Skip to main content

Community State Bank Announces First Quarer 2016 Earnings

 Dear Shareholders:


     Net income for the three months ended March 31, 2016 was $154,000 (unaudited).  Last year’s first quarter 2015 earnings adjusted for extraordinary income of $462,000 was $35,000.   We are proud of this improvement in year-over-year earnings for Community Bancorp, Inc.  The Bank’s interest income has improved, provision for loan losses has been reduced, and other operating expenses are down from prior year.  Net income per share for 2016 was $0.49, compared to $1.58 per share before adjusting for extra ordinary income, or $0.11 per share with the adjustment, during the same period one year ago. Core earnings improved when comparing 2016 to 2015.  The improvement in net interest income is due to increased loan volume and the reduction in the provision for loan losses, when compared to the prior year.  The net interest income results were obtained from the improvement in loan volume and quality.  Non-interest income and non-interest expenses decreased year-over-year. Net interest margin ended the first quarter of 2016 at 3.44% compared to 3.31% for the same period in 2015.  Your dedicated bank employees have successfully migrated balance sheet funds into higher yielding loans over lower yielding investment securities as part of our strategic plan. As a result, the Bank continues to show progress in earnings and an improvement of non-performing assets.


     Loans have grown 19.4% or $13.7 million since March 31, 2015. The increases in loans, along with prospective loan growth, are the key to ongoing strong earnings improvement.  The asset quality in the bank continues to improve.  Past due loans at March 31, 2016 were 0.84%, compared to March 31, 2015 of 1.10%.  The allowance for loan losses had a net charge off for the first quarter of 2016 of $15,828 compared to the first quarter of 2015 of $30,070.  The bank provided $30,000 for loan loss during the first quarter. The reduced provision amount, when comparing to the prior year, is directly related to overall improved credit quality in the loan portfolio. This resulted in an allowance of loan loss reserve of 1.92% at March 31, 2016 compared to 2.86% at March 31, 2015.  The bank’s classified/problem loans have improved substantially year-over-year.  As of March 31, 2016 classified loans were 3.08% of total loans, compared to 9.88% at March 31, 2015. Bank loan officers continue calling efforts with current or future customers by utilizing the customer calling program--“Relationships Matter.” Loan officers have expanded the market areas in which they are calling to better serve potential customers and meet farm, personal and business needs.   


     The Bank’s Tier 1 Leverage Ratio was 9.54% at March 31, 2016, which increased 9.15% from the same time last year.  The minimum Tier 1 Leverage Ratio to be considered well capitalized by FDIC standards is 8.00% and the Bank exceeds limits set forth in 2016 for Basel III Capital Conservation Buffer thresholds. The Bank’s capital position continues to improve with stronger earnings each quarter.  Book value of Community Bancorp, Inc. stock is $69.11 compared to $67.35 last year.


     On March 23, 2016 our Corporation entered into a definitive agreement providing for a merger of Community Bancorp, Inc. with Fentura Financial, Inc. and The State Bank, headquartered in Fenton, Michigan.  This agreement calls for an all cash transaction.  Shareholders of Community Bancorp, Inc. will receive a cash consideration of $68.75 per share or approximately $21.6 million in aggregate.  The agreement remains subject to the approval of shareholders and regulatory agencies including the Federal Reserve, FDIC and State of Michigan.  This follows the basic promise of our Mission Statement: We will work to achieve excellent returns for our stockholders by always placing the best interests of our customers and communities first.  While the name on the door will change, the spirit of Community Bancorp, Inc. and Community State Bank and the dedication of our employees will remain strong. We are proud of our management team and staff who continue to make our local community bank a financial institution where Local Truly Matters.






John C. Wendling

President and CEO