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CNB COMMUNITY BANCORP, INC. REPORTS THIRD QUARTER 2019 RESULTS

October 11, 2019 | Return to News & Updates

CNB Community Bancorp, Inc. (OTC:CNBB), the parent company of County National Bank, today announced record earnings for the three and nine months ended September 30, 2019. Earnings during the third quarter of 2019 for CNB Community Bancorp, Inc. (the “Company”) totaled $2.5 million, an increase of $183,000, or 8.0%, from $2.3 million earned during the three months ended September 30, 2018. Basic earnings per share increased to $1.18 during the three months ended September 30, 2019, up $0.08 from $1.10 earned during the third quarter of 2018. For the nine months ended September 30, 2019, the Company reported net income of $7.1 million, an increase of $645,000 from the $6.5 million earned during the nine months ended September 30, 2018. Basic earnings per share increased to $3.40 for the nine months ended September 30, 2019 up $0.29 from the $3.11 earned during the first nine months of 2018.

The annualized return on average assets (ROA) slightly decreased to 1.39% for the three months ended September 30, 2019, from 1.40% for the three months ended September 30, 2018. The annualized return on average equity (ROE) decreased to 16.18% during the current quarter, from 16.73% during the third quarter of 2018. ROA increased to 1.37% during the nine months ended September 30, 2019, from 1.34% during the same period in 2018. ROE increased to 16.13% during the nine months ended September 30, 2019 up from 16.09% during the nine month period ended September 30, 2018. Book value per share increased to $29.64 at September 30, 2019, up $3.37 from $26.27 at September 30, 2018.

John R. Waldron, President and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “Our model of banking is to service our communities and grow with them. Our branches excel at this, our lenders excel at this and our Wealth Management personnel excel at this. These first nine months of 2019 have reflected that community growth as we have seen expansion of relationships within all of the counties we serve. Also, our employees are working within these communities in a number of charitable events to support the people who truly are in need.”

Financial Highlights

  • Total assets increased $66.9 million, or 10.2%, to $722.6 million from September 30, 2018 and $60.5 million, or 9.1% from December 31, 2018.
  • Net loans increased $42.8 million, or 7.7%, to $600.5 million at September 30, 2019 compared to $557.7 million at September 30, 2018 and increased $33.2 million, or 5.9% from December 31, 2018.
  • Total deposits increased $64.0 million, or 11.1%, to $638.5 million at September 30, 2019 from $574.5 million at September 30, 2018 and increased $59.6 million, or 10.3% from December 31, 2018.
  • Net income increased $183,000, or 8.0%, to $2.5 million in the third quarter of 2019 and basic EPS increased $0.08, or 7.3%, to $1.18 from $1.10 in the third quarter of 2018.
  • The net interest margin for the Bank for the third quarter of 2019 was 4.25%, compared to 4.35% for the third quarter of 2018. The net interest margin for the nine months ended September 30, 2019 was 4.35%, compared to 4.24% for the same period in 2018.
  • Net interest income increased $2.0 million to $21.1 million year-to-date 2019.
  • Pre-tax, pre-provision income increased $413,000 to $3.3 million in the third quarter of 2019, compared to $2.8 million in the third quarter of 2018. For the nine months ended September 30, 2019, pre-tax, pre-provision income was $9.3 million, compared to $8.1 million for the nine months ended September 30, 2018.
  • Book value per share increased $3.37, or 12.9%, to $29.64 at September 30, 2019, up from $26.27 at September 30, 2018 and up $2.67 from $26.97 at December 31, 2018.

Balance Sheet Review
The Company’s assets totaled $722.6 million at September 30, 2019, compared to $662.1 million at December 31, 2018, and $655.7 million at September 30, 2018.
Net loans totaled $600.5 million at September 30, 2019, compared to $567.3 million at December 31, 2018 and $557.7 at September 30, 2018.
The loan portfolio at September 30, 2019 included approximately $311.9 million in commercial real estate loans, $130.6 million in residential mortgage loans, $124.8 million in commercial loans and $40.4 million in consumer loans.

Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at September 30, 2019 were $3.1 million compared to $2.6 million at December 31, 2018 and $3.0 million at September 30, 2018. Nonperforming assets as a percentage of total assets increased to 0.43% at September 30, 2019 from 0.40% at December 31, 2018 and decreased from 0.46% at September 30, 2018.

OREO decreased to zero at September 30, 2019 from $223,000 at December 31, 2018 and $282,000 at September 30, 2018.
Nonperforming loans at September 30, 2019 were $3.1 million, an increase of $717,000, or 29.9%, from the $2.4 million balance at December 31, 2018 and an increase of $ 358,000, or 13.0%, from the $2.8 million at September 30, 2018. Nonperforming loans as a percentage of total loans increased to 0.51% at September 30, 2019, as compared to 0.42% at December 31, 2018 and 0.49% at September 30, 2018.

