Community National Bank Announces Earnings For Second Quarter Of 2014

MELVILLE, N.Y., July 18, 2014 /PRNewswire/ -- Community National Bank (OTC: CBNY) today announced second quarter results for 2014.  Highlights for the quarter include:

  • Net income of $1.1 million or $0.15 per share for the second quarter of 2014 compared to net income of $0.8 million or $0.12 per share for the same period in 2013. 
  • Net interest income increased 13% or $0.9 million to $7.4 million for the quarter ended June 30, 2014 compared to $6.5 million for the quarter ended June 30, 2013.
  • Return on average assets and equity of 0.48% and 5.51%, respectively, for the quarter ended June 30, 2014 compared to 0.44% and 4.36%, respectively, for the quarter ended June 30, 2013. 
  • Commercial loans grew $137.0 million or 37% to $509.2 million at June 30, 2014 when compared to June 30, 2013.
  • Deposits increased $205.1 million or 35% to $790.3 million at June 30, 2014 compared to $585.2 million at June 30, 2013.
  • Demand deposits grew $50.7 million or 30% to $220.6 million at June 30, 2014 compared to $169.9 million at June 30, 2013.

Net Income

Net income for the quarter ended June 30, 2014 was $1.1 million or $0.15 diluted earnings per share compared to net income of $0.8 million or $0.12 diluted earnings per share for the same period in 2013, an increase of 29%. Net income for the six months ended June 30, 2014 was $2.1 million or $0.31 diluted earnings per share compared to net income of $1.7 million or $0.26 diluted earnings per share for the same period in 2013, an increase of 22%. 

The increase in net income for both the quarter and six months ended June 30, 2014 was due to higher net interest income associated with loan growth, lower provision for loan losses and increased fees from service charges and loan servicing income.  The increases were partially offset by lower gains from the sale of SBA loans and higher non-interest expenses associated with our new branch located in Hewlett, New York and our new corporate headquarters in Melville, New York.  These two facilities opened during the third quarter of 2013.

On a linked quarter basis, net income for the second quarter of 2014 declined slightly.  Net income for the second quarter of 2014 did not include $385 thousand in loan prepayment penalties that were received from borrowers and recorded during the first quarter of 2014. In addition, gains on the sale of SBA loans decreased by $552 thousand. These items were partially offset by declines of $435 thousand in the provision for loan losses and $128 thousand in non-interest expenses. 

Net Interest Income

For the quarter ended June 30, 2014, net interest income increased $0.9 million or 13% to $7.4 million compared to $6.5 million for the quarter ended June 30, 2013. The net interest margin decreased by 24 basis points to 3.60% for the quarter ended June 30, 2014 from 3.81% for the quarter ended June 30, 2013.

For the six months ended June 30, 2014, net interest income increased $2.3 million or 18% to $15.0 million compared to $12.7 million for the six months ended June 30, 2013. The net interest margin decreased by 9 basis points to 3.72% for the six months ended June 30, 2014 from 3.81% for the six months ended June 30, 2013.

The increase in net interest income for the quarter and six months ended June 30, 2014 was primarily due to (1) continued growth in our commercial and residential loan portfolios; (2) higher non-interest bearing demand deposits; and (3) a decline in the cost of average interest bearing deposits.

The decrease in the net interest margin from comparable periods in the prior year was due to new loan originations carrying lower yields and re-pricing downward at a faster pace than average interest bearing liabilities. If interest rates continue to remain low, we expect to face a continued narrowing of our net interest margin as the cost of funds on deposits reaches a floor and competition from other financial institutions continue to put pressure on loan yields. 

Non-Interest Income

Non-interest income decreased $0.3 million or 29% to $0.8 million for the quarter ended June 30, 2014 compared to $1.1 million for the prior year period. The decrease in non-interest income was attributable to lower gains from the sale of SBA loans, which was partially offset by increased fees from service charges and loan servicing income. 

Non-Interest Expense

Non-interest expense increased $0.6 million or 12% to $5.9 million for the quarter ended June 30, 2014 compared to $5.3 million for the same period in 2013. The increase was attributable to higher compensation and occupancy costs associated with (1)  our Hewlett branch location; (2) the addition of a new Senior Credit Officer and other personnel in loan administration and bank operations; and (3) increased depreciation expense for our new corporate headquarters and branch location.  Other expenses increased approximately $100 thousand or 10% to $1.4 million for the three months ended June 30, 2014 from $1.3 million for the three months ended June 30, 2013.  The increase was mostly attributable to higher data and item processing costs, compliance costs and FDIC assessments. 

