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Community National Bank Reports Third Quarter Results



            Community National Bank Reports Third Quarter Results

PR Newswire

GREAT NECK, N.Y., Oct. 18, 2013

GREAT NECK, N.Y., Oct. 18, 2013 /PRNewswire/ -- Community National Bank (OTC:
CBNY) today announced third quarter results for 2013.  Highlights for the
quarter include:

  o Commercial loans grew $134.4 million or 45% to $434.0 million at September
    30, 2013 when compared to September 30, 2012.
  o On a linked-quarter basis, commercial loans increased $61.8 million or 17%
    when compared to June 30, 2013.
  o Net interest income increased 26% or $1.4 million to $6.7 million for the
    quarter ended September 30, 2013 compared to $5.3 million for the quarter
    ended September 30, 2012.
  o Net interest margin improved 17 basis points to 3.73% for the quarter
    ended September 30, 2013 from 3.56% for the same period in 2012.  
  o Demand deposits increased $45.3 million or 33% to $181.7 million at
    September 30, 2013 when compared to September 30, 2012.
  o Solid asset quality with non-performing assets to total assets of 0.19%.

Stuart Lubow, Chairman, CEO and President, commented "During the third quarter
of 2013, we continued to make tremendous strides in growing the franchise. The
Bank had strong commercial loan and core deposit growth, which significantly
increased net interest income and service fee income. The Bank grew assets to
approximately $800 million during the third quarter; and we opened our
eleventh branch location in Hewlett and relocated our corporate headquarters
to Melville. The growth in assets, continued geographic expansion and new
corporate location has increased our brand awareness and made our franchise a
premier community commercial bank on Long Island." 

Earnings and Net Interest Income

Net income for the quarter ended September 30, 2013 was $254 thousand or $0.04
basic earnings per share compared to net income of $960 thousand or $0.14
basic earnings per share for the same period in 2012, a decrease of 73% or
$706 thousand. Net income for the nine months ended September 30, 2013 was
$2.0 million or $0.30 basic earnings per share compared to net income of $2.2
million or $0.32 basic earnings per share for the same period in 2012, a
decrease of 7.8% or $169 thousand.

The decrease in net income reflects higher credit costs and non-interest
expense, which were partially offset by higher net interest income and service
charges generated from loan growth.

"While higher credit costs and non-interest expense negatively impacted third
quarter earnings, the Bank continues to execute its strategic initiatives of
growing net interest income, service charge income and servicing income. Our
loan growth is relationship driven and provides a stable core deposit base to
collect recurring fees from loyal customers willing to pay for quality
service. The growth in core earnings during the quarter will benefit the Bank
in the future," commented Mr. Lubow.

Net interest income for the quarter ended September 30, 2013 increased $1.4
million or 26% to $6.7 million from $5.3 million for the quarter ended
September 30, 2012. The net interest margin increased 17 basis points to 3.73%
for the third quarter of 2013 compared to 3.56% for the same period in 2012.
Net interest income for the nine months ended September 30, 2013 increased
$4.2 million or 27% to $19.4 million from $15.2 million for the nine months
ended September 30, 2012. The net interest margin also increased by 18 basis
points to 3.78% for the nine months ended September 30, 2013 from 3.60% for
the comparable period in the prior year. On a linked-quarter basis, the net
interest margin decreased by a modest 8 basis points. 

The increase in net interest income and margin for both the quarter and nine
months ended September 30, 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.

Non-Interest Income

Non-interest income decreased approximately $264 thousand or 21% to $1.0
million for the quarter ended September 30, 2013 compared to $1.3 million for
the prior year quarter. The decrease during the quarter was due to lower SBA
sales volume and income from Bank Owned Life Insurance ("BOLI").  This was
partially offset by an increase in service charge income on commercial
checking accounts and servicing income on the SBA loan portfolio. Non-interest
income for the nine months ended September 30, 2013 increased $221 thousand or
8% to $3.0 million from $2.8 million for the same period in 2012. The increase
was mostly attributable to significantly higher service charge income, which
were partially offset by lower gains from the sale of investments.

