Community National Bank (SYMBOL: CBNY.OB) today announced fourth quarter and year end results for 2011. Highlights include:

  • Total assets of $531.8 million at December 31, 2011, an increase of $55.0 million or 12% compared to prior year;
  • Commercial loan growth of $56.0 million, an increase of 29% compared to the end of 2010;
  • Deposits increased $65.6 million or 18% year over year;
  • Demand deposits grew $28 million or 42%, due to increased business relationships;
  • The Bank opened its eighth and ninth branch locations in Bayside and Melville;
  • Net interest income grew $2.4 million or 17% from the prior year;
  • $2.8 million in gains from the sale of SBA loans;
  • Net income increased $0.8 million or 57% to $2.3 million for the year compared to $1.5 million in 2010;
  • Strong asset quality, with total non-performing loans of 0.32% of total loans;
  • Tier 1 Leverage Capital, in excess of 12%; and
  • #1 Small Business Administration ("SBA") lender on Long Island for 2011.

Chairman, President and CEO, Stuart Lubow commented, "We are proud of the growth achieved in 2011. During the year the Bank increased its banking relationships with small businesses, providing loan and depository services to meet their needs. As part of our commitment to small businesses, the Bank was the number one Small Business Administration lender on Long Island. Our focus on core earnings and deposit growth was evident by the significant increase in commercial loans, demand deposits and net interest income during the year. Additionally, we continued to increase our geographic footprint as we opened two new branch locations in Bayside, Queens and Melville, New York and increased our commercial lending staff for Long Island and New York City, positioning the Bank for a strong 2012."

Net Earnings and Net Interest Income

Net income for the year ended December 31, 2011 was $2.3 million or $0.35 basic earnings per share compared to net income of $1.5 million or $0.25 basic earnings per share for the twelve months ended December 31, 2010.

For the year ended December 31, 2011, net interest income was $16.8 million compared to $14.4 million for the prior year period. The $2.4 million or 17% increase in net interest income was primarily due to the growth in our commercial and residential loan portfolios, which were funded by strong deposit growth from our expanding branch network. The net interest margin increased 21 basis points to 3.58% for the year ended December 31, 2011 from 3.37% for the prior year due to a reduction in the cost of funds on deposits and growth in higher yielding commercial loans.

Net income for the fourth quarter of 2011 was $447 thousand or $.07 per share, compared to net income of $612 thousand or $.09 per share for the fourth quarter of 2010. The decrease in fourth quarter income was primarily due to higher provision for loan losses related to significant commercial loan growth, the charge-off of one commercial loan and increased compensation and occupancy expenses associated with the expansion of the branch network and lending personnel.

Non-Interest Income

Non-Interest income increased $2.0 million or 81% to $4.4 million for the year ended December 31, 2011 compared to $2.4 million for the prior year period. The increase in non-interest income was mostly attributable to gains on the sale of SBA loans and income from Bank Owned Life Insurance ("BOLI"). The SBA modified their recourse provisions in 2011 and expanded the eligibility requirements to encourage lending to small businesses. The SBA has since ended the expanded eligibility program and as a result we expect lower SBA loan originations and gains in 2012.

Non-Interest Expense

Non-interest expense increased $2.1 million or 16% to $15.1 million for the year ended December 31, 2011 compared to $12.9 million for the prior year. The increase was the result of the branch expansion, an increase in the number of commercial lenders and additional operational and compliance personnel.

Loans and Asset Quality

Loans held-for-investment increased $71.2 million or 22% to $395.8 million at December 31, 2011 compared to $324.5 million at December 31, 2010. The commercial loan portfolio increased $56.0 million or 29% when compared to the prior year. The residential loan portfolio increased $15.3 million or 12% compared to the prior year.

Non-Performing loans, consisting of loans past due 90 days or more decreased $2.9 million or 69% to $1.3 million or 0.32% of total loans at December 31, 2011 from $4.2 million or 1.30% at December 31, 2010. The decrease in non-performing loans was mostly attributable to the payoff of a $2.4 million commercial mortgage from proceeds received from an auction sale on a building that collateralized the loan. There were no loans 60 to 89 days past due at December 31, 2011 or 2010, respectively. The Bank had $410 thousand and $20 thousand in loans 30 to 59 days past due at December 31, 2011 and 2010, respectively, The Bank had two SBA loans totaling approximately $280 thousand which were classified as troubled debt restructurings at December 31, 2011. There were no trouble debt restructurings at December 31, 2010.

