MORRISTOWN, Tenn., Oct. 31, 2008 (GLOBE NEWSWIRE) -- Community National Bank of the Lakeway Area (Nasdaq:CNLA) today reported results for the quarter ending September 30, 2008. The company reported a net loss for the quarter of $(75) thousand, or $(0.04) per basic and diluted share, compared with a $122 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:
* Due to an increase in nonaccrual loans coupled with the current state of the economy, the Bank increased the provision for loan losses by $140 thousand during the third quarter bringing the year- to-date provision to $365 thousand, compared to a total provision of $89 thousand for the first nine months of 2007. During the third quarter of 2008, the Bank also increased the valuation allowance for foreclosed assets by $36 thousand to reflect a decline in net realizable value of a property located in Middlesboro, Kentucky. All of the Bank's foreclosed properties are under contract for a pending sale and are scheduled to close before the end of the year at no further loss to the Bank. These increases in provisions had a negative impact of $176 thousand on third quarter earnings. * Nonaccrual loans increased from $2.4 million at June 30, 2008 to $3.5 million at September 30, 2008. The increase related to the deterioration of another out-of-market participation loan. During the past twelve months nonaccruals have increased $3.5 million from $24 thousand at September 30, 2007. Virtually all of the loans on nonaccrual are out-of-market purchased participation loans. Management believes these loans have been adequately reserved for and are adequately collateralized. The Bank's in-market lending remains strong, and has not shown comparable weaknesses due to the global economic situation. * The net interest margin for the quarter ended September 30, 2008 was 3.62% compared to 3.46% for the quarter ended June 30, 2008. The repricing of time deposits at lower rates during the quarter led to a lower cost of funds and a higher net interest margin. The net interest margin year-to-date in 2008 is 3.45% as compared to 3.61% for the first nine months of 2007. The 2008 year-to-date decline is primarily attributable to the increase in nonaccrual loans during the year which resulted in a reduction in accrued interest of approximately $101 thousand. * Loans grew during the third quarter 1.8% (7.6% annualized) from $76.2 million at June 30, 2008 to $77.6 million at September 30, 2008. Gross loans grew 0.4% for the twelve month period from $77.2 million at September 30, 2007 to $77.6 million at September 30, 2008. The annual growth rate was impacted significantly due to approximately $3.5 million in early payoffs relating to purchased participation loans. * The Bank completed and opened its permanent facility for the west Morristown branch during the last week of the third quarter of 2008. In addition, the Bank placed a seasoned local lender in the new location to help increase both loan and deposit activity. The location of the new facility in a high traffic area will make banking more convenient for the existing customer base and should help the Bank attract new customers.
Bank CEO, Sam Grigsby, Jr. said: "Without question, the third quarter of 2008 was a difficult one for Community National Bank, due primarily to continued deterioration in out-of-market loan participations purchased. However, the core of the Bank, our local loans and deposits, remains strong and growing. While we are not immune to the current economic conditions, our local economy appears to be stronger than most. The Bank remains very well-capitalized, and we believe we have estimated our reserves to provide adequate protection to our shareholders. As a result, at this time, we do not see a need to participate in the United States Treasury's Capital Program (TARP). Instead, the Bank intends to retain local, and non-governmental, control over the Bank. However, in an abundance of caution for our shareholders, and as more details are forthcoming, management will evaluate the TARP program as a source of emergency liquidity should present sources disappear."
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 Nine-Months Ended
September 30, September 30,
% %
2008 2007 Change 2008 2007 Change
--------------------------- ---------------------------
All dollars in thousands All dollars in thousands
except per share data except per share data
EARNINGS
Net interest
income $ 979 $ 897 9.1% $ 2,732 $ 2,688 1.6%
Provision
for loan
losses 140 24 483.3% 365 89 310.1%
Noninterest
income 120 121 (0.8)% 337 303 11.2%
Noninterest
expense 1,053 872 20.8% 3,058 2,532 20.8%
Income tax
(benefit) (19) 0 100.0% (32) 0 100.0%
Net income
(loss) (75) 122 (161.5)% (322) 370 (187.0)%
PER SHARE
INFORMATION
Earnings
(loss)
per share,
basic $ (0.04) $ 0.07 (157.1)% $ (0.17) $ 0.20 (185.0)%
Dividends
per share 0 0 0 0 0 0
Book value
per share 8.51 8.14 4.5% 8.51 8.14 4.5%
OPERATING
RATIOS (1)
Net interest
margin 3.62% 3.57% 3.45% 3.61%
Return on
average
assets (0.26)% 0.46% (0.22)% 0.47%
Return on
average
equity (1.89)% 3.29% (1.49)% 3.36%
Efficiency
ratio 95.8% 85.7% 99.6% 84.7%
Net charge
offs /
average
loans 0.15% 0.01% 0.19% 0.17%
AVERAGE
BALANCES
Loans $ 76,713 $ 75,590 1.5% $ 75,485 $ 74,237 1.7%
Total
earning
assets 108,133 100,454 7.6% 105,435 99,352 6.1%
Total
assets 114,650 105,503 8.7% 111,619 104,213 7.1%
Deposits 83,249 75,981 9.6% 78,958 75,282 4.9%
Borrowed
funds 15,021 14,166 6.0% 15,836 13,699 15.6%
Shareholders'
equity 15,914 14,852 7.2% 16,192 14,693 10.2%
As of
Sept. 30, As of
END OF PERIOD ------------------ % Dec. 31, %
BALANCES 2008 2007 Change 2007 Change
-------------------------------------------
Loans $ 77,558 $ 77,215 0.4% $ 77,051 0.7%
Allowance for loan
losses 925 696 32.9% 702 31.8%
Total earning assets 109,825 99,662 10.2% 100,695 9.1%
Total assets 117,390 104,648 12.2% 106,456 10.3%
Deposits 89,102 75,549 17.9% 73,125 21.8%
Borrowed funds 11,851 13,585 (12.8)% 16,471 (28.0)%
Shareholders' equity 16,095 15,048 7.0% 16,264 (1.0)%
ASSET QUALITY (END OF
PERIOD)
Loans 90 days past due
and still accruing $ 117 $ 0 $ 0
Nonaccrual loans 3,532 24 20
Foreclosed assets 400 505 505
Total nonperforming
assets 4,049 529 525
Nonperforming assets /
total assets 3.45% 0.51% 0.49%
Allowance for loan
losses / total loans 1.19% 0.90% 0.91%
(1) All ratios are annualized.