Community Bankshares, parent company for Concord Savings Bank, announces increased first quarter profit

Business Wire, Oct 18, 1995

CONCORD, N.H.--(BUSINESS WIRE)--Oct. 18, 1995--Community Bankshares Inc. (NASDAQ: CBNH) parent company of Concord Savings Bank, today announced net income of $846,000, or $0.47 per share, for the first fiscal quarter ended Sept. 30, 1995.

This compares to net income of $797,000, or $0.44 per share, for the same quarter of the prior year. The Sept. 30, 1995 quarter includes a charge amounting to $0.05 per share for expenses incurred to date relating to the proposed acquisition of Centerpoint Bank which was announced on Aug. 30, 1995, as well as income of $0.02 per share relating to a non-recurring refund of Federal Deposit Insurance Corp. (FDIC) insurance assessments which were paid in a prior period.

In making today's announcement Douglas Crichfield, president and chief executive officer, stated, "The increase in pre-tax and net income this quarter vs. a year ago, despite the expenses taken to date relating to the Centerpoint acquisition, is the result of our dual strategy of adding earning assets through marketshare growth, and diversifying our revenue sources by developing our ability to generate non-interest income. Excluding the Centerpoint acquisition expenses and FDIC insurance refund, net income would have equaled $0.50 per share, an increase of 13.6 percent over last year. Net interest and dividend income increased by 6.9 percent, and non-interest income, exclusive of security gains, increased by 40.0 percent over last year.

Investments we have made in the long-term future of the company have begun to produce significant results. For example, the approximately $180,000,000 of mortgage servicing rights which we acquired during the prior quarter contributed to a 59.2 percent increase in loan servicing income this quarter vs. last year, with minimal increases in associated expenses. Additionally, our new offices in Tilton, New Hampshire will open during October, and should contribute nicely to further earning asset growth."

Net interest and dividend income for the quarter just ended increased by 6.9 percent over last year and totaled $3,577,000, producing a net interest margin of 3.60 percent, as compared with $3,347,000, and 4.02 percent, respectively for the same period of the prior year. The decline in net interest margin is primarily the result of interest rates on deposits and borrowed funds increasing faster than yields on earning assets.

Exclusive of security gains, non-interest income increased by 40.0 percent for the quarter over the same period of the prior year. During the quarter, loan sale gains increased by 1.6 percent over the prior year, reversing the trend of declining loan sale gains which occurred during the prior fiscal year. No security gains were realized this quarter vs. $30,000 realized during the quarter ended Sept. 30, 1994. Loan sale and security gains in future periods may be expected to vary with future changes in market interest rates.

Non-interest expense for the quarter ended Sept. 30, 1995 increased by 8.2 percent over the same period of the prior year. The primary reason for this increased was the costs incurred to date relating to the proposed Centerpoint acquisition and the costs of the investments which the company has made to expand its business lines and product distribution systems. These costs were partially offset during the quarter by reduced FDIC insurance assessments, and by a one-time refund of FDIC assessments paid in a prior period amounting to $48,000. The company will benefit from reduced FDIC insurance assessments in future periods, and expects to incur additional expenses associated with the proposed acquisition of Centerpoint Bank which are currently estimated to be $275,000.

The company provided $175,000 into the allowance for possible loan losses during the quarter ended Sept. 30, 1995, bringing the allowance to $2,987,000 after net charge-offs of $158,000 for the quarter. The company's provision into the allowance and net charge-offs for the quarter ended Sept. 30, 1994 were $100,000 and $235,000, respectively. At Sept. 30, 1995, the allowance for possible loan losses represented 174.9 percent of non-performing loans and 1.1% of total loans. Total non-performing assets at Sept. 30, 1995 equaled $3,042,000, or 0.7 percent of total assets. Total non-performing assets at Sept. 30, 1994 equaled $2,407,000.

At Sept. 30, 1995, stockholders' equity totaled $30,136,000, including unrealized gains in the investment portfolio of $418,000 which is net of applicable income taxes. The company's tangible book value per share and leverage ratio equaled $17.36 and 7.03 percent respectively. The company's capital ratios exceed all published regulatory minimums.

On Aug. 30, 1995, the company announced the signing of a definitive merger agreement to acquire Centerpoint Bank in an exchange of stock which is expected to be a tax-free transaction.

In commenting on the proposed transaction, Crichfield stated, "We are extremely pleased to have reached this agreement with Centerpoint Bank. Centerpoint Bank is a profitable, well run community bank with a proven track record of delivering high quality commercial banking services to businesses and professionals in Hillsborough County, the largest market for financial services in New Hampshire. As such, they bring a great deal of market and product synergy to us, complementing our dominant position in Merrimack County, home of the state's capital, by providing a presence in Hillsborough County. Our strong consumer, mortgage and municipal businesses fit nicely with their commercial banking expertise. We are eager to have Centerpoint Bank join the Community Bankshares Inc. family to build upon our individual and mutual strengths in serving the consumers, businesses and municipalities of central and southern New Hampshire."