COMMUNITY BANCORP /VT
For the period ended Mar 31, 2025. Filed May 15, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
CMTV$47.00+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001654954-24-014367
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001654954-25-005620
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 119 current paragraphs.
61 unchanged; 52 reworded; 6 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 32 previous and 30 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Total deposits as of March 31, 2025, were $979.7 million compared to $1.0 billion as of December 31, 2024, a decrease of approximately $22.0 million, or 2.2%. Year to date, time deposits increased $2.5 million, or 1.4% and savings accounts increased $387 thousand, or 0.3%, while interest-bearing demand deposits decreased $17.9 million, or 5.9%, and money market funds decreased $6.8 million, or 4.0%. A decrease in deposit balances is typical in the first and second quarters of the calendar year, due in part to the timing of customers income tax obligations and the spend down of deposited funds by Vermont municipal customers prior to their June 30 fiscal year end. The decrease in borrowed funds was the result of maturities in the BTFP funds.
Current report
Equity capital increased to $102.9 million, with a book value per share of $18.05 as of March 31, 2025, compared to $98.0 million and a book value per share of $17.24 as of December 31, 2024. Please refer to the section of this Management’s Discussion and Analysis titled “LIQUIDITY AND CAPITAL RESOURCES” for a discussion in of the changes in the Company’s equity capital for the three months ended March 31, 2025.
Current report
During the first quarter of 2025, CFS Partners, in which the Company currently holds a one-third ownership interest, agreed to redeem all of the limited liability company membership interest of Guaranty Bancorp, Inc., representing a one-third ownership interest, contingent upon, and just prior to, consummation of the pending merger of Guaranty Bancorp with and into Bar Harbor Bankshares. Under the terms of the redemption agreement, beginning March 1, 2025, Guaranty Bancorp has agreed to forego its distributional interest in CFS Partners through the closing date of the redemption. Accordingly, beginning March 1, 2025, the Company’s share of the profit and loss from the operations of CFS Partners’ sole subsidiary, CFSG, has increased from one-third to one-half. The redemption of Guaranty Bancorp’s membership interest in CFS Partners is expected to occur before year end 2025. The Company does not have a controlling interest in the partnership and will still remain accounting for the investment using the equity method.
Current report
Considering recent trade policy developments between Canada and the United States, management is assessing the potential risk to the local economy. Canada is Vermont’s largest international trading partner; many businesses who rely on trade with Canada are now at risk of experiencing increased costs, reduced sales, and a sense of uncertainty about the future. Management is evaluating the impact on the bank’s customers, however the impact on profits for many of these businesses remains uncertain. In light of these challenges, the Company’s own strategic focus will be to safeguard its balance sheet while supporting clients.
Current report
The decrease in interest-bearing transactions accounts is attributable to a decrease of $12.9 million, or 29.9% in government agency accounts for our municipal customers, and a decrease of $4.7 million, or 4.5% in retail deposit accounts. The decrease in money market funds was driven by a decrease of $12.5 million, or 28.2%, in ICS accounts, which was partially offset by an increase in retail money market funds of $2.8 million, or 2.3%, and an increase in municipal deposits of $3.0 million, or 71.7%. The increase in time deposits is attributable to an increase in retail time deposits. The Company used overnight deposits to cover maturities in borrowed funds during the first three months of 2025 and used those funds to cover fluctuations in aggregate deposits during the same period, enabling the Company to rely less on other sources of funding, including brokered deposits.
Current report
The first quarter ACL analysis indicated that the reserve balance of $10.2 million as of March 31, 2025, was sufficient to cover expected credit losses that are probable and estimable as of the measurement date. Included in the ACL calculation for the first quarter of 2025 are adjustments to several qualitative factors made by management, including an increase in the risk status of the qualitative factors for volumes and terms in the residential portfolios to reflect increasing trends in volumes. The quantitative factor for exceptions in that portfolio was also adjusted by increasing the risk status as an increasing trend was noted. In addition, the risk status for delinquency and non-performing loans was increased to reflect the uncertainty as to how and when inflation or a recession will, or could, affect our consumer customers’ ability to pay.