The Bank had $2.6 million in provision for loan losses offset by net charge-offs of $1.8 million in 2011. The increase in the provision for loan losses from the prior year was due to higher general valuation allowances attributable to loan growth and additional specific reserves on SBA and commercial loans charged off during the year. The allowance for loan losses was $4.8 million or 1.20% of total loans at December 31, 2011, an increase of $0.8 million from $4.0 million or 1.22% at December 31, 2010.

The Bank had two properties classified as other real estate owned which totaled $0.6 million at December 31, 2011. The Bank had no other real estate owned at December, 31, 2010. We expect to sell these two properties in 2012.

Mr. Lubow commented further, "The Bank's asset quality remains strong, non-performing and delinquent loan trends are at low levels and our ratios are well below our peer group average. We did have an increase in loan charge-off activity during the year as we looked to aggressively resolve any problem credits. We continue to be vigilant in monitoring the Bank's loan portfolio for any signs of weakness as the continued slow economic growth and uncertainty in both the political and regulatory environment has resulted in a tough business climate."

Deposits

Total deposits increased $65.6 million or 18% to $425.2 million at December 31, 2011 compared to $359.6 million at December 31, 2010. Demand deposits grew $28 million or 42%, to $94.5 million at December 31, 2011, when compared to the prior year. Mr. Lubow commented "We remained committed to the old fashion banking model of gathering core deposits through our branches and making loans to our community. As a commercial bank, we remain steadfast in developing business relationships as demonstrated by the significant growth in demand deposits this past year".

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 December 31, 2011 Call Report on or around January 30, 2012.

ABOUT COMMUNITY NATIONAL BANK

Community National Bank is a Long Island based independent commercial bank and operates nine locations in Nassau, Suffolk and Queens County. 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 and 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 Twelve Months Ended
December 31,   December 31, December 31,   December 31,
  2011     2010     2011     2010
Interest Income:
Commercial Loans $ 3,444,917 $ 2,910,143 $ 12,591,969 $ 10,645,404
Residential and Consumer Loans 1,674,388 1,583,430 6,730,776 6,433,098
Securities 563,730 680,427 2,511,308 3,111,866
Money Market Investments   9,258     5,916     33,780     44,743
Total Interest Income   5,692,293     5,179,916     21,867,833     20,235,111
 
Interest Expense:
NOW, Savings & Money Market 176,588 152,376 599,564 743,996
Certificates of Deposit 865,295 1,046,475 3,716,771 4,288,220
Borrowed Funds   154,795     226,753     698,441     782,936
Total Interest Expense   1,196,678     1,425,604     5,014,776     5,815,152
Net Interest Income 4,495,615 3,754,312 16,853,057 14,419,959
Provision For Loan Losses   785,000     300,000     2,628,000     1,602,000
Net Interest Income After Provision for Loan Losses   3,710,615     3,454,312     14,225,057     12,817,959
 
Non-Interest Income:
Service Charges 116,268 120,992 468,091 374,693
Loan Fees & Servicing Income 84,421 61,917 336,237 260,774
Gain on Sale of Investments - 215,228 130,829 499,368
Gain on Sale of Loans 329,743 159,106 2,832,716 1,025,284
BOLI Income   160,155     108,306     612,085     260,005
Total Non-Interest Income   690,587     665,549     4,379,958     2,420,124
 
Non-Interest Expense:
Compensation and Benefits 1,933,852 1,559,078 7,407,481 5,879,056
Occupancy and Equipment 1,029,566 911,585 3,899,986 3,628,254
Advertising 62,139 60,199 186,905 157,885
Other Expenses   772,346     702,532     3,566,102     3,273,529
Total Non-Interest Expense   3,797,903     3,233,394     15,060,474     12,938,724
Income Before Income Taxes 603,299 886,467 3,544,541 2,299,359
Provision For Income Taxes   156,000     274,007     1,228,600     826,369
Net Income $ 447,299   $ 612,460   $ 2,315,941   $ 1,472,990
 
