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Financial Feature
By Louise Bonvechio, Treasurer, Community Bancorp. and Senior Vice President and Chief Financial Officer and Cashier, Community National Bank
I am pleased to report that Community Bancorp., the parent company of Community National Bank, reported earnings for the year ended December 31, 2017, of $6,231,298 or $1.21 per share compared to $5,484,278 or $1.07 per share for the year ended December 31, 2016.

Consolidated assets at December 31, 2017, were $667,045,595, an increase of 4.6% from December 31, 2016, due to continued loan growth, resulting in an increase in the loan portfolio of $15.5 million, or 3.2%. The increase in loans continues to be in the commercial loan portfolio and was funded primarily with increases in deposit balances which allowed the Company to rely less on borrowed funds. An increase in municipal deposits at year end contributed to an increase in Fed Funds sold. These increases in earning assets while maintaining average yields earned on these assets combined with less of an increase in interest expense contributed significantly to the strong earnings for 2017 with an increase in net interest income of $1.8 million.

As the loan portfolio grows, the Company focuses on prudently managing credit risk and maintaining an allowance for loan losses appropriate for the loan portfolio. During 2017, the provision for loan losses was increased by $150,000, year over year. While commercial loans inherently carry more risk, the Company has dedicated significant resources in the credit administration department to mitigate the additional risk.

With mortgage rates remaining low throughout 2017, opportunity for residential mortgage originations was predominantly dependent on new home sales rather than the strong refinancing activity we experienced in prior recent years. This decline in originations and subsequent sales of mortgages in the secondary market resulted in a decrease in income from sold loans of $161,519, year over year. Offsetting this decrease was an increase in services fees on deposit accounts, primarily from an increase in fees attributable to an overdraft privilege program implemented in June of 2016.

Operating expenses continue to be managed in a way that allows the Company to spend strategically in areas such as marketing and information technology that keep up with the electronic delivery of products and services in a safe and responsible manner. Non-interest expenses increased only $23,799, or 0.1% year over year.

Net income was negatively impacted by a one-time charge of $410,304 for the revaluation of the Company’s net deferred tax asset as a result of the Tax Cuts and Jobs Act being signed into law on December 22, 2017. In spite of this one-time charge, earnings for the year increased by $747,020, or 13.6%.

The Company continues to focus on increasing the profitability of the balance sheet, and prudently managing operating expenses and risk, particularly credit risk, in order to remain a well-capitalized bank in this challenging economic environment. From positive retained earnings, shareholders’ equity grew to $57.9 million as of December 31, 2017, compared to $54.5 million at the same time last year.

 

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