CNB Community Bancorp, Inc. Reports First Quarter 2025 Results

CNB Community Bancorp, Inc. (OTCQX: CNBB), the parent company of County National Bank (the “Bank”), today announced earnings for the three months ended March 31, 2025. Earnings during the first quarter of 2025 totaled $2.7 million, which is consistent with the $2.7 million earned during the three months ended March 31, 2024.  Basic earnings per share for CNB Community Bancorp, Inc. (the “Company”) increased to $1.30 during the three months ended March 31, 2025, up $0.04 from $1.26 during the first quarter of 2024.

The annualized return on average assets (“ROA”) decreased to 0.83% for the three months ended March 31, 2025, down 5 basis points or 5.7% from to 0.88% for the three months ended March 31, 2024. The annualized return on average equity (“ROE”) decreased to 10.63% for the current quarter, down from 11.43% for the first quarter of 2024. Book value per share increased to $49.90 at March 31, 2025, up $4.85, or 10.8%, from $45.05 at March 31, 2024.

Joseph R. Williams, President and Chief Executive Officer of CNB Community Bancorp, Inc. and County National Bank, stated, “The results for the first three months of 2025 have been very solid wich are exemplified in our increased earnings per share. Our focus on maintaining CNB’s consistent management of the balance sheet was evident in the resulting increase in our net interest income during the first quarter of 2025.

CNB continues to produce new loans that come into our portfolio at higher rates than those being paid off, a trend we expect will further support our margin this year. Given the strength of our balance sheet, the continued excellence from our banking teams, and the positive trends in our net interest margin, we believe that we are well positioned to drive further improvement in our financial performance in the year ahead.”

Financial Highlights

• Total assets increased year-over-year $47.3 million, or 3.8%, to  $1.30 billion compared to March 31, 2024 and increased $15.4 million, or 1.2% from December 31, 2024.
• Net loans increased $65.1 million, or 6.7%, to $1.04 billion at March 31, 2025 compared to $974.8 million at March 31, 2024 and increased $6.9 million, or 0.7%, from December 31, 2024.
• Total deposits increased $37.3 million, or 3.4%, to $1.12 billion at March 31, 2025 compared to March 31, 2024 and increased $26.9 million, or 2.4% from December 31, 2024.
• Tangible book value per share increased $4.78, or 10.9%, to $48.64 at March 31, 2025, up from $43.86 at March 31, 2024 and up $1.25, or 2.6%, from $47.39 at December 31, 2024.
• Total equity increased $4.1 million to $102.2 million from March 31, 2024. Total shares outstanding were 2,078,157 as of March 31, 2025 and as of December 31, 2024.
• Net income decreased $82,000, or 3.0%, to $2.7 million for the three-month period ended March 31, 2025 but basic EPS increased $0.04, or 3.0%, from $1.26 to $1.30 in the first quarter of 2025 in comparison to the first quarter of 2024.
• Net interest income for the first quarter of 2025 increased $783,000 to $11.3 million from $10.5 million for the three months ended March 31, 2024.
• Pre-tax, pre-provision income decreased $23,000 to $3.5 million in the first quarter of 2025, which is consistent with the pre-tax, pre-provision income from the first quarter of 2024.

Balance Sheet Review

The Company’s assets totaled $1.30 billion at March 31, 2025 compared to $1.28 billion in assets at December 31, 2024, and $1.25 billion at March 31, 2024. The change in assets was resultant from an increase in lending to new and existing clients predominately funded through an increase in client deposits. The asset mix shift was a repositioning of investments into cash and loans.

Net loans totaled $1.04 billion at March 31, 2025, compared to $1.03 billion at December 31, 2024 and $974.8 million at March 31, 2024. The loan portfolio at March 31, 2025 included: $593.5 million in commercial real estate loans, $248.4 million in commercial loans, $172.8 million in residential real estate loans, and $38.3 million in consumer loans.

Nonperforming assets (which are comprised entirely of nonperforming loans) at March 31, 2025 were $6.8 million consistent with December 31, 2024 and a slight increase from the $6.6 million at March 31, 2024. Nonperforming assets as a percentage of total assets remained consistent at 0.53% at March 31, 2025, December 31, 2024, and March 31, 2024.

Nonperforming loans at March 31, 2025 were $6.8 million, a decrease of $5,000, or 0.1%, from the $6.8 million balance at December 31, 2024 and an increase of $235,000, or 3.6%, from the $6.6 million balance at March 31, 2024. Nonperforming loans as a percentage of total loans remained flat at 0.65% at March 31, 2025 consistent with December 31, 2024 and a slight decrease from 0.66% at March 31, 2024. The year-over-year increase in nonperforming loans and assets were not particular to a specific industry or geographic area but rather a few larger credit relationships that are being worked out and, as such, have been reclassified.

During the first quarter of 2025, the Bank recorded a provision for credit losses of $190,000, which is a decrease of $172,000 from $362,000 recorded during the fourth quarter of 2024 and an increase of $65,000 from a provision of $125,000 recorded during the first quarter of 2024. Net charge-offs totaled $5,000 during the first quarter of 2025 compared to net charge-offs of $651,000 in the fourth quarter of 2024 and net recoveries of $210,000 in the first quarter of 2024.