Earnings Per Share:
Basic $ 0.07 $ 0.09 $ 0.35 $ 0.25
Diluted $ 0.07 $ 0.09 $ 0.35 $ 0.25
Weighted Average Shares Outstanding - Basic 6,673,181 6,673,181 6,673,181 5,854,800
Weighted Average Shares Outstanding - Diluted 6,686,691 6,681,994 6,698,905 5,863,613
COMMUNITY NATIONAL BANK
STATEMENTS OF INCOME
Unaudited
 
  For the Three Months Ended
December 31,   September 30,   June 30,   December, 31
  2011     2011     2011     2010
Interest Income:
Commercial Loans $ 3,444,917 $ 3,224,839 $ 2,994,023 $ 2,910,143
Residential and Consumer Loans 1,674,388 1,766,392 1,724,763 1,583,430
Securities 563,730 576,097 685,455 680,427
Money Market Investments   9,258     18,762     2,970     5,916
Total Interest Income   5,692,293     5,586,090     5,407,211     5,179,916
 
Interest Expense:
NOW, Savings & Money Market 176,588 146,285 132,960 152,376
Certificates of Deposit 865,295 933,213 950,174 1,046,475
Borrowed Funds   154,795     159,332     165,868     226,753
Total Interest Expense   1,196,678     1,238,830     1,249,002     1,425,604
Net Interest Income 4,495,615 4,347,260 4,158,209 3,754,312
Provision For Loan Losses   785,000     610,000     473,000     300,000
Net Interest Income After Provision for Loan Losses   3,710,615     3,737,260     3,685,209     3,454,312
 
Non-Interest Income:
Service Charges 116,268 112,896 123,880 120,992
Loan Fees & Servicing Income 84,421 70,620 111,319 61,917
Gain on Sale of Investments - 99,447 21,597 215,228
Gain on Sale of Loans 329,743 565,406 598,101 159,106
BOLI Income   160,155     159,713     156,972     108,306
Total Non-Interest Income   690,587     1,008,082     1,011,869     665,549
 
Non-Interest Expense:
Compensation and Benefits 1,933,852 1,821,239 1,797,948 1,559,078
Occupancy and Equipment 1,029,566 984,176 951,748 911,585
Advertising 62,139 35,222 27,838 60,199
Other Expenses   772,346     941,942     927,290     702,532
Total Non-Interest Expense   3,797,903     3,782,579     3,704,824     3,233,394
Income Before Income Taxes 603,299 962,763 992,254 886,467
Provision For Income Taxes   156,000     351,800     357,302     274,007
Net Income $ 447,299   $ 610,963   $ 634,952   $ 612,460
 
Earnings Per Share:
Basic $ 0.07 $ 0.09 $ 0.10 $ 0.09
Diluted $ 0.07 $ 0.09 $ 0.09 $ 0.09
Weighted Average Shares Outstanding - Basic 6,673,181 6,673,181 6,673,181 6,673,181
Weighted Average Shares Outstanding - Diluted 6,686,691 6,709,187 6,701,982 6,681,994
COMMUNITY NATIONAL BANK
STATEMENTS OF CONDITION
Unaudited
   
December 31,   September 30,   June 30,   December, 31
  2011     2011     2011     2010
Assets:
Cash and Due From Banks $ 6,758,552 $ 4,754,537 $ 4,308,554 $ 3,690,489
Money Market Investments 6,703,973 8,067,065 46,961,011 2,215,083
 
Securities - Available-for-Sale 90,516,272 85,004,338 83,719,729 110,857,926
Restricted Stock   4,279,500     4,028,000     4,140,100     4,472,200
Total Securities   94,795,772     89,032,338     87,859,829     115,330,126
 
Loans Held-For-Sale - 510,000 - 7,518,629
 
Commercial Loans 250,444,848 223,355,521 208,386,201 194,518,041
Residential & Consumer Loans   145,310,058     148,764,403     146,673,520     130,020,381
Gross Loans Held-For-Investment 395,754,906 372,119,924 355,059,721 324,538,422
Less: Allowance For Loans Losses   (4,759,124)     (4,329,596)     (4,784,505)     (3,956,864)
Net Loans Held-For-Investment 390,995,782 367,790,328 350,275,216 320,581,558
 
