I am pleased to report that Community Bancorp., the parent company of Community National Bank (the Bank), reported earnings for the third quarter ended September 30, 2019, of $2,261,943 or $0.43 per share compared to $2,269,732 or $0.44 per share for the third quarter of 2018. Year-to-date earnings for 2019 are $6,453,146 or $1.23 per share compared to 6,254,929 or $1.20 per share a year ago. Also announced during the quarter was a quarterly cash dividend of $0.19 per share payable November 1, 2019, to shareholders of record as of October 15, 2019.
The Company’s consolidated assets on September 30, 2019, were $729,231,941 compared to $720,347,498 at year end 2018, and $694,499,557 at September 30, 2018. The asset growth has been driven in part by increases in loans in the amount of $23 million, year over year and $26 million so far this year. This year-to-date growth is attributable to an increase of $11.9 million in commercial loans, $4.9 million increase in municipal loans and $14.3 million increase in commercial real estate loans. These increases were offset by a $5.0 million decrease in 1-4 Family Residential Loans. Growth in the commercial loan portfolio was enhanced with $7.5 million in purchased loans and the growth in the commercial real estate loans includes a $4.0 million loan participation with the Atlantic Central Bankers Bank, formerly Bankers Bank Northeast. The available for sale portfolio increased $3.2 million, or 8.2%, from December 31, 2018.
The purchased loan volume mentioned above was through a new loan purchasing program with Bankers Healthcare Group (BHG). BHG originates loans to medical professionals nationwide and sells them individually to a secondary market, primarily banks, through a bid process. Management has established conservative credit parameters and expects a low risk of default in this portfolio. Average loan size is approximately $200,000, with average term of 100 months. With average duration expected to be slightly longer than the portfolio average, it reduces exposure to falling rates in the near term. This portfolio will serve to support asset growth and provide geographic diversification in the portfolio.
The Bank’s relationship with Atlantic Central Bankers Bank provides an opportunity for loan participations on both the buy and sell side. Loan participations are useful in managing the balance sheet. Buying loan participations can help balance fluctuations in local market loan demand and provide diversification in the loan portfolio. Through the selling of participations, the bank can manage lending limits, industry concentrations and credit risk.
Total deposits decreased $2.4 million or 0.4%, since December 31, 2018, consisting of a decrease in core deposits totaling $4.5 million, or 1.5%, and an increase in money market accounts and savings accounts totaling $16.2 million, or 9.1%, and a decrease in time deposits of $14.0 million, or 10.8%. A decrease in wholesale time deposits of $13.5 million, or 11.7%, is predominantly due to the maturity of brokered deposits that were not re placed due to the influx of cash on hand.
Interest income increased $389,432, or 5.2%, for the third quarter of 2019 compared to the same quarter in 2018, and $2,544,526, or 11.9%, for the first nine months of 2019 compared to the same period in 2018. Interest expense increased $288,888, or 23.7%, for the third quarter of 2019 compared to the same quarter in 2018, and $1,567,134, or 51.8%, for the first nine months of 2019 compared to the same period in 2018. The year-to date increase in interest income is due in part to a $440 thousand prepayment penalty received in the second quarter of 2019, as well as the increases in short-term rates. While the increase in short-term rates has had a positive impact on interest income, it also has put upward pressure on interest rates paid on deposit accounts and other borrowings. This pressure is expected to lessen as short-term rates have declined in the third quarter.
Growth of the loan portfolio, combined with charge off activity related to write down adjustments on several loans in workout, required provisions for loan losses of $412,499 for the third quarter of 2019 compared to $210,000 for the same period in 2018, an increase of 96.4%. The year-to-date provision for loan losses of $766,668 for the first nine months of 2019 compares to $570,000 for the same period in 2018, an increase of 34.5%.
Non-interest income increased $54,539, or 3.5%, for the third quarter of 2019, while a decrease of $278,455, or 6.0%, is noted for the first nine months of 2019. The year-over-year decrease is due to the combination of a decrease in income from gain on sale of loans sold in the secondary market in 2019 compared to 2018 and a one-time gain on sale of property in 2018. Loan originations that were subsequently sold in the secondary market were $7.5 million for the first nine months of 2019 compared to $8.9 million for the same period in 2018 resulting in a decrease in gain on sale of loans of $107 thousand, or 40.3%. Also contributing to the year-over-year decrease is a one-time gain on sale of property of $263 thousand in 2018 which was directly related to the sale of a condominium unit to the Company’s affiliate, Community Financial Services Group. No similar gains were reported in 2019.
Non-interest expense decreased $10,616, or 0.2%, for the third quarter of 2019 and increased $389,276, or 2.7%, for the first nine months of 2019. While increases are noted in salaries, wages and employee benefits, both periods were positively impacted with a decrease in other expenses due to the distribution of deposit-insurance assessment credits issued by the FDIC. Credits issued to the Bank equal $164,007, which represents 79.4% of the Bank’s total FDIC assessment for the first nine months of 2018.
From positive retained earnings, shareholders’ equity grew to $67.3 million with a book value per share of $12.60 as of September 30, 2019, compared to $60.9 million and $11.42 per share at the same time last year.