Balance Sheet

Total assets grew to $908.8 million at June 30, 2014, an increase of $190.8 million or 27% when compared to total assets of $718.0 million at June 30, 2013. Total loans increased $175.2 million or 32% to $723.5 million at June 30, 2014 when compared to June 30, 2013. The commercial loan portfolio increased $137.0 million or 37% when compared to June 30, 2013 and the residential loan portfolio increased $38.3 million or 22% when compared to June 30, 2013. Loans were funded primarily by the growth in deposits.

Total deposits increased $205.1 million or 35% to $790.3 million at June 30, 2014 from $585.2 million at June 30, 2013. Demand deposits grew $50.7 million or 30% to $220.6 million at June 30, 2014 when compared to June 30, 2013.  The increase was due primarily to additional commercial business relationships. Demand deposits represented 28% of total deposits at June 30, 2014.  NOW, savings and money market deposits increased $100.6 million or 44% to $331.3 million at June 30, 2014 from $230.7 million at June 30, 2013. A significant portion of the money market growth was from new and existing municipal banking relationships.

Asset Quality & Capital

Non-performing loans, which consist of loans past due 90 days or more, were $2.7 million or 0.37% of total loans at June 30, 2014 compared to $2.1 million or 0.39% of total loans at June 30, 2013. The Bank recorded $0.5 million in provision for loan losses during the second quarter of 2014 compared to $1.0 million for the second quarter of 2013. The Bank did not own any foreclosed properties at June 30, 2014 and 2013, respectively.

The allowance for loan losses was $10.9 million or 1.51% of total loans at June 30, 2014, an increase of $2.7 million from $8.2 million or 1.50% of total loans at June 30, 2013. 

The Bank continues to have significant capital strength with Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of 8.94%, 11.42% and 12.68%, respectively, at June 30, 2014.

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://www.fdic.gov/. The Bank expects to file its June 30, 2014 Call Report on or around July 30, 2014.

ABOUT COMMUNITY NATIONAL BANK
Community National Bank is a Long Island based independent commercial bank and operates eleven 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,


2014

2013

2014

2013

Interest Income:





Commercial Loans

$5,930,011

$5,194,321

$12,120,112

$10,128,014

Residential and Consumer Loans

1,810,821

1,670,716

3,554,382

3,318,586

Securities

640,178

551,025

1,272,525

1,092,110

Money Market Investments

3,577

10,823

7,644

20,538

   Total Interest Income

8,384,587

7,426,885

16,954,663

14,559,248






Interest Expense:





NOW, Savings & Money Market

283,207

175,984

579,020

380,804

Certificates of Deposit

633,285

592,243

1,198,809

1,169,675

Borrowed Funds

102,541

155,129

188,934

288,137

   Total Interest Expense

1,019,033

923,356

1,966,763

1,838,616

      Net Interest Income

7,365,554

6,503,529

14,987,900

12,720,632

Provision For Loan Losses

540,000

995,000

1,515,000

1,615,000

Net Interest Income After Provision for Loan Losses

6,825,554

5,508,529

13,472,900

11,105,632






Non-Interest Income:





Service Charges

355,939

267,690

680,014

514,510

Servicing Income & Loan Fees

177,818

134,972

279,193

229,495

Gain on Sale of Investments

-

-

20,432

29,439

Gain on Sale of Loans

121,024

575,299

794,050

921,759

BOLI Income

148,321

148,137

290,246

306,256

   Total Non-Interest Income

803,102

1,126,098

2,063,935

2,001,459






Non-Interest Expense:





Compensation and Benefits

3,071,264

2,639,070

6,213,716

5,187,139

Occupancy and Equipment

1,455,135

1,340,234

2,976,538

2,642,791

Advertising

44,969

67,045

96,012

108,308

Other Expenses

1,395,784

1,263,153

2,776,430

2,337,137

   Total Non-Interest Expense

5,967,152

5,309,502

12,062,696

10,275,375

Income Before Income Taxes

1,661,504

1,325,125

3,474,139

2,831,716

Provision For Income Taxes

641,000

530,999

1,349,000

1,095,001

      Net Income

$1,020,504

$794,126

$2,125,139

$1,736,715






Earnings Per Share:





