Community National Bank Reports Fourth Quarter And Year-End Results For 2013

MELVILLE, N.Y., Jan. 31, 2014 /PRNewswire/ -- Community National Bank (OTC: CBNY) today announced fourth quarter and year-end results for 2013.  Highlights for the quarter and year include:

• Net income of $961 thousand or $0.14 per share for the fourth quarter of 2013 compared to net income of $692 thousand or $0.10 per share for the same period in 2012.
• Net interest income increased 24% or $1.3 million to $7.0 million for the quarter ended December 31, 2013 compared to $5.7 million for the quarter ended December 31, 2012.
• Return on average assets and equity of 0.47% and 5.35%, respectively, for the quarter ended December 31, 2013 compared to 0.42% and 3.88%, respectively, for the quarter ended December 31, 2012.
• Commercial loans grew $112.5 million or 32% to $464.0 million at December 31, 2013 when compared to December 31, 2012. On a linked-quarter basis, commercial loans increased $30 million or 6.9% compared to September 30, 2013.
• Service charge income increased $517 thousand or 82% to $1.1 million for the year ended December 31, 2013 when compared to the same period in 2012.
• Solid asset quality with non-performing assets to total assets of 0.14%, which is well below peer group average.

Stuart Lubow, Chairman, CEO and President, commented, "We are committed to our strategic plan of creating solid commercial relationships, core earnings and franchise value for the long-term. During the past year, we have increased loans by $150 million, improved quarterly net interest income by $1.3 million and increased our service charge income. While competition has increased during the past year, we expect to build upon this strategy in the coming year." 

Earnings and Net Interest Income

Net income for the quarter ended December 31, 2013 was $961 thousand or $0.14 basic earnings per share compared to net income of $692 thousand or $0.10 basic earnings per share for the same period in 2012, an increase of 39% or $269 thousand.

The increase in net income reflects higher net interest income from loan growth and lower provisions for loan losses, which were partially offset by an increase in non-interest expenses. The increase in non-interest expenses was attributable to (1) higher facility related expenses for our new corporate headquarters and new branch location in Hewlett; (2) additional personnel costs for the branch location, operations and compliance; and (3) an increase in legal fees.

Net income for the year ended December 31, 2013 was $2.9 million or $0.44 basic earnings per share, which was flat when compared to net income of $2.8 million or $0.43 basic earnings per share for the year ended December 31, 2012.  Net income remained flat as increases in net interest income were offset by higher provisions for loan losses and non-interest expenses.

On a linked quarter basis, net income for the fourth quarter of 2013 increased $707 thousand or 279% when compared to the third quarter of 2013. The increase was due to a significant decline in the provisions for loan losses, which was offset slightly by lower gains on the sale of SBA loans and higher non-interest expenses.

Net interest income for the quarter ended December 31, 2013 increased $1.3 million or 24% to $7.0 million from $5.7 million for the quarter ended December 31, 2012. The net interest margin decreased 2 basis points to 3.63% for the fourth quarter of 2013 compared to 3.65% for the same period in 2012.

Net interest income for the year ended December 31, 2013 increased $5.5 million or 26% to $26.5 million from $21.0 million for the year ended December 31, 2012. The net interest margin also increased by 12 basis points to 3.74% for the twelve months ended December 31, 2013 from 3.62% for the comparable period in the prior year.

The increase in net interest income for both the quarter and year ended December 31, 2013 was primarily due to (1) growth in the commercial and residential loan portfolios; (2) higher non-interest bearing demand deposits; and (3) a continued decline in overall cost of funds on deposits and FHLB advances.

The net interest margin improved when compared to the prior year due to a continued decline in the Bank's cost of funds.  However, on a linked quarterly basis, the net interest margin declined 10 basis points to 3.63% as new loans carried lower yields.

Non-Interest Income

Non-interest income decreased approximately $104 thousand or 13% to $0.7 million for the quarter ended December 31, 2013 compared to $0.8 million for the comparable quarter in the prior year. The decrease was due to lower SBA sales volume and income from Bank Owned Life Insurance ("BOLI").  This was partially offset by higher service charges on commercial accounts and servicing income from the SBA loan portfolio.

Non-interest income for the twelve months ended December 31, 2013 remained relatively flat at $3.6 million when compared to the same period in 2012.  Declines in gains from the sale of SBA loans and investments and lower BOLI income were offset by higher service charges and servicing income.

Non-Interest Expense

Non-interest expenses increased $1.1 million or 25% to $5.7 million for the quarter ended December 31, 2013 from $4.6 million for the same period in 2012.

Non-interest expenses increased $3.5 million or 19% to $21.4 million for the twelve months ended December 31, 2013 from $17.9 million for the same period in 2012. 

The increase for both the quarter and year reflects investments in new facilities, enhancements in technology, increased personnel to support the growth of the Bank, additional regulatory burdens and higher legal fees. Although non-interest expenses increased in 2013, the Bank's ratio of operating expenses to average assets decreased to 2.87% in 2013 from 2.91% in 2012.

Balance Sheet

Total assets grew $152.8 million or 23% to $818.6 million at December 31, 2013 when compared to total assets of $665.8 million at December 31, 2012.  A significant portion of the asset growth was in the loan category. Total loans increased $149.8 million or 29% to $661.4 million at December 31, 2013 when compared to December 31, 2012. The commercial and residential loan portfolios increased $112.5 million or 32% and $37.3 million or 23%, respectively, when compared to December 31, 2012. The loan growth was funded by increased demand deposits, municipal deposits, certificates of deposit and FHLB advances.

Total deposits increased $123.7 million or 22% to $687.0 million at December 31, 2013 from $563.3 million at December 31, 2012. Demand deposits grew $21.2 million or 14% to $177.1 million at December 31, 2013 when compared to December 31, 2012. The increase was due to additional commercial business relationships. Demand deposits represent 26% of total deposits at December 31, 2013.

NOW, savings and money market deposits increased $83.6 million or 36% to $316.8 million at December 31, 2013 from $233.2 million at December 31, 2012. A significant portion of this growth was from new municipal deposit relationships.

Certificates of deposits increased $18.9 million or 10.9% to $193.1 million at December 31, 2013 when compared to December 31, 2012 due to the Bank's competitive pricing in the local market.

Asset Quality & Capital

Non-performing loans, consisting of loans past due 90 days or more, decreased by $0.3 million or 19% to $1.2 million or 0.18% of total loans at December 31, 2013 from $1.5 million or 0.28% of total loans at December 31, 2012.

The Bank had $0.4 million in provisions for loan losses for the fourth quarter of 2013, a decrease of $0.4 million or 53% when compared to the same quarter in the prior year. The decline in the provision from the same quarter in the prior year was due to less loan origination volume. 

The allowance for loan losses was $9.4 million or 1.42% of total loans at December 31, 2013, an increase of approximately $2.8 million from $6.6 million or 1.29% of total loans at December 31, 2012. The Bank had net charge-offs of $1.2 million in 2013 compared to 0.3 million in 2012.

The Bank continues to have significant capital strength with Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of 9.12%, 11.91% and 13.16%, respectively, at December 31, 2013.

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://www2.fdic.gov/idasp/main_bankfind.asp. The Bank filed its December 31, 2013 Call Report on January 30, 2014.

Certain items in the prior year's financial statements were reclassified to conform to the current presentation.

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.

SOURCE Community National Bank