June 30, 2018.

Net interest income, on a nontax-equivalent basis, for the six months ended June 30, 2019 was $14.0 million, an increase of $1.7 million from the $12.3 million earned during the same period in 2018. Driven mostly by an increase in average loan balances, interest income increased $2.3 million while interest expense increased

$617,000 due to an increase in customer deposits and rising rates. Cost of funds increased from 0.37% in the first half of 2018 to 0.56% for the first half of 2019. However, net interest margin for the six months ended June 30, 2019 increased 21 basis points to 4.41%, up from 4.20% for the same period in 2018 while for the second quarter the net interest margin increased 20 basis points to 4.41% in 2019.

Noninterest Income/Expense

During the quarter ended June 30, 2019 noninterest income increased $122,000 or 7.3% from the $1.7 million earned for the quarter ended June 30, 2018. Predominately the increase was comprised of service charges on deposits of $63,000 and trust fees of $53,000.

During the six months ended June 30, 2019, noninterest income totaled $3.5 million, an increase of $383,000 from the six months ended June 30, 2018. The largest component of this increase was a $166,000 increase in earnings from the Trust Department followed by increases of $130,000 in gains on sale of loans and $83,000 in ATM service charges.

Noninterest  expense  totaled  $5.8  million  during  the  three  months  ended  June  30,  2019  an  increase of

$791,000 from the second quarter of 2018. There were multiple items making up this total with the largest impact being a reduction in noninterest expense in 2018 related to a onetime adjustment in accruals for self- insurance. During the six months ended June 30, 2019, total noninterest expense increased $1.3 million to

$11.4 million from $10.1 million at June 30, 2018.

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 (“CNB”), is a nationally chartered full service bank, which has served its local communities since its founding in 1934. CNB has grown to over $686 million in assets and is headquartered in Hillsdale, Michigan. CNB provides a wide array of financial products and services through 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