Removed paragraphs (14)
Previous report
Total deposits as of September 30, 2024, were $929.6 million compared to $897.0 million as of December 31, 2023, an increase of $32.6 million, or 3.6%. Year to date, time deposits increased $50.7 million, or 40.9% while money market funds decreased $10.3 million, or 8.5%, and savings accounts decreased $7.4 million, or 4.9%. The Company has been offering competitive interest rates for retail time deposits, and accessing the brokered deposit market, accounting for the increase in these funds. An increase in deposit balances is typical in the third and fourth quarters of the calendar year, with balances increasing through year end due in part to municipal accounts collecting tax payments. The increase in deposit balances was less than the loan growth, requiring the continued use of borrowed funds as a supplemental funding source.
Previous report
Equity capital increased to $98.3 million, with a book value per share of $17.36 as of September 30, 2024, compared to $89.0 million and a book value per share of $15.87 as of December 31, 2023. The increase in equity capital between periods reflected the combined effect of net income of $8.7 million for the first nine months of 2024, along with a decrease in unrealized losses in the investment portfolio of $3.5 million, net of tax, reflected in accumulated other comprehensive loss, which was offset in part by dividends paid totaling $3.8 million. The unrealized loss position in the investment portfolio is considered by management as temporary and does not impact the Company’s regulatory capital ratios.
Previous report
During the month of July sections of northern Vermont were hit with catastrophic flash flooding following heavy rainfall from two separate storms, leading to significant road washouts and flooding homes and businesses. The portions of the Company’s service area most impacted were Lamoille, Caledonia, Essex and Orleans counties. None of the Company’s branches sustained any flood damage. The impact to the Bank’s customers appears to be manageable.
Previous report
(1) Items which have shown a year-to-year increase in volume have variances allocated as follows:
Previous report
Variance due to rate = Change in rate x new volume
Previous report
Variance due to volume = Change in volume x old rate
Previous report
Items which have shown a year-to-year decrease in volume have variances allocated as follows:
Previous report
Variance due to rate = Change in rate x old volume
Previous report
Variances due to volume = Change in volume x new rate
Previous report
The decrease in money market funds was driven by a decrease of $9.1 million, or 9.3%, in retail money market funds and a decrease in municipal deposits of $1.4 million, or 14.3%. The decrease in savings deposits is primarily due to a shift of funds between savings and time deposits, resulting from customer response to periodic certificate of deposit specials that have been offered throughout 2024. The increase in time deposits is also due to an increase in brokered deposits, as the Company looks to alternate sources of funding to support loan growth. As a result of the fluctuation in aggregate deposits during 2024, in addition to utilizing brokered deposits the Company utilized funding lines of credit with the FHLBB and FRB, including long-term advances, as a supplemental funding source, accounting for the significant increase in these funds.
Previous report
ACL and provisions – Effective January 1, 2023, the Company was required to recognize credit losses under the guidance of ASU No. 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, rather than under the incurred loss model. The guidance, which is referred to as the current expected credit loss, or CECL model, requires that expected credit losses for financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses over the life of the loans. The adjustment from the adoption of CECL in 2023 amounted to $549,113, net of tax and was recorded as an adjustment to retained earnings, which affected calculation of regulatory capital ratios. Changes in forecasts used in the CECL model could produce different results, quarter to quarter.
Previous report
With the adoption of ASU 2016-13 (CECL), the Company is required to establish an allowance for expected credit losses on OBS credit exposures. Expected credit losses are estimated by management over the contractual period during which the Company is exposed to credit risk under a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over the estimated lives of such commitments. Upon adoption of ASU 2016-13 in 2023, the Company recorded a negative adjustment to retained earnings of $451,704 to reflect an allowance for credit losses for unfunded commitments. The allowance for credit losses for OBS credit exposures is presented in the "Accrued interest and other liabilities" line of the consolidated balance sheets. There was an increase of $53,790 and a decrease of $23,120, respectively, to the allowance for credit losses for OBS credit exposures during the three months ended September 30, 2024 and 2023, and an increase of $29,230 and a decrease of $40,992, respectively, during the nine months ended September 30, 2024 and 2023.
Previous report
(1) Conservation Buffer is calculated based on risk-weighted assets and does not apply to calculations of average assets.
Previous report
(2) Applicable to banks, but not bank holding companies.
Reworded paragraphs (52)
Previous wording
The following discussion analyzes the consolidated financial condition of Community Bancorp. and its wholly owned subsidiary, Community National Bank, as of September 30, 2024 and December 31, 2023, and its consolidated results of operations for the three-month and nine-month interim periods and one year period presented. The Company is considered a “smaller reporting company” and a “non-accelerated filer” under the disclosure rules of the SEC. Accordingly, the Company has elected to provide its statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two-year, rather than a three-year, period and provide certain other smaller reporting company scaled disclosures where management deems it appropriate.
