Community National Bank Announces Earnings For Second Quarter Of 2013

GREAT NECK, N.Y., July 22, 2013 /PRNewswire/ -- Community National Bank (SYMBOL: CBNY.OB) today announced second quarter results for 2013.  Highlights for the quarter include:

  • Net income of $794 thousand or $0.12 per share for the second quarter of 2013 compared to net income of $672 thousand or $0.10 per share for the same period in 2012. 
  • Net interest income increased 27% or $1.4 million to $6.5 million for the quarter ended June 30, 2013 compared to $5.1 million for the quarter ended June 30, 2012.
  • Net interest margin improved 24 basis points to 3.81% for the quarter ended June 30, 2013 from 3.57% for the same period in 2012.  
  • Commercial loans grew 28% or $81.7 million to $372.2 million at June 30, 2013 when compared to June 30, 2012.
  • Demand deposits increased $49.7 million or 41% to $169.9 million at June 30, 2013 when compared to June 30, 2012.
  • Strong asset quality with non-performing assets to total assets of 0.30%, which is well below peer group average.
  • Return on average assets and equity of 0.44% and 4.36%, respectively, for the quarter ended June 30, 2013.

Stuart Lubow, Chairman, President and CEO of Community National Bank, commented, "The Bank made significant progress since last year. Our total loan portfolio increased $102 million or 23% to approximately $550 million and demand deposits grew approximately $50 million or 41% since June 30, 2012, helping to improve our net interest margin by 24 basis points to 3.81%. We continue to focus on core earnings growth and made tremendous strides with service charge income increasing by $109 thousand or 69% when compared to the three months ending June 30, 2012.  We are excited about the opening of our eleventh branch location in Hewlett and the relocation of our corporate headquarters to Melville this upcoming August. We believe it is important to be centrally located on Long Island and this new corporate headquarters provides us with additional visibility and convenience to our customers. The Bank's commercial loan portfolio declined $2.5 million during the past quarter when compared to March 31, 2013. The decline was the result of large payoffs in our taxi medallion loan portfolio. The marketplace for taxi medallions loans has become very competitive and many financial institutions have lowered their underwriting standards at a time when taxi medallion prices have reached record valuations. We did not think it was prudent to match our competitors' terms. Our loan pipeline remains robust and we anticipate loan growth in the upcoming quarters."

Earnings and Net Interest Income

Net income for the quarter ended June 30, 2013 was $794 thousand or $0.12 basic earnings per share compared to net income of $672 thousand or $0.10 basic earnings per share for the same period in 2012, an increase of 18% or $122 thousand. Net income for the six months ended June 30, 2013 was $1.7 million or $0.26 basic earnings per share compared to net income of $1.2 million or $0.18 basic earnings per share for the same period in 2012, an increase of 45% or $538 thousand.

The increase in net income for both the quarter and six months ended June 30, 2013 was due to higher net interest income associated with loan growth, increases in service fees and servicing income and gains on the sale of loans. These increases were partially offset by higher non-interest expenses associated with our infrastructure build-out and provision for loan losses. 

On a linked quarter basis, net income for the second quarter of 2013 decreased $148 thousand or 16% when compared to the first quarter of 2013.  The decrease was due to higher provisions for loan losses and non-interest expenses, which were partially offset by continued growth in net interest income of $286 thousand or 4.6% to $6.5 million and increased service charges and gains on the sale of loans.

Net interest income for the quarter ended June 30, 2013 increased $1.4 million or 27% to $6.5 million from $5.1 million for the quarter ended June 30, 2012. The net interest margin increased 24 basis points to 3.81% for the second quarter of 2013 compared to 3.57% for the same period in 2012. Net interest income for the six months ended June 30, 2013 increased $2.8 million or 28% to $12.7 million from $9.9 million for the six months ended June 30, 2012. The net interest margin also increased during these corresponding periods by 19 basis points to 3.81% for the six months ended June 30, 2013 from 3.62% for the prior year period.

The increase in net interest income and margin for both the quarter and six months ended June 30, 2013 was primarily due to (1) growth in our commercial and residential loan portfolios; (2) higher non-interest bearing demand deposits; and (3) a continued decline in overall cost of funds on deposits. 

Non-Interest Income

Non-interest income increased approximately $260 thousand or 30% to $1.1 million for the quarter ended June 30, 2013 compared to $0.9 million for the prior year quarter. Non-interest income for the six months ended June 30, 2013 increased $485 thousand or 32% to $2.0 million from $1.5 million for the same period in 2012. The increase in non-interest income was attributable to higher service fees and gains on the sale of SBA loans for both the quarter and six months ended June 30, 2013.  

