MORRISTOWN, Tenn., July 25, 2008 (PRIME NEWSWIRE) -- Community National Bank of the Lakeway Area (Nasdaq:CNLA) today reported results for the second quarter of 2008. The company reported a minimal net loss for the quarter of $(16) thousand, or $(0.01) per basic and diluted share, compared with a profit of $121 thousand profit, or $0.07 per basic and diluted share for the same period in the prior year.
Notable events/trends for the quarter follow:
* Loans grew during the second quarter 2.7% (10.8% annualized) from $74.2 million at March 31, 2008 to $76.2 million at June 30, 2008. Gross loans grew 2.4% for the twelve month period from $74.5 million at June 30, 2007 to $76.2 million at June 30, 2008. The growth rate was impacted by early repurchases of approximately $3.5 million in purchased participation loans. The lead bank, as they have the right to do, decided to repurchase the loans. Without that event, loan growth would have been moderate, but not as robust as in the past. * Total deposits grew from $77.7 million at March 31, 2008 to $80.1 million at June 30, 2008 which equates to a growth rate for the second quarter of 3.1% (12.4% annualized). Deposits have grown from $74.5 million at June 30, 2007 to $80.1 million for the period ended June 30, 2008. This represents an increase of 7.5% for the period. Account opening activity has been fairly brisk in both demand deposits and certificates of deposit. * Nonaccrual loans increased during the second quarter from $1.6 million at March 31, 2008 to $2.4 million at June 30, 2008. During the past twelve months nonaccruals increased from $153 thousand at June 30, 2007 to $2.4 million at June 30, 2008. The increase is comprised of three out of market participation loans which management has thoroughly reviewed using updated financial data and appraisals. Based on this updated information, management feels the loans have been adequately reserved for and/or are adequately collateralized. * In an effort to enhance future earnings and preserve capital, the Bank closed the Dandridge, TN loan production office near the end of the second quarter. * The Bank recently announced the hiring of one of the premier lending specialists in the market area. We anticipate that Mr. Wolfe's hiring will accelerate the growth of the Bank in both loans and deposits.
Bank CEO, Sam Grigsby, Jr. said: "With the exception of the out-of-market loan participations, our Bank is growing in size and earning power. The Bank must work through these loan participations, but I believe we have structured our reserves to adequately handle the future. Certainly, we are not immune to the current economic conditions, but our local economy is stronger than most. The first quarter of 2008 was a slow one, but the public seems to have gotten up in the latter half of the second quarter, dusted themselves off, and are moving forward with their lives, even though they are impacted by the price of gasoline and groceries. I remain positive and hopeful about our local economy."
In this day of capital deficiencies in the banking industry, it is important to point out that the Bank currently has over 2.5 times the minimum capital required by our regulators. This capital strength will position the Bank to grow in earning power more rapidly than most, while providing a safety net in case economic conditions should worsen significantly.
The net interest margin of the Bank was negatively impacted for both the first and second quarters of the year due primarily to the reversal of previously accrued interest associated with purchased loan participations that were placed on nonaccrual. The Bank anticipates, assuming relatively stable interest rates, the net interest margin will increase during the third quarter and the remainder of the year with the opportunity to reprice maturing certificates of deposit at lower rates.
This press release contains forward-looking statements concerning Community National Bank of the Lakeway Area's future activities. Such statements are subject to important factors that could cause Community National Bank of the Lakeway Area's actual results to differ materially from those anticipated by the forward-looking statements. These factors include the factors identified in Community National Bank of the Lakeway Area's Annual Report on Form 10-K for the year ended December 31, 2007 under the heading "Risk Factors" which are incorporated herein by reference.
Community National Bank of the Lakeway Area
Financial Highlights
(Unaudited)
Three-Months Ended June 30, Six-Months Ended June 30,
% %
2008 2007 Change 2008 2007 Change
---------------------------- -----------------------------
All dollars in thousands except per share data
EARNINGS
Net
interest
income $ 923 $ 909 1.5% $ 1,753 $ 1,791 (2.1)%
Provision
for loan
losses 45 27 66.7% 225 64 251.6%
Noninterest
income 106 92 15.2% 217 181 19.9%
Noninterest
expense 1,004 854 17.6% 2,005 1,660 20.8%
Income
tax
(benefit) (4) 0 100.0% (13) 0 100.0%
Net
income
(loss) (16) 121 (113.2)% (247) 248 (199.6)%
PER SHARE
INFORMATION
Earnings
(loss)
per
share,
basic $ (0.01) $ 0.07 (112.8)% $ (0.13) $ 0.14 (199.6)%
Dividends
per share 0 0 0 0 0 0
Book value
per share 8.32 7.96 4.5% 8.32 7.96 4.5%
OPERATING
RATIOS
(1)
Net
interest
margin 3.46% 3.67% 3.37% 3.63%
Return on
average
assets (0.06)% 0.46% (0.45)% 0.48%
Return on
average
equity (0.39)% 3.30% (3.02)% 3.42%
Efficiency
ratio 97.6% 85.3% 101.8% 84.2%
Net charge
offs /
average
loans 0.00% 0.04% 0.04% 0.16%
Tier 1
leverage
ratio 14.46% 14.47% 14.46% 14.47%
AVERAGE
BALANCES
Loans $ 74,246 $ 74,189 0.1% $ 75,653 $ 73,549 2.9%
Total
earning
assets 106,778 99,180 7.7% 104,092 98,791 5.4%
Total
assets 112,178 104,168 7.7% 110,088 103,557 6.3%
Deposits 78,911 75,061 5.1% 76,789 74,926 2.5%
Borrowed
funds 16,267 13,766 18.2% 16,248 13,462 20.7%
Stock-
holders'
equity 16,271 14,673 10.9% 16,334 14,517 12.5%
As of June 30, As of
END OF PERIOD ------------------ December 31,
BALANCES 2008 2007 % Change 2007 % Change
--------------------------------------------------
Loans $ 76,248 $ 74,473 2.4% $ 77,051 (1.0)%
Reserve for loan 897 681 31.7% 702 27.8%
losses
Total earning
assets 106,061 99,022 7.1% 100,695 5.3%
Total assets 112,425 104,184 7.9% 106,456 5.6%
Deposits 80,151 74,527 7.5% 73,125 9.6%
Borrowed funds 15,817 14,503 9.1% 16,471 (4.0)%
Stockholders'
equity 15,731 14,597 7.8% 16,264 (3.3)%
ASSET QUALITY (END
OF PERIOD)
Loans 90 days past $ 113 $ 88 $ 0
due and still
accruing
Nonaccrual loans 2,409 153 20
Foreclosed assets 475 370 505
Total nonperforming
assets 2,997 611 525
Nonperforming assets
/ total assets 2.67% 0.59% 0.49%
Allowance for loan
losses / total
loans 1.18% 0.91% 0.91%
(1) All ratios are annualized (quarterly ratios are annualized
based on the assumption that earnings/loss are the same for
each quarter).