Current wording
The following discussion analyzes the consolidated financial condition of Community Bancorp. and its wholly owned subsidiary, Community National Bank, as of March 31, 2025 and December 31, 2024, and its consolidated results of operations for the three-month interim period and one year period presented. The Company is considered a “smaller reporting company” and a “non-accelerated filer” under the disclosure rules of the SEC. Accordingly, the Company has elected to provide its statements of income, comprehensive income, cash flows and changes in shareholders’ equity for a two-year, rather than a three-year, period and provide certain other smaller reporting company scaled disclosures where management deems it appropriate.
Previous wording
The Company’s consolidated assets as of September 30, 2024, were $1.18 billion compared to $1.10 billion as of December 31, 2023, an increase of 7.1%. Changes in the asset base included an increase in loans of $67.3 million, or 8.0%, and an increase in cash of $29.4 million, or 143.8%, which was partially offset by a decrease of $20.2 million, or 10.6%, in investment securities. The increase in the loan portfolio was primarily attributable to an increase of $6.2 million in commercial & industrial loans, $45.2 million in CRE loans, $11.1 million in municipal loans, and $8.4 million in residential first and Jr. lien loans, which was minimally offset by a decrease of $2.2 million in purchased loans. The decrease in the investment portfolio was due in part to maturities in the U.S. Government securities portfolio and paydowns in the MBS and CMO portfolios. In addition, cash flows from the investment portfolio were used to fund loan growth and other liquidity needs, rather than to purchase new investment securities.
Current wording
The Company’s consolidated assets as of March 31, 2025, were $1.19 billion compared to $1.25 billion as of December 31, 2024, a decrease of 4.9%. Changes in the asset base included an increase in loans of $12.3 million, or 1.3%, an increase in investment securities AFS of $8.6 million, or 5.4%, and an increase in cash of $3.5 million, or 35.5%, which more than offset by a decrease in overnight deposits of $85.6 million, or 84.7%. The increase in the loan portfolio was primarily attributable to an increase of $7.6 million in residential first and Jr. lien loans, $4.6 million in CRE loans, and $3.4 million in municipal loans, which was partially offset by a decrease of $3.2 million, collectively, in commercial & industrial and purchased loans. The increase in the investment portfolio was due to the purchase of MBS classified as AFS. The decrease in overnight deposits is partly due to the increase in the loan and investment securities portfolios, as well as reflecting decreases in deposit balances and payoff of BTFP advances that matured during the first quarter of 2025.
Previous wording
Total interest income increased approximately $1.9 million, or 15.6%, for the third quarter of 2024, compared to the same quarter in 2023, and $6.0 million, or 17.5%, for the first nine months of 2024, compared to the same period in 2023. The growth of the loan portfolio originated at higher interest rates, as well as adjustable-rate loans repricing to current market rates, helped to support the year-over-year increase in interest income.
Current wording
Total interest income increased approximately $1.7 million, or 13.0%, for the first three months of 2025, compared to the same period in 2024. The growth in the volume of the loan portfolio and origination of loans at higher interest rates, as well as adjustable-rate loans repricing to current market rates, helped to support the year-over-year increase in interest income.
Previous wording
These increases in total interest income were offset by significant increases in total interest expense, which increased $1.6 million, or 45.1%, for the third quarter of 2024, compared to the same quarter of 2023 and $6.1 million, or 68.4%, for the first nine months of 2024, compared to the same period in 2023. The higher rate environment and the reliance on wholesale funding has increased borrowing costs and put more pressure on competitive deposit pricing, resulting in an increase in the rates paid on the Company’s money market and time deposit accounts. However, the 50 bps FRB rate cut late in the third quarter of 2024 could possibly have a moderate influence in future periods. Please refer to the interest rate sensitivity discussion in the Interest Rate Risk and Asset and Liability Management section for more information on the impact that the actions of the FRB’s FOMC in regulating interest rates, and changes in the yield curve, could have on our net interest income.
Current wording
Total interest expense increased $585 thousand, or 13.0%, for the first three months of 2025, compared to the same period in 2024. The higher rate environment put more pressure on competitive deposit pricing, resulting in an increase in the rates paid on the Company’s money market and time deposit accounts. The increase of $1.1 million, or 35.9%, in interest on deposits was partially offset by a decrease of $575 thousand, or 60.8% in interest on borrowed funds due to the decrease in borrowed funds. Please refer to the interest rate sensitivity discussion in the Interest Rate Risk and Asset and Liability Management section for more information on the impact that the actions of the FRB’s FOMC in regulating interest rates, and changes in the yield curve, could have on our net interest income.