Non-Interest Expense

Non-interest expense increased $755 thousand or 16% to $5.4 million for the
quarter ended September 30, 2013 from $4.6 million for the same period in
2012. Non-interest expense increased $2.4 million or 18% to $15.7 million for
the nine months ended September 30, 2013 from $13.3 million for the same
period in 2012.  The increase reflects investments in new facilities,
enhancements in technology, additional personnel to support the Bank's growth
and higher legal fees and compliance costs. Although non-interest expenses
have increased in 2013, the Bank's ratio of operating expenses to average
assets decreased to 2.83% in the third quarter of 2013 from 2.90% in the third
quarter of 2012.

Balance Sheet

Total loans increased $157.3 million or 34% to $615.7 million at September 30,
2013 when compared to September 30, 2012. The commercial loan portfolio
increased $134.4 million or 45% when compared to September 30, 2012. The
residential and consumer loan portfolio increased $22.8 million or 14% when
compared to September 30, 2012. The loan growth was funded by increased demand
deposits, municipal deposits, and certificates of deposit.

Total deposits increased $150.7 million or 28% to $693.0 million at September
30, 2013 from $542.3 million at September 30, 2012. Demand deposits grew $45.3
million or 33% to $181.7 million at September 30, 2013 when compared to
September 30, 2012. The increase was due to additional commercial business
relationships. Demand deposits represent 26% of total deposits at September
30, 2013. NOW, savings and money market deposits increased $91.4 million or
40% to $316.2 million at September 30, 2013 from $224.8 million at September
30, 2012. A significant portion of this growth was from new municipal deposit
relationships. Certificates of deposits increased $13.9 million or 7.6% to
$195.1 million at September 30, 2013, due to the Bank's competitive pricing in
the local market.

Asset Quality

On a linked-quarter basis, the provision for loan losses grew 102% to $2.0
million for the quarter ended September 30, 2013 from $1.0 million for the
quarter ended June 30, 2013.  Approximately $1.3 million of the provision for
the quarter ended September 30, 2013 was due to general valuation reserves,
which are required when a loan is originated. The remaining provision amount
of $0.7 million was for specific reserves required on several classified
loans. The classified loans are current and management is working with the
borrowers to restructure the original loans terms.                

Non-performing loans, consisting of loans past due 90 days or more, were $1.5
million at September 30, 2013, which was flat when compared to September 30,
2012.  Non-performing loans as a percentage of total loans decreased to 0.25%
at September 30, 2013 from 0.32% at September 30, 2012.

The allowance for loan losses was $8.9 million or 1.45% of total loans at
September 30, 2013, an increase of approximately $3.0 million from $5.9
million or 1.29% of total loans at September 30, 2012. The Bank had net
charge-offs of $1.3 million during the third quarter of 2013. The Bank took a
prudent approach and charged-off the remaining loan balances of three
borrowers. The Bank has legal action against each borrower and hopes to
recover a portion of the losses in the future.  The Bank did not have any
charge-offs during the first six months of 2013.  

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

Current Events

"Uncertainty continues to plague the economy. Additional regulations and
speculation that the Federal Reserve Bank's bond buying program might end or
slow down led to a significant increase in rates over the summer and might
slow GDP growth in future quarters.  Higher long-term interest rates should
help alleviate margin compression as new loans and securities are originated
at higher rates. In the short term, higher rates negatively affected the fair
value of our available-for-sale securities portfolio, which resulted in
unrealized losses and a reduction in stockholders' equity," noted Mr. Lubow.

"The Bank is cognizant of the historical low interest rate environment we are
in" commented Mr. Lubow.  "We continue to manage interest rate risk by
originating adjustable rate loans, reducing the duration on our securities
portfolio, increasing demand deposits and extending the maturities of
certificates of deposit and FHLB advances.  While these decisions impact
current earnings due to lower asset yields and/or higher costs of funds, we
believe they are prudent moves in this environment," commented Mr. Lubow.

