Community Bancorp. News Release
Contact Person: Tracy Roberts, VP & Marketing Director
Community National Bank
For Immediate Release
October 28, 2020
Derby,VT—On Tuesday, October 6, 2020, at 2:00 pm, the Officers of Community Bancorp. held a virtual 2020 Annual Shareholders meeting.
Stephen Marsh, Board Chair of Community Bancorp. and Community National Bank, welcomed the online audience and shared instructions regarding voting options and how to submit questions in the virtual format. Mr. Marsh introduced all of the Company’s Directors and Executive Officers. He continued with a heartfelt memoriam honoring Elwood “Duck” Duckless who passed away on June 30, 2020. Elwood served as a Director of Community Bancorp. and Community National Bank from 1987-2013.
Continuing with the business portion of the Bancorp. meeting, shareholders voted on two proposals. The first was an election of Directors with an introduction of incumbent nominees for three-year terms expiring in 2023. The Directors up for election included Thomas E. Adams, Jacques R. Couture, Emma L. Marvin, Dorothy R. Mitchell and James G. Wheeler, Jr. The second proposal requested the ratification of BerryDunn as the Company’s External Audit Firm for 2020.
With voting closed, results showed nominees for election to the Board were duly elected and BerryDunn was ratified as External Auditor for 2020. With no further business coming before the meeting, the business portion of the 2020 Annual Meeting of Shareholders of Community Bancorp. adjourned and Mr. Marsh turned the meeting over to Community Bancorp. and Community National Bank CEO Kathy Austin to share information about an investor presentation which will be used to tell the Company’s story and increase the Company’s visibility to new potential investors.
Austin continued currently Community National Bank (CNB), originating in 1851, is the sole subsidiary of CMTV, which is traded on the OTC Market and has more than $822 million in consolidated assets and 5.3 million shares outstanding as of June 30, 2020. Kathy attributed the Bank’s recent success and gain of market share across Vermont and New Hampshire to the Bank’s business lenders’ consultative approach and close knowledge of customers’ businesses and markets. This bank-wide commitment to their customers continued to serve them well with the onset of the COVID-19 pandemic. The Bank has invested in the technology, infrastructure and human resources to support the strategy of responsible, profitable growth. As the CARES act, Treasury and SBA were still working to develop the Payroll Protection Program (PPP), CNB took additional steps to prepare internal processes and reach out to their customers to help them use this new program. CNB served customers and noncustomers alike to navigate the PPP process and secure the funds greatly needed to survive the pandemic. The Bank also continued to support its communities by honoring commitments to events that could not be held, contributing to food pantries, by purchasing meals for essential workers in the community, and purchasing meals from local eateries for their own essential workers at the Bank and hopefully helping the businesses through a rough time. Austin stated, “We’ve performed admirably during these extraordinary times, because we’ve had practice being a trusted member of our communities during all of the ordinary times. It’s who we are.” Concluding her portion of the presentation, Kathy turned the meeting over to Chief Financial Officer Louise Bonvechio for a report of the Bank’s financial performance for 2019 and 2020.
Ms. Bonvechio reported being pleased with the results for 2019. Strong loan growth provided a 9% increase in interest income and the loan growth was mostly funded with core deposits which provided low-cost funding. The provision for loan losses of $1 million in 2019 also supported loan growth and covered charge-off activity. This supported a reserve coverage of .98% putting CNB among the leaders in their group. Non-interest income decreased mainly due to a one-time gain during 2018 of $263 thousand from the sale of office space to CFSG. The Bank held non-interest expenses flat from 2018 to 2019 as they received a distribution of Small Bank deposit-insurance assessment credits from the FDIC for $164 thousand, and reduced core processing costs by negotiating annual vendor contracts. The decreases offset normal increases in salaries and benefits of 3%. The Company reported earnings per share of $1.68 for 2019 compared to $1.61 for 2018, a 4.3% increase.
Bonvechio continued by sharing results from the first half of 2020 which were impacted by the origination of $98.5 million in PPP loans at 1%, and the Fed’s action to reduce short-term interest rates by 150 basis points in March. Lower rates can rapidly impact yields, but CNB moved quickly to reduce rates on deposit accounts to minimize margin compression, resulting in a 3% increase in net-interest income, year over year. The PPP loans originations provided $555 thousand in processing fees that further supported the margin. Quickly expediting the PPP loan program for customers and non-customers was a testament to the Bank’s strength. The pandemic and related shutdown included a decrease in interchange and overdraft fees while customers stayed at home. Currently interchange income has returned to normal and overdraft fees were lower by 20% compared to the prior year period for the six months ended June 30, 2020. In May and June, the market experienced a residential refinance boom and CNB originated $19.6 million in loans that were sold in the secondary market during the first six months of 2020, compared to $1.7 million for the same period in 2019. This is providing strong income from gains on sales of loans in 2020, an increase of $300 thousand year over year. Non-interest expenses are being well-managed and are 1.5 % less than the first six months in 2019. There were other non-interest expenses that were impacted by the shutdown, but it’s too early to tell if all of these costs will be shifted to the second half of 2020 or into 2021.
Moving to the Bank’s balance sheet, Louise stated the loan growth in 2019 was due to a 5% increase in Commercial Real Estate Loans and a 22% increase in Commercial and Industrial (C&I) loans, with approximately 13% of the C & I growth coming from a new loan purchased program. The loan growth for the Company in 2019 has largely originated in Central Vermont and Chittenden County. In 2020, the Bank’s Loan Production office in Lebanon, NH, is already showing good growth as well. The strategy deployed last year to build deposit relationships with commercial borrowers has resulted in a 5% growth in non-interest bearing Business Checking accounts year over year from 2019. In 2020, the Bank also experienced an impact from the PPP loans to the asset side as well as the liability side. PPP loans funds have stayed in Business Checking accounts and have been slow to run off. Customer account balances were higher during this time possibly due to a number of one-time factors which may include COVID Stimulus payments, Unemployment Insurance including Pandemic Unemployment Assistance, mortgage payments in forbearance, the extension of the IRS tax filing deadline, Stay Home orders impacting spending and a flight to safety. While the Bank has strategically shifted their lending focus to Commercial loans their average loan size, at about $124 thousand, indicates that they are still committed to serving the small businesses and the consumers in the communities, even though some of the PPP loans were of significantly higher amounts.
Bonvechio wrapped up her presentation by sharing some information about the Bank’s deposit mix and some key data in regards to asset quality. Trends in past dues and non-accruing loans are generally low and improving; losses from charge-offs have been low so far in 2020; the decrease in the Allowance for Loan and Lease Losses to loans coverage ratio as of June 30, 2020, was due to the PPP loans that were added to the portfolio and carry a 100% SBA guarantee, therefore do not require a reserve.
CEO Austin closed the presentation by restating her key messages and thanked all of the attendees for joining the virtual meeting. A recording of the 2020 Virtual Community Bancorp. Annual Shareholders meeting will be available for one year. Visit the Community Bancorp. section of communitynationalbank.com and use the link provided to watch and listen to the recording.