Non-Interest Expense

Non-interest expense increased $841 thousand or 19% to $5.3 million for the quarter ended June 30, 2013 from $4.5 million for the same period in 2012. The increase was attributable to higher compensation associated with the hiring of a director of human resources, a senior vice president of operations, support staff for lending and higher occupancy costs associated with the new Hewlett branch location and corporate headquarters in Melville, both of which are expected to open in August 2013.

Balance Sheet and Asset Quality

Total assets grew $99.3 million or 16% to $718.1 million at June 30, 2013 compared to total assets of $618.7 million at June 30, 2012. Total loans increased $102.8 million or 23% to $548.3 million at June 30, 2013 when compared to June 30, 2012. The commercial loan portfolio increased $81.7 million or 28% when compared to June 30, 2012. The residential and consumer loan portfolio increased $21.1 million or 13.6% when compared to June 30, 2012. Loan growth was funded by increases in core deposits from our existing branch network as well as our newest location in New York City, which opened in June 2012, and additional municipal deposit relationships and FHLB advances.  

Our asset quality remains strong and a core focus during these challenging economic times. Non-performing loans, consisting of loans past due 90 days or more, increased $1.4 million to $2.1 million or 0.39% of total loans at June 30, 2013 from $0.7 million or 0.17% of total loans at June 30, 2012.

The Bank's provision for loan losses for the second quarter of 2013 was $995 thousand, an increase of $520 thousand or 109% when compared to the prior year quarter. The allowance for loan losses was $8.2 million or 1.50% of total loans at June 30, 2013, an increase of approximately $2.8 million from $5.4 million or 1.21% of total loans at June 30, 2012. The increase in the allowance for loan losses was mostly attributable to general valuation reserves related to the significant commercial loan growth since June 30, 2012. 

The Bank did not have any other real estate owned at June 30, 2013. It had one property classified as other real estate owned at June 30, 2012, which sold for its carrying value in the fourth quarter of 2012. 

Deposits

Total deposits increased $73.3 million or 14% to $585.2 million at June 30, 2013 from $511.9 million at June 30, 2012. Demand deposits grew $49.7 million or 41% to $169.9 million at June 30, 2013 when compared to June 30, 2012.

Further information about the financial condition and performance of Community National Bank is available from its Call Reports filed by the Bank with the FDIC and available on the FDIC website at: http://research.fdic.gov/bankfind. The Bank expects to file its June 30, 2013 Call Report on or around July 30, 2013.

ABOUT COMMUNITY NATIONAL BANK
Community National Bank is a Long Island based independent commercial bank and operates ten locations in Nassau, Suffolk, Queens, and Manhattan Counties. We offer a full range of modern financial services, backed by state-of-the-art technology. In addition to commercial loans, commercial mortgages, small business loans and lines of credit and residential mortgages, CNB also provides a complete selection of traditional personal and commercial deposit products such as no fee individual and business checking accounts, IRA accounts and statement savings.

Cautionary Statement about Forward-Looking Statements
This release contains certain "forward looking statements" about CNB which, to the extent applicable, are intended to be covered by the safe harbor for forward looking statements provided under the Federal securities laws and, regardless of such coverage, you are cautioned about. Examples of forward-looking statements include but are not limited to, CNB's financial condition, capital ratios, results of operations and outlook. Forward-looking statements are not historical facts. Such statements may be identified by the use of such words as "may," "believe," "expect," "anticipate," "plan," "continue," or similar terminology. These statements relate to future events or our future financial performance and involve risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we caution you not to place undue reliance on these forward-looking statements. Factors which may cause our forward looking statements to be materially inaccurate include, but are not limited to, a unexpected deterioration in our loan portfolio, unexpected increases in our expenses, greater than anticipated growth, unanticipated regulatory action, unexpected changes in interest rates, a loss of key personnel, an unanticipated loss of existing customers, competition from other institutions causing us unanticipated changes in our deposit or loan rates, increases in FDIC insurance costs and unanticipated adverse changes in our customers' economic conditions or economic conditions in our local area generally. Forward-looking statements speak only as of the date of this press release We do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

COMMUNITY NATIONAL BANK

STATEMENTS OF INCOME

Unaudited





For The Three Months Ended

For The Six Months Ended


June 30,

June 30,

June 30,

June 30,


2013

2012

2013

2012

Interest Income:





Commercial Loans

$5,194,321

$3,984,291

$10,128,014

$7,724,975

Residential and Consumer Loans

1,670,716

1,640,173

3,318,586

3,268,934

Securities

551,025

626,625

1,092,110

1,211,475

Money Market Investments

10,823

10,216

20,538

17,295

   Total Interest Income

7,426,885

6,261,305

14,559,248

12,222,679






Interest Expense:





