Community National Bank (OTC BB: CBNY.OB) today announced second quarter results for 2011. Highlights for the quarter include:

  • Net income of $635 thousand for the second quarter of 2011 compared to net income of $323 thousand for the same period in 2010.
  • Net interest income grew $638 thousand or 18% over 2010 to $4.2 million for the quarter. The net interest margin was 3.50%.
  • Commercial loans increased 20% or $34.3 million to $208.3 million compared to June 30, 2010.
  • Deposits increased 12% or $45.7 million to $418 million compared to the same quarter in the prior year, including Demand Deposit growth of $33 million or 49%.
  • $0.6 million in gains on the sale of Small Business Administration Loans ("SBA") during the quarter.
  • The Bank hosted the Grand Opening of its eighth branch location in Bayside, New York in May.

Chairman, President and CEO, Stuart Lubow commented "We are proud that Community National Bank exceeded the $500 million in total asset plateau for the first time since opening in April 2005. We expect this growth to continue as we celebrated the grand opening of our eighth branch location in Bayside, New York in May and will open our ninth branch location in Melville, New York by the end of the year. We continue to develop banking relationships with small and medium sized business as evident by the growth in business demand deposits. The Bank's commercial loan pipeline remains robust and we expect continued loan growth during the second half of 2011. The Bank's growth in assets, capital and branch locations has enabled us to become a key business partner and an alternative choice for many local businesses that have become frustrated by the lack of service from the larger financial institutions. We are able to help our customers by providing quality customer service so that they can remain focused on growing their own business."

Net Earnings and Net Interest Income

Net income for the quarter ended June 30, 2011 was $635 thousand or $0.10 basic earnings per share as compared to net income of $323 thousand or $0.06 basic earnings per share for the comparable period in 2010.

For the quarter ended June 30, 2011, net interest income and net interest margin were $4.2 million and 3.50%, respectively, compared to $3.5 million and 3.28% for the prior 2010 quarter. The $0.7 million or 20% increase in net interest income was primarily due to the growth in our commercial and residential loan portfolios which were funded through $23 million in sales proceeds and principal repayments from the securities portfolio and an increase of $33 million in demand deposits and $11.8 million in certificate of deposits. The net interest margin increased 22 basis points from the prior year quarter due to the increase in higher yielding loan products as well as reductions in the cost of funds on core deposits and certificate of deposits.

Loans and Asset Quality

Loans held-for-investment increased $16.3 million for an annualized growth rate of 19% to $355.1 million at June 30, 2011 compared to $338.8 million at March 31, 2011. The commercial loan portfolio increased $34.3 million or 20% when compared to the prior year quarter.

Non-Performing loans remained stable at $4.9 million or 1.39% of total loans at June 30, 2011, significantly below the Bank's peer group average. The Bank's provision for loan losses was $473 thousand during the second quarter of 2011 compared to $410 thousand for quarter ended March 31, 2011. The increase in the provision was due to two loans that were classified as non-accrual during the quarter and an increase in the amount of general valuation reserves due to growth in the loan portfolio. The allowance for loan losses to total loans was 1.35% at June 30, 2011, a slight decrease from 1.38% at March 31, 2011. The Bank had $370 thousand in charged off loans during the second quarter.

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://www2.fdic.gov/idasp/main_bankfind.asp. The Bank expects to file its June 30, 2011 Call Report on or around July 30, 2011.

About Community National Bank

Community National Bank is a Long Island based independent commercial bank and operates eight locations in Nassau, Suffolk and Queen 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, 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,
2011     2010       2011     2010
Interest Income:
Commercial Loans $2,994,023 $2,645,591 $5,923,463 $5,067,096
Residential and Consumer Loans 1,724,763 1,590,295 3,288,745 3,306,109
Securities 685,455 781,066 1,371,483 1,644,522
Money Market Investments 2,970     13,771       5,760     18,960
Total Interest Income 5,407,211     5,030,723       10,589,451     10,036,687
 
Interest Expense:
NOW, Savings & Money Market 132,960 207,256 276,691 426,227
Certificates of Deposit 950,174 1,101,180 1,918,262 2,158,943
Borrowed Funds 165,868     202,800       384,314     342,023
Total Interest Expense 1,249,002     1,511,236       2,579,267     2,927,193
Net Interest Income 4,158,209 3,519,487 8,010,184 7,109,494
Provision For Loan Losses 473,000     410,000       1,233,000     717,000
Net Interest Income After Provision for Loan Losses 3,685,209     3,109,487       6,777,184     6,392,494
 