Previous wording
The credit loss expense for the nine months ended September 30, 2024 and 2023, was determined under ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses, or CECL, which the Company adopted effective January 1, 2023. The credit loss expense for the third quarter of 2024 was $460,745 compared to $240,889 for the same quarter of 2023 and $1.1 million for the first nine months of 2024 compared to $808,557 for the same period in 2023, resulting in increases of $219,856, or 91.3%, and $297,349, or 36.8%, respectively, between periods. The current period credit loss expense considers a number of factors, including loan growth and changes in balances of the loan categories within the current portfolio, changes in forecasts, historical loss rate and qualitative factors. During the third quarter of 2024, certain qualitative factors used in the ACL calculation were adjusted to better reflect expected credit losses in the loan portfolio. Please refer to Note 5 of the unaudited consolidated financial statements as well as the ACL and credit loss expense discussion in the Credit Risk section of this MD&A.
Current wording
The credit loss expense for the first three months of 2025 was $325,054 compared to $313,579 for the same period in 2024, resulting in an increase of $11,475, or 3.7%. The current period credit loss expense considers a number of factors, including loan growth and changes in balances of the loan categories within the current portfolio, changes in forecasts, historical loss rate and qualitative factors. During the first quarter of 2025, certain qualitative factors used in the ACL calculation were adjusted to better reflect expected credit losses in the loan portfolio. Please refer to Note 5 of the unaudited consolidated financial statements as well as the ACL and credit loss expense discussion in the Credit Risk section of this MD&A.
Previous wording
Consolidated net income for the third quarter of 2024 decreased $248,258 to $3.1 million compared to $3.4 million for the same quarter of 2023, and for the first nine months of 2024 consolidated net income decreased $1.2 million to $8.7 million compared to $9.9 million for the same period of 2023. Year over year, the $6.1 million increase in interest expense, despite a $6.0 million increase in interest income, was a contributing factor to the decrease in net income, along with a $1.5 million increase in non-interest expense. These changes, along with other significant changes in non-interest income and non-interest expense are discussed in the appropriate sections of this MD&A.
Current wording
Consolidated net income for the first three months of 2025 increased $703 thousand to $3.5 million compared to $2.8 million for the same period in 2024. The $1.1 million increase in net interest income after credit loss expense was a contributing factor to the increase in net income. This change, along with other significant changes in non-interest income and non-interest expense are discussed in the appropriate sections of this MD&A.
Previous wording
On September 11, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per common share, an increase of $0.01 or 4.3% from the previous level, payable on November 1, 2024, to shareholders of record on October 15, 2024.
Current wording
On March 19, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.24 per common share, payable on May 1, 2025, to shareholders of record on April 15, 2025.
Previous wording
As of September 30, 2024, the Company’s capital ratios, and those of our subsidiary Bank, were in excess of applicable regulatory requirements. During the third quarter of 2024, the Company adopted a stock repurchase program authorizing the repurchase of up to 275,000 shares of the Company’s common stock, representing approximately 5% of the outstanding common shares. Purchases under the program may be on such terms, including price, as market conditions warrant, and may be made through open market purchases or in privately negotiated transactions. The repurchase authorization expires in five years, unless extended, or earlier terminated, by the Board. Notwithstanding the program’s five-year term, the Board will review and re-evaluate the program annually in light of the Company’s then current capital needs, the number and cost of shares repurchased, the number of shares remaining for repurchase under the authorization, and other relevant factors, and management will confer with the FRBB regarding the program, as appropriate in the circumstances. As of September 30, 2024, no shares had been repurchased.
Current wording
As described in more detail below under “LIQUIDITY AND CAPITAL RESOURCES” as of March 31, 2025, the Company’s capital ratios, and those of our subsidiary Bank, were in excess of applicable regulatory requirements.
Previous wording
These policies are described in the Company’s 2023 Annual Report on Form 10-K in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and in Note 1 (Significant Accounting Policies) to the audited consolidated financial statements. There were no material changes during the first nine months of 2024 in the Company’s critical accounting policies.
Current wording
These policies are described in the Company’s 2024 Annual Report on Form 10-K in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” and in Note 1 (Significant Accounting Policies) to the audited consolidated financial statements. There were no material changes during the first three months of 2025 in the Company’s critical accounting policies.