Net charge-offs (annualized) as a percentage of average loans was 0.00% for the first quarter of 2025, 0.05% for the fourth quarter of 2024 and (0.02)% for the first quarter of 2024. The allowance for credit losses totaled $13.4 million at March 31, 2025 compared to $13.2 million at December 31, 2024 and $13.3 million at March 31, 2024. The allowance for credit losses as a percentage of total loans increased to 1.27% at March 31, 2025 compared to 1.26% at December 31, 2024 and decreased from 1.35% at March 31, 2024. The allowance as a percentage of loans decreased year-over-year as a direct result of the increase in the loan portfolio offset by improving credit factors and overall economic conditions. The allowance will continue to be adjusted based upon the current and potential issues inherent in the 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 $121.4 million at March 31, 2025, which is a decrease compared to the $127.1 million at December 31, 2024 and $173.4 million at March 31, 2024. This decrease was largely a result of maturities of US Treasury securities and, to a lesser extent, municipals combined with amortization of purchase premiums and paydowns of mortgage-backed securities. While continued growth of the loan portfolio remains the primary focus for Bank management, the Bank will continue to manage the securities portfolio through prudent investment in securities that align with the Bank’s investment criteria when excess cash is available.

Noninterest bearing deposits have decreased by $15.6 million (7.1%) from $218.6 million at December 31, 2024 and decreased by $19.2 million (8.6%) from $222.2 million one year ago. Interest bearing deposits have increased from $878.6 million at December 31, 2024 and $864.5 million at March 31, 2024 to $921.0 million at March 31, 2025. Deposits are being impacted by the changing rate environment as the competition from higher yielding non-depository investment vehicles continues within the markets for consumer, commercial, and public fund deposits. The results have been a reallocation of deposits that manifests in a reduction in noninterest-bearing deposits somewhat mitigated by ongoing efforts of our employees in retaining existing clients as well as expanding relationships within the communities that the Bank serves.

The Company’s outstanding borrowings decreased by $13.0 to $59.1 million at March 31, 2025 compared to $72.1 million at December 31, 2024 and increased by $4.2 million from $54.9 million at March 31, 2024. The decrease from year-end 2024 was due to normal paydown of senior debt at the holding company and a maturity of a short-term bank-level funding of CNB’s strong loan growth while the increase from March 31, 2024 was predominately a result of the $6 million borrowing at the holding company done in conjunction with the stock repurchase completed in the third quarter of 2024.

Total shareholders’ equity increased $2.5 million (2.5%) from $99.7 million at December 31, 2024 and $4.1 million (4.2%) from $98.1 million a year ago. The $2.5 million increase was mainly related to earnings during the first quarter of 2025 of $2.7 million and a decrease of $523,000 in the unrealized loss on available-for sale securities, which was partially offset by a $0.30 per share cash dividend totaling $623,000. On a year-over-year basis, the increase of $4.1 million in equity was predominately related to net income of $11.5 million, an increase in common stock from vesting of restricted shares and stock grants of $653,000, and a $608,000 reduction in the loss position of OCI from temporary market value adjustments to the securities portfolio. The partial offset was a result of the tender offer that repurchased 145,000 shares at $5.7 million and the $2.9 million in dividends paid over the last twelve months to shareholders.

Net Interest Income and Net Interest Margin

Net interest income, on a non-fully tax equivalent basis, was $11.3 million for the quarter ended March 31, 2025, up $783,000, or 7.4%, from $10.5 million during the first quarter of 2024. Interest income for the first quarter of 2025 increased $1.1 million, or 6.7%, from $16.2 million for the first quarter of 2024 to $17.3 million during the first quarter of 2025, mainly due to increases in rate and volume in commercial real estate credits. Interest expense increased $307,000 to $6.0 million for the first quarter of 2025 which was predominately resultant from deposits continuing to transition to interest-bearing accounts from noninterest-bearing accounts as well as a combination of growth in deposits and consistently higher rates paid across interest-bearing deposit accounts.

Net interest margin (“NIM”) is net interest income expressed as a percentage of average interest-earning assets. For the quarter ended March 31, 2025, the net interest margin on a fully taxable equivalent basis increased to 3.74% from 3.57% for the first quarter of 2024. Much of the change in margin has been a product of the market rates continuing to rise with the yield on earning assets improving to 5.67% in the first quarter of 2025 from 5.36% during that same period in 2024. Over that same period, the cost of funds increased only 3 basis points to 2.01% from 1.98%.

Noninterest Income/Expense

During the three months ended March 31, 2025, noninterest income totaled $2.0 million, consistent with the three months ended March 31, 2024. Although noninterest income was similar year-over-year, Wealth Management income increased 32.9%, or $177,000, from the first quarter of 2024 when compared to that same period in 2025. Partial offsets to that increase were reductions in deposit account service charges, ATM service charges, and gain on sale of loans.

Noninterest expense totaled $9.9 million during the three months ended March 31, 2025, an increase of $883,000 from the first quarter of 2024. The largest components of the year-over-year increase in noninterest expense were an increase in salaries and employee benefits of $552,000 and occupancy and equipment expense of $100,000. The increase in employee related expense was driven by an increase in the number of employees as well as increases in expense for insurance and incentives. The increase in occupancy and equipment expense was mainly due to software expense increases across multiple different line items.

About CNB Community Bancorp Inc.

CNB Community Bancorp, Inc. (OTCQX:CNBB) is a one-bank holding company formed in 2005. Its subsidiary bank, County National Bank, is a nationally chartered full-service bank, which has served its local communities since its founding in 1934. CNB Community Bancorp, Inc. is headquartered in Hillsdale, Michigan and through its subsidiary bank offers banking products along with investment management and trust services to communities located throughout Southern Michigan.

Investor Contact: Erik A. Lawson, CFO, erik.lawson@cnbb.bank 517-439-6115

Media Contacts: Craig S. Connor, Chairman of the Board; Joseph R. Williams, President & CEO

Safe Harbor Statement
This news release and other releases and reports issued by the Company may contain "forward-looking statements." The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company is including this statement for purposes of taking advantage of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.