For Immediate Release
May 30, 2019
Derby, VT—Stephen P. Marsh, Board Chair of Community Bancorp. and Community National Bank, welcomed 170 shareholders to the annual shareholders’ meeting at the Elks’ Club on May 14, 2019. Mr. Marsh led the group in the Pledge of Allegiance and asked for a moment of silence for friends and neighbors who have passed. He continued with introductions of Board Members, Executive Officers and retired Directors and recognized Charlie Bucknam for his 11 years of service and retirement as a Director following the annual meeting. Marsh introduced guests Todd Desjardins from the public accounting firm BerryDunn and Denise Deschenes from the law firm of Primmer Piper Eggleston and Cramer, PC.
Marsh stated that of the 3,274,909 total shares, 63.29% were represented, enough to reach a quorum. Shareholders voted to reelect Directors Dave Laforce, Steve Marsh, Jeff Moore and Fred Oeschger, BerryDunn was ratified as the external audit firm, the executive compensation was approved and the frequency of this vote will take place every three years. Marsh introduced Jen Daigle, Penny Johnson and Kelly Paul as Judges of Election and Cindy LaGue and Kimico Perry as Proxy Voters. The Judges of Election and the Proxy Voters entered private quarters to certify the election.
Louise Bonvechio, Treasurer, Community Bancorp., and Senior Vice President, Chief Financial Officer and Cashier, Community National Bank, shared the company’s financial report. She highlighted events that contributed to a 35% increase in earnings, year over year. There was a lift in net interest income due to 6% loan growth together with four fed rate increases. There were also a couple of non-recurring events that impacted earnings. The first being the sale of the condo unit rented from the Bank by Community Financial Services Group (CFSG) and the other was the impact of the 2017 Tax Cuts and Jobs Act. This Act resulted in a one-time charge of $410 thousand to income tax expense in 2017; the reduction of the Company’s tax rate from 34% to 21%, effective January 1, 2018, contributed to a decrease of $1.2 million, or 40%, in income tax expense, year over year. These events are significant when looking at the results of 2018 and into 2019.
Bonvechio reported the Company’s consolidated assets of $720 million on December 31, 2018, compared to $667 million at year-end 2017 and net income for the year was $8.4 million, an increase of $2.2 million, or 34.8%, from 2017. Net loans increased $28.5 million, or 5.7%. This increase in loans to $526 million was driven primarily by an increase in commercial loans offset by a decrease in the residential loan portfolio. Funding for the decrease in the residential portfolio was provided by a $48.2 million net increase in deposits. Capital grew from $57.9 million to $62.6 million with a book value per share of $11.72 on December 31, 2018.
During the prolonged, low, flat rate environment from 2009 to 2017, the bank ran a balance sheet model to forecast net interest income based on various rate movements. The model projected that in a rising rate environment, net interest income would increase. However, after a period of time the short-term rate increases would put upward pressure on interest rates paid on deposit accounts, the bank would pay more for borrowings and would see compression in net interest margins. Bonvechio commented, “We take comfort in the fact that our modeling and assumptions were correct. But it certainly has had an impact on our results for the first quarter of 2019.”
As of March 31, total assets were $707 million, a decrease of $14 million since year end, but $41 million greater than last year at this time. The first quarter is not typically a significant loan growth period so loans remain relatively flat. The bank earned $1.8 million for the first quarter of 2019 compared to $1.9 million for the same period in 2018, a decrease of $210 thousand, or 10.6%. As anticipated, the increase in short-term rates is putting upward pressure on interest rates paid on deposit accounts. While interest income increased 14%, interest expense increased 77%, year over year. Non-interest expenses increased $425 thousand, or 9%, for the first quarter compared to the first quarter of 2018, largely due to increases in salaries, wages and employee benefits. As of March 31, 2019, shareholders’ equity has grown to $63.6 million with a book value per share of $11.97 compared to $58.3 million and $10.99 per share as of March 31, 2018. The Company remains a well-capitalized bank and will continue focusing on core banking strategies and building capital for the future.
CFSG, a trust and investment company partly owned by Community National Bank, was invited to share a company report. Trust Officers Joe Preddy and Shellie Wright shared CFSG’s positive financial results, steady growth and the opening of a new office in Florida.
Continuing the meeting, Kathy Austin, President and Chief Executive Officer, Community Bancorp. and Community National Bank shared that 2018 was an excellent year. The bank enjoyed rising rates, reduction in corporate taxes and growth in both loans and deposits. Austin recognized the bank’s employees, both current and former, acknowledging their work and commitment to the bank and its customers which has contributed to the positive results. The consultative approach, local decision making and flexibility resonate with small to medium sized businesses and contributed to the success in new markets in Chittenden County and the Upper Valley of New Hampshire. On May 1, 2019, the bank opened a Loan Production Office in Lebanon, NH, to provide a professional space for lenders to meet customers and prospective clients.
Austin thanked Melissa Tinker for organizing the shareholders’ meeting and recognized Executive Officer Louise Bonvechio for her financial acumen. She commended the Board of Directors for their invaluable guidance and stewardship and recognized the support of the Advisory Council members. Austin reported the promotions of Justin Bourgeois to Regional Vice President and Commercial Loan Officer, Will Hamilton to Vice President and Commercial Loan Officer, Dave Rubel to Commercial Loan Officer, Jennifer Daigle to Vice President and Senior Credit Officer and Beth Morin to Vice President and Senior Loan Operations Officer.
Austin concluded, “I believe community banking has a rightful place in our modern world. While what we do is done differently today, and will be tomorrow, our work adds value to our customers’ lives, strengthens our communities and contributes to the economy. And I believe it is our authentic time and place as ‘Vermont’s Community Bank’.” The meeting was concluded with a blessing, led by Charlie Bucknam, and appreciation for the excellent meal served by members of the Elk’s Club.