Non-Interest Income:
Service Charges 123,880 92,503 238,927 164,286
Loan Fees & Servicing Income 111,319 24,245 181,196 89,387
Gain on Sale of Investments 21,597 52,915 31,381 54,983
Gain on Sale of Loans 598,101 517,409 1,937,566 522,121
BOLI Income 156,972     39,509       292,217     39,509
Total Non-Interest Income 1,011,869     726,581       2,681,287     870,286
 
Non-Interest Expense:
Compensation and Benefits 1,797,948 1,490,136 3,652,390 2,893,372
Occupancy and Equipment 951,748 901,056 1,886,244 1,828,066
Advertising 27,838 39,885 89,544 53,679
Other Expenses 927,290     866,416       1,851,814     1,725,644
Total Non-Interest Expense 3,704,824     3,297,493       7,479,992     6,500,761
Income Before Income Taxes 992,254 538,575 1,978,479 762,019
Provision For Income Taxes 357,302     215,701       720,800     305,062
Net Income $634,952     $322,874       $1,257,679     $456,957
 
Earnings Per Share:
Basic $0.10 $0.06 $0.19 $0.09
Diluted $0.09 $0.06 $0.19 $0.09
Weighted Average Shares Outstanding - Basic 6,673,181 5,179,954 6,673,181 5,026,351
Weighted Average Shares Outstanding - Diluted 6,701,982 5,179,954 6,692,901 5,026,351
 
 
COMMUNITY NATIONAL BANK
STATEMENTS OF INCOME
Unaudited
                     
For the Three Months Ended
June 30, March 31,

December 31,

June 30,
2011     2011       2010     2010
Interest Income:
Commercial Loans $2,994,023 $2,929,441 $2,910,143 $2,645,591
Residential and Consumer Loans 1,724,763 1,563,982 1,583,430 1,590,295
Securities 685,455 686,028 680,427 781,066
Money Market Investments 2,970     2,790       5,916     13,771
Total Interest Income 5,407,211     5,182,241       5,179,916     5,030,723
 
Interest Expense:
NOW, Savings & Money Market 132,960 143,731 152,376 207,256
Certificates of Deposit 950,174 968,088 1,046,475 1,101,180
Borrowed Funds 165,868     218,446       226,753     202,800
Total Interest Expense 1,249,002     1,330,265       1,425,604     1,511,236
Net Interest Income 4,158,209 3,851,976 3,754,312 3,519,487
Provision For Loan Losses 473,000     760,000       300,000     410,000
Net Interest Income After Provision for Loan Losses 3,685,209     3,091,976       3,454,312     3,109,487
 
Non-Interest Income:
Service Charges 123,880 115,047 120,992 92,503
Loan Fees & Servicing Income 111,319 69,877 61,917 24,245
Gain on Sale of Investments 21,597 9,784 215,228 52,915
Gain on Sale of Loans 598,101 1,339,465 159,106 517,409
BOLI Income 156,972     135,245       108,306     39,509
Total Non-Interest Income 1,011,869     1,669,418       665,549     726,581
 
Non-Interest Expense:
Compensation and Benefits 1,797,948 1,854,442 1,559,078 1,490,136
Occupancy and Equipment 951,748 934,496 911,585 901,056
Advertising 27,838 61,706 60,199 39,885
Other Expenses 927,290     924,524       702,532     866,416
Total Non-Interest Expense 3,704,824     3,775,168       3,233,394     3,297,493
Income Before Income Taxes 992,254 986,226 886,467 538,575
Provision For Income Taxes 357,302     363,499       274,007     215,701
Net Income $634,952     $622,727       $612,460     $322,874
 
Earnings Per Share:
Basic $0.10 $0.09 $0.09 $0.06
Diluted $0.09 $0.09 $0.09 $0.06
Weighted Average Shares Outstanding - Basic 6,673,181 6,673,181 6,673,181 5,179,954
Weighted Average Shares Outstanding - Diluted 6,701,982 6,684,195 6,681,994 5,179,954
 
 
COMMUNITY NATIONAL BANK
STATEMENTS OF CONDITION
Unaudited
                   
 
                     
June 30, March 31,

December 31,

June 30,
2011     2011       2010     2010
Assets:
Cash and Due From Banks $4,308,554 $4,733,264 $3,690,489 $4,654,965
Money Market Investments 46,961,011 3,036,235 2,215,083 42,477,882
 
Securities - Available-for-Sale 83,719,729 99,466,280 110,857,926 107,508,416
Restricted Stock 4,140,100     4,245,250       4,472,200     3,367,750
Total Securities 87,859,829     103,711,530       115,330,126     110,876,166
 
