CNB Community Bancorp, Inc. (OTCQX: CNBB), the parent company of County National Bank, today announced earnings for the three and six months ended June 30, 2021. Earnings during the second quarter of 2021 totaled $3.3 million, an increase of $483,000 or 17.2% compared to the $2.8 million earned during the three months ended June 30, 2020. Basic earnings per share for CNB Community Bancorp, Inc. (the “Company”) increased to $1.55 during the three months ended June 30, 2021, up $0.22 from $1.33 for the second quarter of 2020. For the six months ended June 30, 2021, the Company reported net income of $6.3 million, an increase of $1.2 million, or 22.4%, from the $5.2 million earned during the six months ended June 30, 2020. Basic earnings per share increased to $2.96 during the six months ended June 30, 2021, up $0.52 from $2.44 for the first six months of 2020.

The annualized return on average assets (ROA) increased to 1.39% for the three months ended June 30, 2021, up three basis points from 1.36% for the three months ended June 30, 2020. The annualized return on average equity (ROE) increased to 17.6% for the current quarter, up from 17.0% for the second quarter of 2020. ROA increased to 1.37% during the six months ended June 30, 2021, up six basis points from the 1.31% during the first six months of 2020. ROE was 17.2% during the first half of 2021, up from 15.9% during the six-month period ended June 30, 2020. Book value per share increased to $36.08 at June 30, 2021, up $3.89 from $32.19 at June 30, 2020.

John R. Waldron, President and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, remarked, “As our country recently celebrated its 245^th birthday, I think we all can relate to the fact that over that long a time there are periods of great success and great trials. We are approaching the end of an unprecedented trial of endurance over these last fifteen months. We look forward to moving on in a positive way.”

Financial Highlights

• Total assets increased $99.0 million, or 10.4%, to $1.05 billion from June 30, 2020 and $109.0 million, or 11.6% from December 31, 2020.
• Net loans decreased $1.7 million, or 0.2%, to $764.2 million at June 30, 2021 compared to $765.9 million at June 30, 2020 and increased $3.0 million, or 0.4%, from December 31, 2020.
• Total deposits increased $97.4 million, or 11.5%, to $945.1 million at June 30, 2021 from $847.7 million at June 30, 2020 and increased $104.9 million, or 12.5% from December 31, 2020.
• Book value per share increased $3.89, or 12.1%, to $36.08 at June 30, 2021, up from $32.19 at June 30, 2020 and up $2.32 from $33.76 at December 31, 2020.
• Total equity increased $8.8 million to $76.9 million from June 30, 2020.
• Net income increased $483,000, 17.2%, to $3.3 million in the second quarter of 2021 and basic EPS increased $0.22, or 16.3%, to $1.55 from $1.33 in the second quarter of 2020.
• Net interest income for the second quarter of 2021 increased $1.1 million to $8.9 million.
• Pre-tax, pre-provision income remained consistent at $4.2 million in the second quarter of 2021 and 2020.

Balance Sheet Review

The Company’s assets totaled $1.05 billion at June 30, 2021 compared to $937.9 million at December 31, 2020, and $947.9 million at June 30, 2020. The increase in assets was predominately related to the increase in cash from customer deposits, partially as a result of the Paycheck Protection Program (the “PPP”), a fully government supported loan program for small businesses, as well as from government-initiated stimulus checks and new customers that have been leveraged by our continued community outreach programs.

Net loans totaled $764.2 million at June 30, 2021, compared to $761.2 million at December 31, 2020 and $765.9 million at June 30, 2020. The impact of PPP loans on the overall balances in loans has begun to decline as outstanding PPP balances have decreased to $84.7 million at June 30, 2021 from $97.3 million at December 31, 2020 and $131.1 million at June 30, 2020. Net loan balances exclusive of PPP loans have increased to $679.5 million at June 30, 2021 from $663.9 million at December 31, 2020 and $634.8 million at June 30, 2020.

Nonperforming assets (which are predominately comprised of nonperforming loans) at June 30, 2021 were $2.3 million compared to $2.6 million at December 31, 2020 and $3.3 million at June 30, 2020. Nonperforming assets as a percentage of total assets decreased to 0.22% at June 30, 2021 from 0.28% at December 31, 2020 and from 0.35% at June 30, 2020.

