Here is your 4th Quarter 2015 consolidated statements of condition and income for Community Bancorp and subsidiary Community State Bank. During 2015, the bank has experienced loan growth of 13% or $9.2 million in net new loans. Our customer loan calling program – “Relationships Matter” has been instrumental in helping to achieve these results. The asset quality of the bank continues to improve. Past due loans as of December 31, 2015 were 1.6% of total loans, compared to December 31, 2014 of 2.8%. Our allowance for loan loss had a net charge off for the fourth quarter of 2015 of $21,332 compared to a net recovery for the fourth quarter of 2014 of $4,890. The bank did not provide for any loan loss during the fourth quarter of 2015. Rather, we reversed a calculated excess of $480,000 during the fourth quarter. This reversal was the result of the loan loss calculation having a couple of large loan write-offs fall out of our formula. This resulted in an allowance of loan loss reserve of 2.02% at December 31, 2015 compared to 2.81% at December 31, 2014. The bank’s classified or problem loans continue to improve and decreased to 21.9% of total loans at December 31, 2015 compared to 31.92% at December 31, 2014. This 10% decline is a good reflection of the effectiveness of our collection efforts.
Net income was $1,094,000 (unaudited) for the twelve months ended December 31, 2015. The bank had extraordinary income in the first quarter of $462,000, which resulted from a death benefit from life insurance. Additionally, the year-to-date reversal of $330,000 of loan loss provision, net for the year, improved earnings on a one time basis. Net income per share for 2015 was $3.48, compared to $0.64 per share during the same period last year. Core earnings improved when comparing 2015 to 2014. The improvement in net interest income is due increased loan volume and the reduction in the provision for loan losses. Non-interest income increased slightly year-over-year and non-interest expense decreased year-over-year. We gained a few points on our net interest margin which ended up at 3.49% for the fourth quarter of 2015 compared to 3.43% for the same period of the prior year. Our management and staff continues to work on repositioning asset balances into higher yielding loans rather than purchasing investment securities with lower yields. Management discloses to our shareholders that an error was detected in our third quarter (unaudited) financial statements. While third quarter net income was properly disclosed at $57,000, year-to-date net income should have been disclosed as $618,000 instead of $641,000. Management apologizes for this error and has implemented controls to prevent in the future.
The Bank’s Tier 1 Leverage Ratio was 9.46% at December 31, 2015. The ratio increased from last year’s 8.88%. The minimum Tier 1 Leverage Ratio to be considered well capitalized by FDIC standards is 8.00%. The Bank’s capital position improved substantially during 2015 with the extraordinary income carrying forward from first quarter earnings. Book value of Community Bancorp, Inc. is $67.83 compared to $64.48 the prior year. The most recent recorded transfer of Community Bancorp, Inc. shares traded at $57.25 per share. Community Bancorp, Inc. has set up a trading desk in October 2014 and has traded approximately 1600 shares. The bank’s trading desk has shares available for purchase by current shareholders or other interested investors. The bank continues to look for new shareholders to invest in our bank and existing shareholders who desire to expand their investment in our community bank.
The Board of Directors and Management team continue to utilize the strategic plan, with the goal of guiding the bank to stronger profitability and asset levels. The bank continues to invest in technology for our customers, daily operations, ATM networking, and on-line banking. The bank is working to implement additional tools to our website to assist customers with financial decisions and an understanding of the products and services offered by Community State Bank. The bank will be launching our mobile banking service in the very near future. Bank team members continue to working diligently to improve the financial position of the bank and the customer experience for our existing and potential customer base. Thank you for your continued loyalty and support of your local bank. As always, please remember to refer “Community State Bank” to your family, friends and associates.
John C. Wendling
President and CEO