Previous wording
The Company’s net income for the third quarter of 2024 was $3.1 million, or $0.55 per common share, compared to $3.4 million, or $0.61 per common share for the same quarter of 2023, and for the first nine months of 2024 was $8.7 million, or $1.55 per common share, compared to $9.9 million, or $1.80 per common share, for the same period in 2023. Core earnings (NII) were $8.7 million for the third quarter of 2024 compared to $8.4 million for the same period of 2023, and $25.1 million for the first nine months of 2024 compared to $25.2 million for the same period in 2023. Interest and fees on loans, the major component of interest income, increased $1.8 million, or 16.7% for the third quarter of 2024 compared to the same quarter of 2023, and $6.2 million, or 20.4%, for the first nine months of 2024 compared to the same period in 2023. Interest paid on deposits, which is the major component of total interest expense, increased $1.2 million, or 47.0% for the third quarter of 2024 compared to the same quarter of 2023 and increased $3.5 million, or 54.0%, year over year, driven primarily by the increases in the fed funds rate during 2022 and into the third quarter of 2023. A shift from lower yielding interest-bearing accounts and savings accounts to higher yielding money market and certificate of deposit accounts has contributed to the higher interest expense year over year. Interest on borrowed funds increased $482 thousand, or 71.3% for the third quarter of 2024 compared to the same period in 2023 and increased $2.4 million, or 254.3%, for the first nine months of 2024 compared to the same period in 2023. Market pressures on deposit rates along with an increased use of wholesale funding are driving up the Company’s cost of funds and compressing the net interest margin and net interest spread. The FOMC’s recent 50 bps decrease in the federal funds rate occurred late in the third quarter and did not reduce the Company’s funding costs for the three- and nine-month periods of 2024.
Current wording
The Company’s net income for the first three months of 2025 was $3.5 million, or $0.62 per common share, compared to $2.8 million, or $0.51 per common share, for the same period in 2024. Core earnings (NII) were $9.4 million for the first three months of 2025 compared to $8.4 million for the same period in 2024. Interest and fees on loans, the major component of interest income, increased $1.5 million, or 13.2% for the first three months of 2025 compared to the same period in 2024. Interest paid on deposits, which is the major component of total interest expense, increased $1.1 million, or 35.9% for the first three months of 2025 compared to the same period in 2024, driven primarily by the increases in the fed funds rate. Interest on borrowed funds decreased $575 thousand, or 60.8%, for the first three months of 2025 compared to the same period in 2024. Market pressures on deposit rates have stabilized and a decrease in wholesale funding has resulted in an improved net interest margin and net interest spread.
Previous wording
(1) Dividends declared per common share divided by earnings per common share.
Current wording
**(1)Dividends declared per common share divided by earnings per common share. **
Previous wording
The Company’s tax-exempt interest income of $762,126 and $559,985 for the three months ended September 30, 2024 and 2023, respectively, and $2.0 million and $1.2 million for the nine months ended September 30, 2024 and 2023, respectively, was derived from loans to local municipalities of $65.5 million and $58.7 million, and tax-exempt municipal investment securities of $10.5 million and $10.6 million as of September 30, 2024 and 2023, respectively.
Current wording
The Company’s tax-exempt interest income of $818,363 and $575,470 for the three months ended March 31, 2025 and 2024, respectively, was derived from loans to local municipalities of $70.4 million and $56.9 million, and tax-exempt municipal investment securities of $10.0 million and $10.4 million as of March 31, 2025 and 2024, respectively.
Previous wording
The following table presents the daily average assets and the daily average liabilities, including the yields on interest-earning assets and interest-bearing liabilities for the comparison periods. Interest income (excluding interest on non-accrual loans) is expressed on a tax equivalent basis, both in dollars and as a yield/rate for the comparison periods presented. Net interest income, net interest spread, and net interest margin are also expressed on a tax equivalent basis.
Current wording
The following table presents the daily average assets and the daily average liabilities, including the yields on interest-earning assets and interest-bearing liabilities for the comparison periods presented. Interest income (excluding interest on non-accrual loans) is expressed on a tax equivalent basis, both in dollars and as a yield/rate for the comparison periods presented. Net interest income, net interest spread, and net interest margin are also expressed on a tax equivalent basis.
Previous wording
The average volume of interest-earning assets for the three- and nine-month periods ended September 30, 2024 increased 6.0% and 7.2%, respectively, compared to the same periods last year, and the average yield on interest-earning assets increased 46 bps in both comparison periods.