NOW, Savings & Money Market

175,984

235,288

380,804

438,969

Certificates of Deposit

592,243

754,517

1,169,675

1,564,758

Borrowed Funds

155,129

149,253

288,137

305,723

   Total Interest Expense

923,356

1,139,058

1,838,616

2,309,450

      Net Interest Income

6,503,529

5,122,247

12,720,632

9,913,229

Provision For Loan Losses

995,000

475,000

1,615,000

918,000

Net Interest Income After Provision for Loan Losses

5,508,529

4,647,247

11,105,632

8,995,229






Non-Interest Income:





Service Charges

267,690

158,438

514,510

300,456

Servicing Income & Loan Fees

134,972

79,510

229,495

172,963

Gain on Sale of Investments

-

-

29,439

132,576

Gain on Sale of Loans

575,299

442,252

921,759

562,933

BOLI Income

148,137

186,034

306,256

347,296

   Total Non-Interest Income

1,126,098

866,234

2,001,459

1,516,224






Non-Interest Expense:





Compensation and Benefits

2,639,070

2,258,229

5,187,139

4,416,705

Occupancy and Equipment

1,340,234

1,139,060

2,642,791

2,210,313

Advertising

67,045

52,360

108,308

99,385

Other Expenses

1,263,153

1,018,972

2,337,137

1,938,902

   Total Non-Interest Expense

5,309,502

4,468,621

10,275,375

8,665,305

Income Before Income Taxes

1,325,125

1,044,860

2,831,716

1,846,148

Provision For Income Taxes

530,999

372,754

1,095,001

646,954

      Net Income

$794,126

$672,106

1,736,715

$1,199,194






Earnings Per Share:





   Basic

$0.12

$0.10

$0.26

$0.18

   Diluted

$0.12

$0.10

$0.26

$0.18

   Weighted Average Shares Outstanding – Basic

6,673,181

6,673,181

6,673,181

6,673,181

   Weighted Average Shares Outstanding – Diluted

6,767,440

6,700,265

6,756,881

6,692,062

 

COMMUNITY NATIONAL BANK

STATEMENTS OF INCOME

Unaudited





For the Three Months Ended


June 30,

March 31,

December 31,

September 30,


2013

2013

2012

2012

Interest Income:





Commercial Loans

$5,194,321

$4,933,693

$4,503,513

$4,198,087

Residential and Consumer Loans

1,670,716

1,647,870

1,626,252

1,631,210

Securities

551,025

541,085

541,214

587,751

Money Market Investments

10,823

9,715

23,148

11,183

   Total Interest Income

7,426,885

7,132,363

$6,694,127

6,428,231






Interest Expense:





NOW, Savings & Money Market

175,984

204,820

229,149

234,914

Certificates of Deposit

592,243

577,432

649,781

707,539

Borrowed Funds

155,129

133,008

125,485

138,624

   Total Interest Expense

923,356

915,260

1,004,415

1,081,077

      Net Interest Income

6,503,529

6,217,103

5,689,712

5,347,154

Provision For Loan Losses

995,000

620,000

800,000

475,000

Net Interest Income After Provision for Loan Losses

5,508,529

5,597,103

4,889,712

4,872,154






Non-Interest Income:





Service Charges

267,690

246,820

189,246

140,704

Loan Fees & Servicing Income

134,972

94,523

99,005

136,067

Gain on Sale of Investments

-

29,439

6,788

141,217

Gain on Sale of Loans

575,299

346,460

289,091

656,256

BOLI Income

148,137

158,119

196,659

177,812

   Total Non-Interest Income

1,126,098

875,361

780,789

1,252,056






Non-Interest Expense:





Compensation and Benefits

2,639,070

2,548,069

2,380,164

2,355,625

Occupancy and Equipment

1,340,234

1,302,557

1,141,651

1,168,866

Advertising

67,045

41,263

59,419

59,409

Other Expenses

1,263,153

1,073,984

1,039,938

1,039,594

   Total Non-Interest Expense

5,309,502

4,965,873

4,621,172

4,623,494

Income Before Income Taxes

1,325,125

1,506,591

1,049,329

1,500,716

Provision For Income Taxes

530,999

564,002

356,929

541,050

      Net Income

$794,126

$942,589

$692,400

$959,666






Earnings Per Share:





   Basic

$0.12

$0.14

$0.10

$0.14

   Diluted

$0.12

$0.14

$0.10

$0.14

   Weighted Average Shares Outstanding – Basic

6,673,181

6,673,181

6,673,181

6,673,181

   Weighted Average Shares Outstanding – Diluted

6,767,440

6,745,079

6,701,691

6,697,975







 

COMMUNITY NATIONAL BANK

STATEMENTS OF CONDITION

Unaudited








June 30,

March 31,

December 31,

June 30,


2013

2013

2012

2012

Assets:





