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CNB Community Bancorp, Inc. Reports Fourth Quarter 2019 Results

/ Categories: Bank News

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, 2019. Earnings during the fourth quarter of 2019 totaled $2.0 million, consistent with the $2.0 million earned during the three months ended December 31, 2018. Basic earnings per share increased to $0.98 during the three months ended December 31, 2019, up $0.03 from $0.95 during the fourth quarter of 2018. For the year ended December 31, 2019, CNB Community Bancorp, Inc. (the “Company”) reported net income of $9.2 million, an increase of $695,000, or 8.2%, from the $8.5 million earned during the year ended December 31, 2018. Basic earnings per share increased to $4.37 during the year ended December 31, 2019, up $0.31 from $4.06 during 2018.

The annualized return on average assets (ROA) decreased to 1.12% for the three months ended December 31, 2019, down from 1.20% for the three months ended December 31, 2018. The annualized return on average equity (ROE) decreased to 13.7% for the current quarter, down from 14.2% for the fourth quarter of 2018. ROA remained flat at 1.31% for the year ended December 31, 2019. ROE decreased to 15.3% for 2019, down from 15.8% during the year ended December 31, 2018. Book value per share increased to $30.11 at December 31, 2019, up $3.14 from $26.97 at December 31, 2018.

John R. Waldron, President and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “Our employees worked very hard throughout 2019 and delivered another record year. Loan volume was brisk during the fourth quarter and we have strong momentum as we start 2020.”

Financial Highlights

  • Total assets increased $75.4 million, or 11.4%, to $737.4 million.
  • Net loans increased $55.6 million, or 9.8%, to $622.6 million at December 31, 2019 compared to $567.0 million at December 31, 2018.
  • Total deposits increased $73.2 million, or 12.6%, to $652.0 million at December 31, 2019.
  • Other borrowings decreased $6.1 million to $17.8 million at December 31, 2019.
  • Total equity increased $7.2 million to $63.7 million.
  • Net income increased $695,000, 8.2%, to $9.2 million for 2019 and basic EPS increased $0.31, or 7.6%, to $4.37 from $4.06 for 2019.
  • Net interest income for the fourth quarter of 2019 increased $198,000 to $7.2 million while for the twelve months ended December 31, 2019 net interest income increase $2.2 million or 8.6%.
  • Pre-tax, pre-provision income increased $394,000 to $2.9 million in the fourth quarter of 2019, compared to $2.5 million in the fourth quarter of 2018. For 2019, pre-tax, pre-provision income was $12.2 million, compared to $10.7 million for 2018, an increase of 15.0%.


Balance Sheet Review

The Company’s assets totaled $737.4 million at December 31, 2019 compared to $662.1 million at December 31, 2018.
Net loans increased $55.6 million, or 9.8%, from $567.0 million at December 31, 2018 to $622.6 million at December 31, 2019. The increase in loan balances includes approximately $30.0 million in commercial real estate loans, $21.0 million in commercial loans and $8.6 million in consumer loans. The partial offset to this growth is a decline of $4.0 million in residential real estate loans. Overall, the 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.

Nonperforming assets (which are predominately comprised of nonperforming loans and other real estate owned (“OREO”)) at December 31, 2019 were $3.2 million compared to $2.6 million at December 31, 2018. Nonperforming assets as a percentage of total assets increased to 0.44% at December 31, 2019 from 0.40% at December 31, 2018. OREO and other non-performing assets increased to $253,000 at December 31, 2019 from $223,000 at December 31, 2018.

Nonperforming loans at December 31, 2019 were $3.0 million, an increase of $581,000, or 24.2%, from the $2.4 million balance at December 31, 2018. Nonperforming loans as a percentage of total loans increased to 0.47% at December 31, 2019, as compared to 0.42% at December 31, 2018.