Nonperforming loans at June 30, 2021 were $2.3 million, a decrease of $246,000, or 9.5%, from the $2.6 million balance at December 31, 2020 and a decrease of $841,000, or 26.4%, from the $3.2 million balance at June 30, 2020. Nonperforming loans as a percentage of total loans (excluding PPP loans) decreased to 0.34% at June 30, 2021, compared to 0.38% at December 31, 2020 and 0.49% at June 30, 2020.

During the second quarter of 2021, there was recorded a provision for loan losses of $105,000, which is a decrease of $1.1 million from a provision of $1.2 million recorded during the fourth quarter of 2020 and$595,000 from a provision of $700,000 recorded during the second quarter of 2020. Net recoveries totaled $19,000 during the second quarter of 2021 compared to net charge-offs of $125,000 in the fourth quarter of 2020 and net recoveries of $10,000 in the second quarter of 2020.

Net recoveries as a percentage of average loans was (0.00)% for second quarter of 2021, which was comparable to the 0.01% for the fourth quarter of 2020 and the (0.01)% for the second quarter of 2020. The allowance for loan losses totaled $11.6 million at June 30, 2021 compared to $10.5 million at December 31, 2020 and $8.4 million at June 30, 2020. The allowance for loan losses as a percentage of total loans (exclusive of PPP loans) increased from 1.55% at December 31, 2020 and from 1.28% at June 30, 2020 to 1.67% at June 30, 2021. The increase in the required allowance for loan losses is directly attributable to the potential impact to the regional economy due to the worldwide pandemic. Continued economic disruption from the COVID-19 virus has the potential to impact the portfolio for the immediate future. The allowance will continue to be adjusted based upon these current and potential risks inherent in the loan portfolio.

Total investment securities, exclusive of the Federal Home Loan Bank of Indianapolis, Federal Reserve Bank and other stock without readily determined fair value aggregated to $37.6 million at June 30, 2021, an increase of 25.3% from $30.0 million at December 31, 2020 and 11.7% from $33.6 million at June 30, 2020. This increase was largely a result of budgeted purchases made late in 2020 and early 2021 that were partially offset by maturities of municipals and certificate of deposits combined with a material increase in amortization of purchase premiums and paydowns. The Bank continues to focus on growing the portfolio through prudent investment in securities that align with the Bank’s investment criteria, regardless of the rate environment.

Noninterest bearing deposits have increased by $45.0 million (19.6%) from $229.4 million at December 31, 2020 and $20.4 million (8.0%) from $254.0 million one year ago. Interest bearing deposits have increased from $610.8 million at December 31, 2020 and $593.7 million at June 30, 2020 to $670.7 million at June 30, 2021. The growth in deposits is still a result of ongoing efforts by our employees with significant credit given to our Treasury Management team; however, government stimulus checks and PPP loans funded by the Bank have also added to the balance sheet. The Bank will continue to monitor the deposit accounts for fluctuations based upon usage of the PPP loans.

Total shareholders’ equity increased by $4.9 million (6.8%) from $72.0 million at December 31, 2020 and $8.8 million (12.9%) from $68.1 million one year ago. The $4.9 million increase was mainly related to earnings year-to-date during 2021 of $6.3 million, partially offset by two $0.27 per share cash dividends totaling $1.2 million and a $207,000 reduction in OCI from market value adjustments to the securities portfolio. On a year- over-year basis, the increase of $8.8 million in equity was predominately related to income of $11.3 million and an increase in common stock from vesting of restricted shares of $500,000, partially offset by $2.8 million in dividends paid as well as a $200,000 reduction in OCI.

Net Interest Income and Net Interest Margin

Net interest income was $8.9 million for the quarter ended June 30, 2021, up $1.1 million, or 13.9%, from $7.8 million during the second quarter of 2020, and for the six months ended June 30, 2021, net interest income increased $2.5 million (16.4%) to $17.4 million from $14.9 million for the six months ended June 30, 2020. Interest income for the second quarter of 2021 increased $1.0 million (11.5%) to $9.7 million from $8.7 million