Current wording
The average volume of interest-earning assets for the three-month period ended March 31, 2025 increased 7.8% compared to the same period last year, and the average yield on interest-earning assets increased 29 bps.
Previous wording
The average volume of loans increased over the three- and nine-month comparison periods of 2024 versus 2023 by 8.4% and 11.7%, respectively, and the average yield on loans increased 44 bps and 43 bps, respectively. Loans accounted for 82.2% and 82.0% of the average interest-earning asset portfolio for the three- and nine-month periods ended September 30, 2024, compared to 80.5% and 78.7%, respectively, for the same periods last year. Interest earned on the loan portfolio as a percentage of total interest income was 91.2% and 91.1%, respectively, for the three- and nine-month periods in 2024 compared to 90.3% and 88.9%, respectively, for the same periods in 2023.
Current wording
The average volume of loans increased over the three-month comparison period of 2025 versus 2024 by 9.8%, and the average yield on loans increased 24 bps. Loans accounted for 82.8% of the average interest-earning asset portfolio for the three-month period ended March 31, 2025, compared to 81.3% for the same period last year. Interest earned on the loan portfolio as a percentage of total interest income was 91.0% for the three-month period in 2025 compared to 90.8% for the same period in 2024.
Previous wording
The average volume of the taxable investment portfolio (classified as AFS) decreased 8.2% and 6.1%, respectively, during the three- and nine-month periods ended September 30, 2024, compared to the same periods last year, while the average yield increased five bps and 11 bps, respectively, between periods. There were no purchases of taxable AFS investment securities during the first nine months of 2024, accounting for the decrease in average volume year over year.
Current wording
The average volume of the taxable investment portfolio (classified as AFS) decreased 14.6% during the three-month period ended March 31, 2025, compared to the same period last year, while the average yield increased 10 bps between periods. There were purchases of taxable AFS investment securities during the first three months of 2025, however maturities and paydowns on this portfolio in 2024 and into 2025 outweighed purchases during the same time period, accounting for the decrease in average volume year over year.
Previous wording
The average volume of the tax-exempt investment portfolio (classified as AFS) for the three- and nine-month periods ended September 30, 2024 decreased 0.6% in both periods, and the tax equivalent yield decreased nine bps and seven bps, respectively. There were no tax-exempt bond purchases during the first nine months of 2024, accounting for the decrease in average volume in this portfolio.
Current wording
The average volume of the tax-exempt investment portfolio (classified as AFS) for the three-month period ended March 31, 2025 decreased 0.1% and the tax equivalent yield increased nine bps. There were no tax-exempt bond purchases during the first three months of 2025, accounting for the decrease in average volume in this portfolio.
Previous wording
The average volume of sweep and interest-earning accounts, which consists primarily of an interest-bearing account at the FRBB, increased 94.7%, but decreased 48.6%, respectively, for the three- and nine-months ended September 30, 2024, compared to the same periods in 2023. The decrease in average volume for the nine-month period year over year is attributable to the funding of loan growth, and to a decrease in customer deposit accounts. The average yield on these funds increased 48 bps and 76 bps, respectively, for the three- and nine-month periods ended September 30, 2024, versus the same periods in 2023, directly related to the increases in the fed funds rate throughout 2022 and into 2023.
Current wording
The average volume of sweep and interest-earning accounts, which consists primarily of an interest-bearing account at the FRBB, increased 368.9% for the three-month period ended March 31, 2025, compared to the same periods in 2024. The average volume grew steadily throughout 2024 with the influx of customer deposit accounts, primarily municipal deposit accounts. The average yield on these funds decreased 104 bps for the three-month period ended March 31, 2025, versus the same period in 2024.
Previous wording
The average volume of interest-bearing liabilities for the three- and nine-month periods ended September 30, 2024 increased 8.5% and 10.3%, respectively, compared to the same periods in 2023, and the average rate paid on interest-bearing liabilities increased 64 bps and 82 bps, respectively.
Current wording
The average volume of interest-bearing liabilities for the three-month period ended March 31, 2025 increased 8.7% compared to the same period in 2024, and the average rate paid on interest-bearing liabilities increased 11 bps.