During the quarter ended December 31, 2019 there was recorded a provision for loan losses of $328,000, which is an increase of $272,000 from a provision of $56,000 recorded during the quarter ended December 31, 2018. Net charge-offs totaled $37,000 during the three months ended December 31, 2019 compared to net charge-offs of $90,000 during the same period in 2018. For the twelve months ended December 31, 2019 the provision was $629,000 compared to $206,000 for the twelve months ended December 31, 2018. Net charge-offs totaled $208,000 during the twelve months ended December 31, 2019 compared to net charge-offs of $84,000 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 0.04% for the year ended December 31, 2019, which was an increase from the 0.02% for the same period in 2018. The allowance for loan losses totaled $7.5 million at December 31, 2019 and $7.1 million at December 31, 2018. The allowance for loan losses as a percentage of total loans decreased from 1.23% at December 31, 2018 to 1.18% at December 31, 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 aggregated $33.3 million at December 31, 2019, up 16.5% from $28.6 million at December 31, 2018. This increase was largely a result of purchases made late in 2019 that were partially offset by maturities of municipals and certificate of deposits at other banks combined with normal amortization of purchase premiums and paydowns. The Bank continues to focus on growing the portfolio through prudent investment in securities that align with the Bank’s investment criteria.
Noninterest bearing deposits have increased by $21.6 million from $139.9 million at December 31, 2018. Interest bearing deposits have increased from $438.9 million at December 31, 2018 to $490.5 million at December 31, 2019. The growth in deposits is a result of ongoing efforts by our employees with significant credit given to our Treasury Management team.

CNB Community Bancorp, Inc.’s outstanding note payable decreased $1.1 million from $8.1 million at December 31, 2018 to $7.0 million at December 31, 2019 as the Company paid down principal along with interest in the normal course of amortization. Furthermore, there was a maturity of a $5.0 million borrowing at the bank level in 2019.
Total shareholders’ equity increased $7.2 million from $56.5 million at December 31, 2018 to $63.7 million at December 31, 2019. The $7.2 million increase was mainly related to earnings during 2019 of $9.2 million, $584,000 of equity compensation and a change in other comprehensive income of $38,000, which were partially offset by a $1.22 per share cash dividend totaling $2.6 million.

Net Interest Income and Net Interest Margin

Net interest income, on a nontax-equivalent basis, was $28.2 million for the year ended December 31, 2019, up $2.2 million, or 8.6%, from $26.0 million during 2018. Interest income increased $3.6 million, or 12.4%, from $28.6 million during 2018 to $32.2 million during the current year primarily due to an increase in average loan balances booked at market rates. Interest expense increased $1.3 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. For the year ended December 31, 2019, the net interest margin on a fully taxable equivalent basis fell to 4.30% from 4.31% in 2018.

Net interest income, on a nontax-equivalent basis, for the three months ended December 31, 2019 was $7.2 million, an increase of $198,000 from the $7.0 million earned during the same period in 2018. 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 $722,000 during the three months ended December 31, 2018 to $1.1 million during the quarter ended December 31, 2019 related to increases in overall deposit balances. Net interest margin on a fully taxable equivalent basis for the three months ended December 31, 2019 decreased to 4.17% from 4.24% during the fourth quarter of 2018. The first of the three Federal Open Market Committee rate cuts of 25 BPs was on July 31, 2019. These cuts impacted the interest rate market over the last five months of 2019, which was a significant factor in the net interest margin for the fourth quarter of 2019 decreasing.

Noninterest Income/Expense

During the year ended December 31, 2019 noninterest income totaled $7.5 million, an increase of $1.3 million from the $6.2 million totaled during 2018. Increases in the gain on sale of loans of approximately $801,000 and Wealth Management Department (formerly known as Trust Department) gross income of $246,000 drove the year-over-year increase.

During the three months ended December 31, 2019 noninterest income totaled $2.1 million, an increase of $543,000 from the three months ended December 31, 2018. Increases in the gain on sale of loans of approximately $415,000 drove the quarter-over-quarter increase. This increase was predominately related to the interest rate environment in 2019 due to lower rates for mortgages. Noninterest expense increased $1.9 million, or 9.0%, to $23.5 million during the twelve months ended December 31, 2019, up from $21.6 million during 2018.

Noninterest expense totaled $6.3 million during the three months ended December 31, 2019 an increase of $347,000 from the fourth quarter of 2018. The largest component of the year-over year increase in noninterest expense was an increase in salary and benefit expense of $1.6 million on a year-over-year basis. Of which, approximately $1.66 million was expense for base wages including overtime and incentives that was due to increase in personnel, normal annual wage adjustments and increased production. Further, the quarter-over-quarter increase was largely a result of an increase in donations of $296,000 as the Company opened a private charitable foundation in the fourth quarter of 2019.

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@cnbb.bank 517-439-6115
  • L. Michelle Heminger, michelle.heminger@cnbb.bank 517-439-0401

Media Contact:

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

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.


 

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