We continue to make strides in bringing our company back to previous levels of profitability. Equally as important, to bring that return back to you, our shareholders, in the form of cash dividends and growth of your investment in Community Bancorp, Inc. The economy continues to challenge the bank’s financial statements, your Board, management, and staff is committed to continue our efforts in meeting our strategic objectives.
The first nine months of this year has brought mixed results in meeting our objectives laid out in the beginning of 2014. The biggest challenge facing Community State Bank and many other banks is the booking of new loan volume. We need your help in attracting new loan volume to your community bank. The loan production office, in the City of Saginaw, has provided a modest benefit to Community State Bank with a slight increase in lending opportunities.
A transitioning balance sheet and income statement is the path we must navigate while we strive to increase lending which will have both an immediate and long-term positive impact on earnings. The first nine months income in 2014 was $201,000/$0.64 per share, compared to $427,000/$1.36 per share for the same period in 2013. Factors that contributed to reduced comparative earnings was reduced interest income, due to low new loan volume, reduce non-interest income primarily from mortgage sales and the slight increase in non-interest expenses. While disappointing, our organization is looking to the future for improvement in net income.
As of September 30, 2014 past due loan ratio decreased significantly to 2.40% of total loans, compared to 3.85% for the comparative period in 2013. Further review of the bank’s loan portfolio resulted in net loan charge-offs of $947,000 compared to $203,000 for the same period in 2013, coupled with an increase in loan loss reserves. Another component of this transition was the increase in our capital (Tier I) ratio to 8.68% an increase from 8.51% resulting in an increase of shareholder book value to $64.84. What this means is that our balance sheet and income statement is getting continually stronger.
Your Board is also focused on increasing the liquidity of your investment in Community Bancorp, Inc. You have received a letter detailing some valued changes in the processes associated with your company’s stock transfer process (trading desk). We look to the changes outlines as an important feature in supporting stock liquidity and the Buy/Sell of company stock. Over the course of the next twelve months we will look to attract new shareholders, as our bank improves. To accomplish this your Board through the services of a third party firm known for valuing privately held bank stock will be providing a fair market value (“FMV”) to our stock on a quarterly basis. Effective this date your stock’s FMV has been set at $57.25 per share. Please contact my office if you are interested in knowing more about the availability of stock.
Douglas J. Kelley
President and CEO