"Additional regulations required under the Dodd-Frank Act continue to be
issued and in July 2013, the regulatory agencies issued the final capital
rules under Basel III, which become effective for the Bank in January 2015.
While the final rules are more favorable to community banks, it does require
that all banks maintain higher capital levels in the future. We believe our
current capital levels would meet these new requirements," concluded Mr.
Lubow.    

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 September 30, 2013 Call Report on or around
October 30, 2013.

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 Nine Months Ended
                       September 30, September 30, September 30, September 30,
                       2013          2012          2013          2012
Interest Income:
Commercial Loans       $5,350,569    $4,198,087    $15,478,583   $11,923,062
Residential and        1,695,999     1,631,210     5,014,585     4,900,144
Consumer Loans
Securities             583,095       587,751       1,675,205     1,799,226
Money Market           12,880        11,183        33,418        28,478
Investments
   Total Interest      7,642,543     6,428,231     22,201,791    18,650,910
Income
Interest Expense:
NOW, Savings & Money   221,026       234,914       601,830       673,883
Market
Certificates of        592,162       707,539       1,761,837     2,272,297
Deposit
Borrowed Funds         118,059       138,624       406,196       444,347
   Total Interest      931,247       1,081,077     2,769,863     3,390,527
Expense
      Net Interest     6,711,296     5,347,154     19,431,928    15,260,383
Income
Provision For Loan     2,015,000     475,000       3,630,000     1,393,000
Losses
Net Interest Income
After Provision for    4,696,296     4,872,154     15,801,928    13,867,383
Loan Losses
Non-Interest Income:
Service Charges        301,609       140,704       816,119       441,160
Servicing Income &     143,632       136,067       373,127       309,030
Loan Fees
Gain on Sale of        -             141,217       29,439        273,793
Investments
Gain on Sale of Loans  394,166       656,256       1,315,925     1,219,189
BOLI Income            148,241       177,812       454,497       525,108
   Total Non-Interest  987,648       1,252,056     2,989,107     2,768,280
Income
Non-Interest Expense:
Compensation and       2,665,323     2,355,625     7,852,462     6,772,330
Benefits
Occupancy and          1,350,272     1,168,866     3,993,063     3,379,179
Equipment
Advertising            65,403        59,409        173,711       158,794
Other Expenses         1,297,440     1,039,594     3,634,577     2,978,496
   Total Non-Interest  5,378,438     4,623,494     15,653,813    13,288,799
Expense
Income Before Income   305,506       1,500,716     3,137,222     3,346,864
Taxes
Provision For Income   51,915        541,050       1,146,916     1,188,004
Taxes
      Net Income       $253,591      $959,666      $1,990,306    $2,158,860
Earnings Per Share:
   Basic               $0.04         $0.14         $0.30         $0.32
   Diluted             $0.04         $0.14         $0.30         $0.32
   Weighted Average
Shares Outstanding –   6,673,181     6,673,181     6,673,181     6,673,181
Basic
   Weighted Average
Shares Outstanding –   6,792,969     6,697,675     6,736,313     6,693,592
Diluted

 