   Basic

$0.15

$0.12

$0.32

$0.26

   Diluted

$0.15

$0.12

$0.31

$0.26

   Weighted Average Shares Outstanding – Basic

6,673,181

6,673,181

6,673,181

6,673,181

   Weighted Average Shares Outstanding – Diluted

6,845,990

6,767,440

6,830,153

6,756,881

 

COMMUNITY NATIONAL BANK

STATEMENTS OF INCOME

Unaudited





For the Three Months Ended


June 30,

March 31,

December 31,

September 30,


2014

2014

2013

2013

Interest Income:





Commercial Loans

$5,930,011

$6,190,101

$5,672,443

$5,350,569

Residential and Consumer Loans

1,810,821

1,743,561

1,738,300

1,695,999

Securities

640,178

632,347

609,843

583,095

Money Market Investments

3,577

4,067

20,428

12,880

   Total Interest Income

8,384,587

8,570,076

$8,041,014

7,642,543






Interest Expense:





NOW, Savings & Money Market

283,207

295,813

328,531

221,026

Certificates of Deposit

633,285

565,524

608,736

592,162

Borrowed Funds

102,541

86,393

75,860

118,059

   Total Interest Expense

1,019,033

947,730

1,013,127

931,247

      Net Interest Income

7,365,554

7,622,346

7,027,887

6,711,296

Provision For Loan Losses

540,000

975,000

373,000

2,015,000

Net Interest Income After Provision for Loan Losses

6,825,554

6,647,346

6,654,887

4,696,296






Non-Interest Income:





Service Charges

355,939

324,075

331,778

301,609

Loan Fees & Servicing Income

177,818

101,375

167,308

143,632

Gain on Sale of Investments

-

20,432

-

-

Gain on Sale of Loans

121,024

673,026

26,237

394,166

BOLI Income

148,321

141,925

151,206

148,241

   Total Non-Interest Income

803,102

1,260,833

676,529

987,648






Non-Interest Expense:





Compensation and Benefits

3,071,264

3,142,452

2,836,429

2,665,323

Occupancy and Equipment

1,455,135

1,521,403

1,388,281

1,350,272

Advertising

44,969

51,043

49,321

65,403

Other Expenses

1,395,784

1,380,646

1,499,655

1,297,440

   Total Non-Interest Expense

5,967,152

6,095,544

5,773,686

5,378,438

Income Before Income Taxes

1,661,504

1,812,635

1,557,730

305,506

Provision For Income Taxes

641,000

708,000

596,387

51,915

      Net Income

$1,020,504

$1,104,635

$961,343

$253,591






Earnings Per Share:





   Basic

$0.15

$0.17

$0.14

$0.04

   Diluted

$0.15

$0.16

$0.14

$0.04

   Weighted Average Shares Outstanding – Basic

6,673,181

6,673,181

6,673,181

6,673,181

   Weighted Average Shares Outstanding – Diluted

6,845,990

6,813,748

6,796,064

6,792,969







 

COMMUNITY NATIONAL BANK

STATEMENTS OF CONDITION

Unaudited











June 30,

March 31,

December 31,

June 30,


2014

2014

2013

2013

Assets:





Cash and Due From Banks

$12,876,224

$4,819,820

$8,783,780

$7,927,992

Money Market Investments

28,984,287

15,953,371

2,102,723

18,966,565






Securities – Available-for-Sale

96,991,395

98,770,601

100,894,759

107,982,445

Securities – Held-to-Maturity

8,989,549

5,824,335

6,053,339

-

Restricted Stock

4,924,950

4,899,450

5,408,850

5,494,450

   Total Securities

110,905,894

109,494,386

112,356,948

113,476,895











Commercial Loans

509,189,897

471,362,962

464,037,616

372,236,723

Residential & Consumer Loans

214,296,552

198,968,236

197,350,345

176,034,480

Gross Loans Held-For-Investment

723,486,449

670,331,198

661,387,961

548,271,203

Less:  Allowance For Loans Losses

(10,897,125)

(10,355,770)

(9,383,788)

(8,228,359)