Cash and Due From Banks

$7,927,992

$8,223,778

$13,453,651

$7,980,739

Money Market Investments

18,966,565

15,708,308

7,391,467

11,756,613






Securities - Available-for-Sale

107,982,445

104,853,026

100,126,177

116,969,332

Restricted Stock

5,494,450

4,603,950

3,904,850

4,080,250

   Total Securities

113,476,895

109,456,976

104,031,027

121,049,582






Loans Held-For-Sale

-

-

-

400,000






Commercial Loans

372,236,723

374,772,120

351,587,251

290,558,824

Residential & Consumer Loans

176,034,480

167,837,569

160,030,011

154,910,682

Gross Loans Held-For-Investment

548,271,203

542,609,689

511,617,262

445,469,506

Less:  Allowance For Loans Losses

(8,228,359)

(7,227,875)

(6,606,498)

(5,396,607)

   Net Loans Held-For-Investment

540,042,844

535,381,814

505,010,764

440,072,899






Premises and Equipment, net

9,590,787

8,614,816

8,709,570

9,087,941

Bank Owned Life Insurance ("BOLI")

19,800,850

19,651,976

19,493,857

19,119,387

Other Assets

8,246,406

8,505,838

7,693,014

9,281,539

   Total Assets

$718,052,339

$705,543,506

$665,783,350

$618,748,700






Liabilities and Stockholders' Equity:





Deposits:





Demand

$169,896,257

$161,971,063

$155,877,268

$120,182,668

NOW, Savings & Money Market

230,706,025

254,477,223

233,241,844

202,311,136

Certificates of Deposit

184,636,337

171,504,040

174,223,625

189,446,881

   Total Deposits

585,238,619

587,952,326

563,342,737

511,940,685






FHLB Advances

56,951,949

40,462,894

$24,970,887

33,978,085

Accrued Expenses and Other Liabilities

4,170,988

4,731,800

5,666,170

2,917,289

   Total Liabilities

646,361,556

633,147,020

593,979,794

548,836,059






Stockholders' Equity:





Common Stock, par value $5.00; authorized





10,000,000 shares;  issued 6,673,181 shares

33,365,905

33,365,905

33,365,905

33,365,905

Additional Paid in Capital

34,228,336

34,164,118

34,101,246

33,968,660

Retained Earnings

5,192,007

4,397,881

3,455,292

1,803,226

Unrealized (Loss)/Gain on Securities

(1,095,465)

468,582

881,113

774,850

      Total Stockholders' Equity

71,690,783

72,396,486

71,803,556

69,912,641

      Total Liabilities and Stockholders' Equity

$718,052,339

$705,543,506

$665,783,350

$618,748,700







 

COMMUNITY NATIONAL BANK

SELECTED FINANCIAL DATA & BALANCE SHEET COMPONENTS

Unaudited








For The Three Months Ended

For The Six Months Ended


June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

Per Share:





Net Income-Basic

$0.12

$0.10

$0.26

$0.18

Average Shares Outstanding – Basic

6,673,181

6,673,181

6,673,181

6,673,181

Net Income – Diluted

$0.12

$0.10

$0.26

$0.18

Average Shares Outstanding – Diluted

6,767,440

6,700,265

6,756,881

6,692,062

Book Value

$10.74

$10.48

$10.74

$10.48






Performance:





Return on Average Assets

0.44%

0.44%

0.49%

0.41%

Return on Average Equity

4.36%

3.88%

4.80%

3.49%

Efficiency Ratio

69.59%

74.62%

69.80%

75.82%






Yield on Average Earning Assets

4.35%

4.37%

4.36%

4.47%

Cost on Average Interest Bearing Liabilities

0.78%

1.08%

0.79%

1.16%

Cost of Deposits

0.53%

0.78%

0.53%

0.84%

Net Interest Spread

3.57%

3.29%

3.58%

3.31%

Net Interest Margin

3.81%

3.57%

3.81%

3.62%







Quarter Ended


June 30,

March 31,

December 31,

June 30,


2013

2013

2012

2012

Capital Ratios:


Tangible Common Equity

9.98%

10.26%

10.78%

11.30%

Leverage

10.10%

10.42%

10.35%

11.00%

Tier 1

13.90%

13.77%

13.85%

15.53%

Total Risk Based

15.16%

15.02%

15.10%

16.78%






Asset Quality:





Allowance for Loan Losses to Total Loans

1.50%

1.33%

1.29%

1.21%

Allowance for Loan Losses to Non-Performing Loans

386%

706%

456%

732%

Non-Performing Loans to Total Loans

0.39%

0.19%

0.28%

0.17%

Non-Performing Assets to Total Assets

0.30%

0.15%

0.22%

0.21%

Annualized Quarterly Net Charge offs to Avg. Loans

0.00%

0.00%

0.08%

0.26%






 

SOURCE Community National Bank



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