COMMUNITY NATIONAL BANK
STATEMENTS OF INCOME
Unaudited
                           For the Three Months Ended
                           September 30, June 30,   December, 31 September 30,
                           2013          2013       2012         2012
Interest Income:
Commercial Loans           $5,350,569    $5,194,321 $4,503,513   $4,198,087
Residential and Consumer   1,695,999     1,670,716  1,626,252    1,631,210
Loans
Securities                 583,095       551,025    541,214      587,751
Money Market Investments   12,880        10,823     23,148       11,183
   Total Interest Income   7,642,543     7,426,885  $6,694,127   6,428,231
Interest Expense:
NOW, Savings & Money       221,026       175,984    229,149      234,914
Market
Certificates of Deposit    592,162       592,243    649,781      707,539
Borrowed Funds             118,059       155,129    125,485      138,624
   Total Interest Expense  931,247       923,356    1,004,415    1,081,077
      Net Interest Income  6,711,296     6,503,529  5,689,712    5,347,154
Provision For Loan Losses  2,015,000     995,000    800,000      475,000
Net Interest Income After  4,696,296     5,508,529  4,889,712    4,872,154
Provision for Loan Losses
Non-Interest Income:
Service Charges            301,609       267,690    189,246      140,704
Servicing Income & Loan    143,632       134,972    99,005       136,067
Fees
Gain on Sale of            -             -          6,788        141,217
Investments
Gain on Sale of Loans      394,166       575,299    289,091      656,256
BOLI Income                148,241       148,137    196,659      177,812
   Total Non-Interest      987,648       1,126,098  780,789      1,252,056
Income
Non-Interest Expense:
Compensation and Benefits  2,665,323     2,639,070  2,380,164    2,355,625
Occupancy and Equipment    1,350,272     1,340,234  1,141,651    1,168,866
Advertising                65,403        67,045     59,419       59,409
Other Expenses             1,297,440     1,263,153  1,039,938    1,039,594
   Total Non-Interest      5,378,438     5,309,502  4,621,172    4,623,494
Expense
Income Before Income Taxes 305,506       1,325,125  1,049,329    1,500,716
Provision For Income Taxes 51,915        530,999    356,929      541,050
      Net Income           $253,591      $794,126   $692,400     $959,666
Earnings Per Share:
   Basic                   $0.04         $0.12      $0.10        $0.14
   Diluted                 $0.04         $0.12      $0.10        $0.14
   Weighted Average Shares 6,673,181     6,673,181  6,673,181    6,673,181
Outstanding – Basic
   Weighted Average Shares 6,792,969     6,767,440  6,701,691    6,697,975
Outstanding – Diluted

 

COMMUNITY NATIONAL BANK
STATEMENTS OF CONDITION
Unaudited
                         September 30, June 30,     December, 31 September 30,
                         2013          2013         2012         2012
Assets:
Cash and Due From Banks  $8,323,492    $7,927,992   $13,453,651  $7,666,354
Money Market Investments 26,344,244    18,966,565   7,391,467    31,922,204
Securities -             106,001,818   107,982,445  100,126,177  109,974,255
Available-for-Sale
Restricted Stock         4,121,350     5,494,450    3,904,850    3,922,650
   Total Securities      110,123,168   113,476,895  104,031,027  113,896,905
Loans Held-For-Sale      -             -            -            500,000
Commercial Loans         434,020,481   372,236,723  351,587,251  299,607,536
Residential & Consumer   181,653,928   176,034,480  160,030,011  158,791,493
Loans
Gross Loans              615,674,409   548,271,203  511,617,262  458,399,029
Held-For-Investment
Less:  Allowance For     (8,942,236)   (8,228,359)  (6,606,498)  (5,904,167)
Loans Losses
   Net Loans             606,732,173   540,042,844  505,010,764  452,494,862
Held-For-Investment
Premises and Equipment,  10,927,997    9,590,787    8,709,570    8,869,722
net
Bank Owned Life          19,948,355    19,800,850   19,493,857   19,297,199
Insurance ("BOLI")
Other Assets             14,930,676    8,246,406    7,693,014    9,280,117
   Total Assets          $797,330,105  $718,052,339 $665,783,350 $643,927,363
Liabilities and
Stockholders' Equity:
Deposits:
Demand                   $181,740,742  $169,896,257 $155,877,268 $136,410,679
NOW, Savings & Money     316,213,221   230,706,025  233,241,844  224,776,773
Market
Certificates of Deposit  195,077,799   184,636,337  174,223,625  181,175,999
   Total Deposits        693,031,762   585,238,619  563,342,737  542,363,451
FHLB Advances            26,438,035    56,951,949   $24,970,887  25,475,945
Accrued Expenses and     6,550,574     4,170,988    5,666,170    4,983,042
Other Liabilities
   Total Liabilities     726,020,371   646,361,556  593,979,794  572,822,438
Stockholders' Equity:
Common Stock, par value
$5.00; authorized
10,000,000 shares;       33,365,905    33,365,905   33,365,905   33,365,905
issued 6,673,181 shares
Additional               34,295,244    34,228,336   34,101,246   34,037,538
Paid-in-Capital
Retained Earnings        5,445,598     5,192,007    3,455,292    2,762,891
Unrealized (Loss)/Gain   (1,797,013)   (1,095,465)  881,113      938,591
on Securities
      Total              71,309,734    71,690,783   71,803,556   71,104,925
Stockholders' Equity
      Total Liabilities  $797,330,105  $718,052,339 $665,783,350 $643,927,363
and Stockholders' Equity