During the quarter ended September 30, 2019 there was recorded a provision for loan losses of $100,000, which is an increase of $44,000 from a provision of $56,000 recorded during the quarter ended September 30, 2018. Net charge-offs totaled $20,000 during the three months ended September 30, 2019 compared to net charge-offs of $21,000 during the same period in 2018. For the first nine months of 2019 the provision was $301,000 compared to $150,000 for the nine months ended September 30, 2018. Net charge-offs totaled $171,000 during the nine months ended September 30, 2019 compared to net charge-offs of $71,000 during the same period in 2018. The increase in provision is directly related to the growth in the loan portfolio.

Net charge-offs as a percentage of average loans was 0.03% for the nine months ended September 30, 2019, which was an increase from the 0.01% for the nine months ended September 30, 2018. The allowance for loan losses totaled $7.2 million at September 30, 2019 and $7.0 million at September 30, 2018. The allowance for loan losses as a percentage of total loans decreased from 1.24% at September 30, 2018 to 1.18% at September 30, 2019. The decline in the required allowance for loan losses is directly attributable to stable regional economic conditions as we have experienced growth of high quality credits and a decline in specific impairments.

Total investment securities totaled $27.4 million at September 30, 2019, down 4.2% from $28.6 million at December 31, 2018 and 8.7% from the $30.0 million at September 30, 2018. This decrease was largely a result of maturities in 2019 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 government and municipal securities.

At September 30, 2019, total deposits were $638.5 million, compared to $578.9 million at December 31, 2018 and $574.5 million, a year ago.
Noninterest bearing deposits have increased by $15.1 million from $140.0 million at December 31, 2018 and $14.1 million from $140.9 million at September 30, 2018. Interest bearing deposits have increased from $438.9 million at December 31, 2018 to $483.5 million at September 30, 2019 and increased from $433.6 million at September 30, 2018. The growth in deposits is a result of ongoing efforts by our employees.

CNB Community Bancorp, Inc.’s outstanding note payable was at $7.3 million at September 30, 2019, compared to $8.1 million at December 31, 2018 and $8.4 million at September 30, 2018. The Company continues to make principal and interest payments at the holding company. Furthermore, the Bank had a $5.0 million dollar Federal Home Loan Bank borrowing that matured and was not replaced in May of 2019.

Total shareholders’ equity increased to $62.2 million at September 30, 2019, compared to $56.5 million at December 31, 2018 and $55.0 million at September 30, 2018. The $5.7 million increase in equity since the end of 2018 was mainly related to earnings over those nine months of $7.1 million that was partially offset by a $0.76 per share cash dividend totaling $1.6 million.

Net Interest Income and Net Interest Margin

Net interest income, on a nontax-equivalent basis, was $7.1 million for the quarter ended September 30, 2019, up $353,000, or 5.3%, from $6.7 million for the quarter ended September 30, 2018. Interest income increased $726,000, or 9.8%, from $7.4 million during the quarter ended September 30, 2018 to $8.1 million in the current quarter primarily due to an increase in average loan balances but somewhat offset by two 25 basis point decreases in the federal funds rate (August 1, 2019 and September 19, 2019). Interest expense increased $373,000, which is related to increasing market competition 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, 2019 decreased to 4.25%, from 4.35% during the three months ended September 30, 2018.

Net interest income, on a nontax-equivalent basis, for the nine months ended September 30, 2019 was $21.1 million, an increase of approximately $2.0 million from the $19.0 million earned during the same period in 2018. Driven primarily by an increase in average loan balances, interest income increased by $3.0 million while interest expense increased by $990,000 due to the increase in interest bearing deposits and the overall rate environment. Net interest margin for the bank for nine months ended September 30, 2019 increased 11 basis points to 4.35%, up from 4.24% for the same period in 2018.

Noninterest Income/Expense

During the quarter ended September 30, 2019 noninterest income increased $383,000 or 23.5% from the $1.6 million earned for the quarter ended September 30, 2018. Predominately the increase was driven by an increase of the gain on sale of loans of $246,000, deposit account service charges of $45,000 and ATM service charges of $42,000.

During the nine months ended September 30, 2019, noninterest income totaled $5.5 million, an increase of $766,000 from the nine months ended September 30, 2018. The largest components of this increase were a $376,000 increase in gain on sale of loans, a $190,000 increase in earnings from the Wealth Management Department, a $128,000 increase in service charges on deposits and an increase of $103,000 in ATM service charges.

Noninterest expense totaled $5.8 million during the three months ended September 30, 2019 an increase of $323,000 from the third quarter of 2018. There were multiple items making up this total, of which, the $318,000 from salaries and employee benefits was the primary cause of the increase. During the nine months ended September 30, 2019, total non-interest expense increased $1.6 million from $15.6 million for the same period in 2018 to $17.2 million in 2019. The primary driver being a $1.5 million increase in salaries and employee benefits due to an increase in number of employees, employee compensation and the Company covering a larger share of healthcare costs.

About CNB Community Bancorp Inc.

CNB Community Bancorp, Inc. (OTC:CNBB) is a one-bank holding company formed in 2005. Its subsidiary bank, 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 investment management and trust 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:

  • John R. Waldron, President & CEO Craig S. Connor, Chairman of the Board

 

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.