Premises and Equipment, net 8,722,455 8,280,874 8,126,007 7,620,331
Bank Owned Life Insurance ("BOLI") 15,872,091 15,711,935 15,552,223 10,260,005
Other Assets   7,959,080     8,017,628     7,295,841     9,628,576
Total Assets $ 531,807,705   $ 502,164,705   $ 520,378,681   $ 476,844,797
 
Liabilities and Stockholders' Equity:
Deposits:
Demand $ 94,531,309 $ 87,948,946 $ 100,564,404 $ 66,609,198
NOW, Savings & Money Market 134,268,269 117,004,236 108,291,294 106,383,448
Certificates of Deposit   196,452,756     195,792,324     209,563,822     186,611,547
Total Deposits   425,252,334     400,745,506     418,419,520     359,604,193
 
FHLB Borrowings 34,973,678 30,467,164 32,957,800 42,930,582
Secured Borrowings - SBA Loans - - - 6,570,004
Accrued Expenses and Other Liabilities   3,198,516     3,207,408     2,329,922     2,978,842
Total Liabilities   463,424,528     434,420,078     453,707,242     412,083,621
 
Stockholders' Equity:
Common Stock, par value $5.00; authorized
10,000,000 shares; issued 6,673,181 shares at
December 31, 2011 and 2010, respectively 33,365,905 33,365,905 33,365,905 33,365,905
Additional Paid in Capital 33,872,063 33,823,722 33,775,379 33,693,112
Retained Earnings (Deficit) 604,031 156,732 (454,231) (1,711,910)
Unrealized (Loss)/Gain on Securities   541,178     398,268     (15,614)     (585,931)
Total Stockholders' Equity   68,383,177     67,744,627     66,671,439     64,761,176
Total Liabilities and Stockholders' Equity $ 531,807,705   $ 502,164,705   $ 520,378,681   $ 476,844,797
COMMUNITY NATIONAL BANK
SELECTED FINANCIAL DATA & BALANCE SHEET COMPONENTS
Unaudited
   
For The Three Months Ended   For The Twelve Months Ended

December 31,

2011

  

December 31,

2010

  

December 31, 

2011

  

December 31,

2010

Per Share:    
Net Income-Basic $ 0.07 $ 0.09 $ 0.35 $ 0.25
Average Shares Outstanding - Basic 6,673,181 6,673,181 6,673,181 5,854,800
Net Income - Diluted $ 0.07 $ 0.09 $ 0.35 $ 0.25
Average Shares Outstanding - Diluted 6,686,691 6,681,994 6,698,905 5,863,613
Tangible Book Value $ 10.25 $ 9.70 $ 10.25 $ 9.70
 
Performance:
Return on Average Assets 0.35% 0.52% 0.46% 0.33%
Return on Average Equity 2.62% 3.76% 3.49% 2.61%
Efficiency Ratio 73.23% 73.16% 70.93% 76.83%
 
Yield on Average Earning Assets 4.69% 4.63% 4.65% 4.72%
Cost on Average Interest Bearing Liabilities 1.36% 1.69% 1.44% 1.74%
Cost of Deposits 1.00% 1.16% 1.09% 1.40%
Net Interest Spread 3.33% 2.94% 3.21% 2.98%
Net Interest Margin 3.70% 3.36% 3.58% 3.37%
             

December 31, 

2011

  

September 30, 

2011

  

June 30, 

2011

  

December 31, 

2010

Risk Based Capital:
Leverage Ratio 12.75% 12.79% 13.19% 13.45%
Tier 1 17.50% 18.68% 19.50% 20.54%
Total Risk Based 18.75% 19.92% 20.75% 21.79%
 
Asset Quality:
Allowance for Loan Losses to Total Loans 1.20% 1.16% 1.35% 1.22%
Allowance for Loan Losses to Non-Performing Loans 374% 276% 97% 94%
Non-Performing Loans to Total Loans 0.32% 0.42% 1.39% 1.30%
Non-Performing Assets to Total Assets 0.36% 0.31% 0.95% 0.88%
Annualized Quarterly Net Charge offs to Avg. Loans 0.37% 1.16% 0.42% 0.01%

Community National Bank
Jay McConie, 516-498-9111 Ext 139
Senior Vice President
Chief Financial Officer