Community National Bank Announces Earnings For Second Quarter Of 2014

    Community National Bank Announces Earnings For Second Quarter Of 2014  PR Newswire  MELVILLE, N.Y., July 18, 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:    oNet 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.   oNet 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.   oReturn 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.   oCommercial loans grew $137.0 million or 37% to $509.2 million at June 30,     2014 when compared to June 30, 2013.   oDeposits increased $205.1 million or 35% to $790.3 million at June 30,     2014 compared to $585.2 million at June 30, 2013.   oDemand 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   1,810,821     1,670,716    3,554,382    3,318,586 Loans 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       283,207       175,984      579,020      380,804 Market 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  6,825,554     5,508,529    13,472,900   11,105,632 Provision for Loan Losses Non-Interest Income: Service Charges            355,939       267,690      680,014      514,510 Servicing Income & Loan    177,818       134,972      279,193      229,495 Fees Gain on Sale of            -             -            20,432       29,439 Investments 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      803,102       1,126,098    2,063,935    2,001,459 Income 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      5,967,152     5,309,502    12,062,696   10,275,375 Expense 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 6,673,181     6,673,181    6,673,181    6,673,181 Outstanding – Basic  Weighted Average Shares 6,845,990     6,767,440    6,830,153    6,756,881 Outstanding – Diluted    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      1,810,821  1,743,561  1,738,300    1,695,999 Loans 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     6,825,554  6,647,346  6,654,887    4,696,296 Provision for Loan Losses 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    6,673,181  6,673,181  6,673,181    6,673,181 Outstanding – Basic  Weighted Average Shares    6,845,990  6,813,748  6,796,064    6,792,969 Outstanding – Diluted    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 –               96,991,395   98,770,601   100,894,759  107,982,445 Available-for-Sale Securities –               8,989,549    5,824,335    6,053,339    - Held-to-Maturity 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     214,296,552  198,968,236  197,350,345  176,034,480 Loans Gross Loans                723,486,449  670,331,198  661,387,961  548,271,203 Held-For-Investment Less: Allowance For Loans (10,897,125) (10,355,770) (9,383,788)  (8,228,359) Losses  Net Loans               712,589,324  659,975,428  652,004,173  540,042,844 Held-For-Investment Premises and Equipment,    10,529,647   10,845,303   11,116,968   9,590,787 net Bank Owned Life Insurance  22,389,807   20,241,485   20,099,560   19,800,850 ("BOLI") 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       331,320,846  323,544,027  316,807,903  230,706,025 Market 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 6,148,817    7,773,533    4,985,420    4,170,988 Liabilities  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 33,365,905   33,365,905   33,365,905   33,365,905 6,673,181 shares 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         (1,149,500)  (1,983,169)  (2,509,351)  (1,095,465) Securities  Total Stockholders'  75,245,192   73,323,249   71,625,647   71,690,783 Equity  Total Liabilities    $908,864,003 $833,062,612 $818,582,214 $718,052,339 and Stockholders' Equity    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            6,673,181     6,673,181     6,673,181      6,673,181 Outstanding – Basic Net Income – Diluted      $0.15         $0.12         $0.31          $0.26 Average Shares            6,845,990     6,767,440     6,830.153      6,756,881 Outstanding – Diluted 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  4.10%         4.35%         4.21%          4.36% Assets Cost on Average Interest  0.71%         0.78%         0.69%          0.79% Bearing Liabilities 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 1.51%         1.54%         1.42%          1.50% to Total Loans Allowance for Loan Losses 402%          791%          800%           386% to Non-Performing Loans Non-Performing Loans to   0.37%         0.20%         0.18%          0.39% Total Loans Non-Performing Assets to  0.30%         0.16%         0.14%          0.30% Total Assets Annualized Quarterly Net  0.00%         0.00%         -0.04%         0.00% Charge offs to Avg. Loans Yield on Average Earning  4.10%         4.32%         4.16%          4.35% Assets Cost on Average Interest  0.71%         0.68%         0.74%          0.78% Bearing Liabilities 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  Contact: Jay McConie, Senior Vice President, Chief Financial Officer, (516) 498-9111 Ext 1139  
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