Community Bancorp Lifts Profit as Lending Margin Widens
Net interest margin expanded 53 basis points to 4.00% in the second quarter.
Community Bancorp (CMTV), the community-bank holding company, lifted second-quarter net income to $4.69 million from $4.06 million a year earlier, as earnings rose 16.7% to $0.84 a share.
The quarter extended a stronger first half, with net income increasing 19.4% to $9.06 million and earnings climbing to $1.62 a share from $1.34. Wider lending spreads helped offset higher credit costs and operating expenses.
Quarterly net interest income rose 13.7% to $11.25 million. Interest and fees on loans increased 7.7% to $14.75 million, reflecting loan growth and higher yields, while deposit interest expense edged up 0.9% to $4.01 million.
The wider spread also supported operating efficiency. The quarterly efficiency ratio improved to 52.8% from 55.8%, and pre-tax, pre-provision return on average assets increased to 2.11% from 1.81%. Noninterest income rose to $2.31 million from $2.06 million, led by higher other income from loans.
Those gains absorbed a 77.1% increase in second-quarter credit-loss expense to $720,967, which the company primarily attributed to loan growth. Noninterest expense rose 7.5% to $7.17 million, including increases in salaries and other operating costs.
Gross loans increased 3.1% from a year earlier to $970.54 million, though growth from year-end was $5.25 million. Deposits rose 5.2% year over year to $981.65 million but declined seasonally from December, contributing to a $114.8 million reduction in assets from year-end as municipal balances matured and cash funded two maturing advances.
Community Bancorp ended the quarter with stronger capital and book value. Shareholders’ equity rose to $120.9 million, and fully diluted tangible book value increased 17.3% from a year earlier to $19.51 a share. Its total capital ratio strengthened to 16.05% from 14.85%, giving the bank a larger capital base as loan growth continued.