Previous wording
The average volume of interest-bearing transaction accounts increased 5.2% and 2.5%, respectively, for the three- and nine-month periods ended September 30, 2024, compared to the same periods of 2023, reflecting moderate growth year over year. The average rate paid on these accounts increased 32 bps and 34 bps, respectively, between comparison periods. Interest-bearing transaction accounts comprised 33.0% and 33.5% of the average interest-bearing liabilities portfolio for the three- and nine-month periods ended September 30, 2024, compared to 34.0% and 36.0%, respectively, for the same periods last year. Interest paid on these funds accounted for 26.3% and 27.1%, respectively, of total interest expense for the three- and nine-month periods of 2024 compared to 30.5% and 36.8%, respectively, for the same periods in 2023.
Current wording
The average volume of interest-bearing transaction accounts increased 2.9% for the three-month period ended March 31, 2025, compared to the same period in 2024, reflecting moderate growth year over year, while the average rate paid on these accounts decreased two bps between comparison periods. Interest-bearing transaction accounts comprised 33.3% of the average interest-bearing liabilities portfolio for the three-month period ended March 31, 2025, compared to 35.2% for the same period last year. Interest paid on these funds accounted for 27.2% of total interest expense for the three-month period of 2025 compared to 30.4% for the same period in 2024.
Previous wording
The average volume of money market accounts decreased 20.9% and 9.9%, respectively, for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023, while the average rate paid on these deposits increased 22 bps and 50 bps, respectively.
Current wording
The average volume of money market accounts increased 37.2% for the three-month period ended March 31, 2025, compared to the same period in 2024, and the average rate paid on these deposits increased 52 bps. The increase was driven primarily by increases in the average volume of municipal deposit accounts during the third and fourth quarter of 2024.
Previous wording
The average volume of savings accounts decreased 11.8% and 12.1%, respectively, for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023, while the average rate paid on these accounts increased one bp in both comparison periods.
Current wording
The average volume of savings accounts decreased 5.2% for the three-month period ended March 31, 2025, compared to the same period in 2024, with no change in the average rate paid on these accounts.
Previous wording
The average volume of time deposits increased 52.0% and 39.1%, respectively, for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023, and the average rate paid increased 156 bps and 172 bps, respectively.
Current wording
The average volume of time deposits increased 44.8% for the three-month period ended March 31, 2025, compared to the same period in 2024, and the average rate paid increased 42 bps. The increase in both the average volume and average rate paid are attributable to CD promotional rates offered throughout 2024 and into 2025.
Previous wording
The average volume of repurchase agreements decreased 8.0% and 12.1%, respectively, for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023, while the average rate paid increased 11 bps and 38 bps, respectively, between comparison periods.
Current wording
The average volume of repurchase agreements increased 37.3% for the three-month period ended March 31, 2025, compared to the same period in 2024, and the average rate paid increased 14 bps between comparison periods.
Previous wording
The Company has utilized borrowed funds to fund loan growth and cover deposit outflows, particularly during the second and third quarters of 2023, and continuing into 2024, accounting for the increases of $44.3 million and $67.6 million in the average volume of borrowed funds, respectively, for the three- and nine-month periods ended September 30, 2024, compared to the same periods in 2023. The average rate paid on borrowed funds decreased 30 bps for the three-month period but remained the same for the nine-month period ended September 30, 2024, compared to the same periods in 2023.
Current wording
The Company utilized borrowed funds to fund loan growth and cover deposit outflows during 2023 and into the first and second quarters of 2024, but as deposit accounts began to increase, the need for these funds decreased, accounting for the 57.8% decrease in average volume of borrowed funds during the three-month period ended March 31, 2025, compared to the same period in 2024. The average rate paid on borrowed funds decreased as well by 43 bps for the three-month period ended March 31, 2025, compared to the same period in 2024.
Previous wording
In summary, between the three- and nine-month periods ended September 30, 2024 and 2023, the average yield on interest-earning assets increased 46 bps in both periods, and the average rate paid on interest-bearing liabilities increased 64 bps and 82 bps, respectively. Net interest spread decreased 18 bps and 36 bps, respectively, for the three- and nine-month periods ended September 30, 2024 versus the same periods in 2023, and the net interest margin decreased eight bps and 22 bps, respectively, between comparison periods.
Current wording
In summary, between the three-month periods ended March 31, 2025 and 2024, the average yield on interest-earning assets increased 29 bps and the average rate paid on interest-bearing liabilities increased 11 bps. Net interest spread increased 18 bps for the three-month period ended March 31, 2025 versus the same period in 2024, and the net interest margin increased 20 bps between comparison periods.