 

COMMUNITY NATIONAL BANK
SELECTED FINANCIAL DATA & BALANCE SHEET COMPONENTS
Unaudited
                         For The Three Months Ended  For The Nine Months Ended
                         September 30, September 30, September 30,  September
                                                                    30,
                         2013          2012          2013           2012
Per Share:
Net Income-Basic         $0.04         $0.14         $0.30          $0.32
Average Shares           6,673,181     6,673,181     6,673,181      6,673,181
Outstanding – Basic
Net Income – Diluted     $0.04         $0.14         $0.30          $0.32
Average Shares           6,792,969     6,697,675     6,736,313      6,693,592
Outstanding – Diluted
Tangible Book Value      $10.69        $10.66        $10.69         $10.66
Performance:
Return on Average Assets 0.13%         0.60%         0.37%          0.48%
Return on Average Equity 1.42%         5.46%         3.68%          4.16%
Efficiency Ratio         69.86%        70.06%        69.82%         73.71%
Yield on Average Earning 4.25%         4.28%         4.32%          4.40%
Assets
Cost on Average Interest 0.74%         1.00%         0.77%          1.10%
Bearing Liabilities
Cost of Deposits         0.51%         0.70%         0.53%          0.79%
Net Interest Spread      3.51%         3.28%         3.55%          3.30%
Net Interest Margin      3.73%         3.56%         3.78%          3.60%
                         Quarter Ended
                         September 30, June 30,      December 31,   September
                                                                    30,
                         2013          2013          2012           2012
Capital Ratios:
Tangible Common Equity   8.94%         9.98%         10.78%         11.04%
Leverage                 9.62%         10.10%        10.35%         10.70%
Tier 1                   12.39%        13.90%        13.85%         15.28%
Total Risk Based         13.64%        15.16%        15.10%         16.53%
Asset Quality:
Allowance for Loan       1.45%         1.50%         1.29%          1.29%
Losses to Total Loans
Allowance for Loan
Losses to Non-Performing 577%          386%          456%           406%
Loans
Non-Performing Loans to  0.25%         0.39%         0.28%          0.32%
Total Loans
Non-Performing Assets to 0.19%         0.30%         0.22%          0.31%
Total Assets
Annualized Quarterly Net
Charge offs to Avg.      0.88%         0.00%         0.08%          -0.03%
Loans
Yield on Average Earning 4.25%         4.35%         4.30%          4.28%
Assets
Cost on Average Interest 0.74%         0.78%         0.91%          1.00%
Bearing Liabilities
Cost of Deposits         0.51%         0.53%         0.63%          0.70%
Net Interest Spread      3.51%         3.57%         3.38%          3.28%
Net Interest Margin      3.73%         3.81%         3.65%          3.56%

 

 

SOURCE Community National Bank

Contact: Jay McConie, Senior Vice President, Chief Financial Officer, (516)
498-9111 Ext 1139
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