Loans Held-For-Sale - - 7,518,629 5,065,700
 
Commercial Loans 208,386,201 205,180,420 194,518,041 174,102,694
Residential & Consumer Loans 146,673,520     133,616,246       130,020,381     115,901,584
Gross Loans Held-For-Investment 355,059,721 338,796,666 324,538,422 290,004,278
Less: Allowance For Loans Losses (4,784,505)     (4,681,642)       (3,956,864)     (3,263,027)
Net Loans Held-For-Investment 350,275,216 334,115,024 320,581,558 286,741,251
 
Premises and Equipment, net 8,126,007 7,704,607 7,620,331 8,024,599
Bank Owned Life Insurance ("BOLI") 15,552,223 15,336,213 10,260,005 10,039,509
Other Assets 7,295,841     7,248,198       9,628,576     6,713,162
Total Assets $520,378,681     $475,885,071       $476,844,797     $474,593,234
 
Liabilities and Stockholders' Equity:
Deposits:
Demand $100,564,404 $70,448,381 $66,609,198 $67,506,715
NOW, Savings & Money Market 108,291,294 107,193,520 106,383,448 107,530,296
Certificates of Deposit 209,563,822     192,355,205       186,611,547     197,718,233
Total Deposits 418,419,520     369,997,106       359,604,193     372,755,244
 
FHLB Borrowings 32,957,800 37,445,600 42,930,582 30,892,157
Secured Borrowings - SBA Loans - - 6,570,004 3,060,000
Accrued Expenses and Other Liabilities 2,329,922     2,875,920       2,978,842     3,494,005
Total Liabilities 453,707,242     410,318,626       412,083,621     410,201,406
 
Stockholders' Equity:
Common Stock, par value $5.00; authorized
10,000,000 shares; issued 6,673,181 shares at
June 30, 2011 and 6,627,981 shares at June 30, 2010 33,365,905 33,365,905 33,365,905 33,139,905
Additional Paid in Capital 33,775,379 33,732,805 33,693,112 33,421,447
Retained Deficit (454,231) (1,089,183) (1,711,910) (2,727,942)
Unrealized (Loss)/Gain on Securities (15,614)     (443,082)       (585,931)     558,418
Total Stockholders' Equity 66,671,439     65,566,445       64,761,176     64,391,828
Total Liabilities and Stockholders' Equity $520,378,681     $475,885,071       $476,844,797     $474,593,234
 
 
COMMUNITY NATIONAL BANK
SELECTED FINANCIAL DATA & BALANCE SHEET COMPONENTS
Unaudited
                   
 
 
For The Three Months Ended       For The Six Months Ended
June 30, 2011     June 30, 2010       June 30, 2011     June 30, 2010
Per Share:
Net Income-Basic $0.10 $0.06 $0.19 $0.09
Average Shares Outstanding - Basic 6,673,181 5,179,954 6,673,181 5,026,351
Net Income - Diluted $0.09 $0.06 $0.19 $0.09
Average Shares Outstanding - Diluted 6,701,982 5,179,954 6,692,901 5,026,351
Book Value $9.99 $9.72 $9.99 $9.72
 
Performance:
Return on Average Assets 0.52% 0.29% 0.52% 0.21%
Return on Average Equity 3.85% 2.61% 3.86% 1.92%
Efficiency Ratio 71.66% 77.66% 69.96% 81.47%
 
Yield on Average Earning Assets 4.56% 4.70% 4.63% 4.88%
Cost on Average Interest Bearing Liabilities 1.45% 1.77% 1.50% 1.77%
Cost of Deposits 1.12% 1.43% 1.17% 1.47%
Net Interest Spread 3.11% 2.93% 3.13% 3.11%
Net Interest Margin 3.50% 3.28% 3.50% 3.45%
                     
June 30, 2011     March 31, 2011       December 31, 2011     June 30, 2010
Risk Based Capital:
Leverage Ratio 13.19% 13.32% 13.45% 14.06%
Tier 1 19.50% 19.75% 20.54% 21.79%
Total Risk Based 20.75% 21.00% 21.79% 22.91%
 
Asset Quality:
Allowance for Loan Losses to Total Loans 1.35% 1.38% 1.22% 1.13%
Allowance for Loan Losses to Non-Performing Loans 97% 95% 94% 5516%
Non-Performing Loans to Total Loans 1.39% 1.45% 1.30% 0.02%
Non-Performing Assets to Total Assets 0.95% 1.03% 0.88% 0.01%
Annualized Quarterly Net Charge offs to Avg. Loans 0.42% 0.04% 0.01% 0.91%

Turchette Advertising
Christopher Dale, 973-227-8080, ext. 29
cdale@turchette.com
or
Community National Bank
Jay McConie, 516-498-9111 Ext 139
Senior Vice President
Chief Financial Officer