   Net Loans Held-For-Investment

712,589,324

659,975,428

652,004,173

540,042,844






Premises and Equipment, net

10,529,647

10,845,303

11,116,968

9,590,787

Bank Owned Life Insurance ("BOLI")

22,389,807

20,241,485

20,099,560

19,800,850

Other Assets

10,588,820

11,732,819

12,118,062

8,246,406

   Total Assets

$908,864,003

$833,062,612

$818,582,214

$718,052,339






Liabilities and Stockholders' Equity:





Deposits:





Demand

$220,648,870

$198,252,200

$177,107,547

$169,896,257

NOW, Savings & Money Market

331,320,846

323,544,027

316,807,903

230,706,025

Certificates of Deposit

238,321,973

186,568,373

193,134,562

184,636,337

   Total Deposits

790,291,689

708,364,600

687,050,012

585,238,619






FHLB Advances

37,178,305

43,601,230

54,921,135

56,951,949

Accrued Expenses and Other Liabilities

6,148,817

7,773,533

4,985,420

4,170,988

   Total Liabilities

833,618,811

759,739,363

746,956,567

646,361,556






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

34,496,707

34,428,937

34,362,152

34,228,336

Retained Earnings

8,532,080

7,511,576

6,406,941

5,192,007

Unrealized Loss on Securities

(1,149,500)

(1,983,169)

(2,509,351)

(1,095,465)

      Total Stockholders' Equity

75,245,192

73,323,249

71,625,647

71,690,783

      Total Liabilities and Stockholders' Equity

$908,864,003

$833,062,612

$818,582,214

$718,052,339







 

COMMUNITY NATIONAL BANK

SELECTED FINANCIAL DATA & BALANCE SHEET COMPONENTS

Unaudited











For The Three Months Ended

For The Six Months Ended


June 30, 2014

June 30, 2013

June 30, 2014

June 30, 2013

Per Share:





Net Income-Basic

$0.15

$0.12

$0.32

$0.26

Average Shares Outstanding – Basic

6,673,181

6,673,181

6,673,181

6,673,181

Net Income – Diluted

$0.15

$0.12

$0.31

$0.26

Average Shares Outstanding – Diluted

6,845,990

6,767,440

6,830.153

6,756,881

Tangible Book Value

$11.28

$10.74

$11.28

$10.74






Performance:





Return on Average Assets

0.48%

0.44%

0.51%

0.49%

Return on Average Equity

5.51%

4.36%

5.79%

4.80%

Efficiency Ratio

73.05%

69.59%

70.74%

69.80%






Yield on Average Earning Assets

4.10%

4.35%

4.21%

4.36%

Cost on Average Interest Bearing Liabilities

0.71%

0.78%

0.69%

0.79%

Cost of Deposits

0.51%

0.53%

0.50%

0.53%

Net Interest Spread

3.39%

3.57%

3.52%

3.57%

Net Interest Margin

3.60%

3.81%

3.72%

3.81%







Quarter Ended


June 30,

March 31,

December 31,

June 30,


2014

2014

2013

2013

Capital Ratios:


Tangible Common Equity

8.28%

8.80%

8.75%

9.98%

Leverage

8.94%

9.13%

9.12%

10.10%

Tier 1

11.42%

12.04%

11.91%

13.90%

Total Risk Based

12.68%

13.29%

13.16%

15.16%






Asset Quality:





Allowance for Loan Losses to Total Loans

1.51%

1.54%

1.42%

1.50%

Allowance for Loan Losses to Non-Performing Loans

402%

791%

800%

386%

Non-Performing Loans to Total Loans

0.37%

0.20%

0.18%

0.39%

Non-Performing Assets to Total Assets

0.30%

0.16%

0.14%

0.30%

Annualized Quarterly Net Charge offs to Avg. Loans

0.00%

0.00%

-0.04%

0.00%






Yield on Average Earning Assets

4.10%

4.32%

4.16%

4.35%

Cost on Average Interest Bearing Liabilities

0.71%

0.68%

0.74%

0.78%

Cost of Deposits

0.51%

0.49%

0.53%

0.53%

Net Interest Spread

3.39%

3.64%

3.42%

3.57%

Net Interest Margin

3.60%

3.84%

3.63%

3.81%

 

 

SOURCE Community National Bank



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