Previous wording
Total non-interest income increased $295,083, or 17.2% and $104,198, or 2.0%, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023, with significant changes noted in the following:
Current wording
Total non-interest income decreased $55,298, or 3.4%, for the three months ended March 31, 2025, compared to the same period in 2024, with significant changes noted in the following:
Previous wording
Total non-interest expense increased $694,114, or 11.9% and $1.5 million, or 8.7%, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023, with significant changes noted in the following:
Current wording
Total non-interest expense increased $203,468, or 3.2% for the three months ended March 31, 2025, compared to the same period in 2024, with significant changes noted in the following:
Previous wording
The provision for income taxes decreased $138,765, or 19.2% for the third quarter of 2024 and $584,509, or 25.8% for the first nine months of 2024 compared to the same periods in 2023, which is consistent with the decrease in income before income taxes but is also partially attributable to an increase in tax-exempt income associated with municipal loans and investments and an increase in tax credits year over year. Tax credits related to low-income housing limited partnership investments amounted to $174,612 and $80,529 for the third quarter of 2024 and 2023, respectively, and $523,836 and $241,587, respectively for the first nine months of 2024 and 2023. The Company’s investment in two new limited partnerships were fully funded by year-end 2023 accounting for the increase in tax credits.
Current wording
The provision for income taxes increased $107,884, or 19.4%, for the first three months of 2025 compared to the same period in 2024, which is consistent with the increase in income before income taxes. Tax credits, which consist of credits from affordable housing investments and NMTC, amounted to $249,612 and $174,612, respectively for the first three months of 2025 and 2024. The Company’s investment in a project during the last quarter of 2024 generated NMTC for the first quarter of 2025, accounting for the increase in tax credits between comparison periods.
Previous wording
Amortization expense related to limited partnership investments is included as a component of income tax expense and amounted to $149,202 and $67,128 for the third quarter of 2024 and 2023, respectively and $447,606 and $201,384, respectively, for the first nine months of 2024 and 2023. These investments provide tax benefits, including tax credits, and are designed to provide a targeted effective annual yield between 5% and 7%.
Current wording
Amortization expense related to the affordable housing investments and NMTC is included as a component of income tax expense and amounted to $212,868 and $149,202, respectively for the first three months of 2025 and 2024. These investments provide tax benefits, including tax credits, and are designed to provide a targeted effective annual yield between 5% and 7%.
Previous wording
The increase in the loan portfolio during the first nine months of 2024 was primarily attributable to increases in CRE loans, commercial & industrial loans, municipal loans and residential real estate 1 st lien loans.
Current wording
The increase in the loan portfolio during the first three months of 2025 was primarily attributable to increases in CRE loans, municipal loans and residential real estate 1 st lien loans.
Previous wording
The decrease in the securities AFS portfolio at September 30, 2024 is attributable to the combined effect during the first nine months of the year of maturities amounting to $11.0 million and principal payments on MBS, ABS and CMO investments totaling $13.5 million, which was partially offset by a decrease of $4.4 million in unrealized losses, which is reflected in OCI. In management’s view, the size of the AFS securities portfolio is appropriate and proportional to the overall asset base, as this portfolio serves a significant role in the Company’s liquidity position.
Current wording
The increase in the securities AFS portfolio at March 31, 2025 is attributable to the combined effect during the first three months of the year of purchases totaling $15.0 million and a decrease of $3.0 million in unrealized losses reflected in OCI, which was partially offset by maturities of $5.5 million and principal payments on MBS, ABS and CMO investments totaling $3.9 million. In management’s view, the size of the AFS securities portfolio is appropriate and proportional to the overall asset base, as this portfolio serves a significant role in the Company’s liquidity position.
Previous wording
Estimated deposits in excess of the FDIC insurance level amounted to $219.3 million as of September 30, 2024 and $217.3 million at December 31, 2023. The estimated balance of $35.5 million of uninsured time deposits as of September 30, 2024 was made up of time CDs of $31.4 million and retirement accounts of $4.1 million. Increments of maturity of these time deposits are summarized as follows:
Current wording
Estimated deposits in excess of the FDIC insurance level amounted to $244.6 million as of March 31, 2025 and $258.0 million as of December 31, 2024. The estimated balance of $40.5 million of uninsured time deposits as of March 31, 2025 was made up of time CDs of $37.2 million and retirement accounts of $3.3 million. Increments of maturity of these time deposits are summarized as follows:
Previous wording
Interest Rate Risk and Asset and Liability Management - Management actively monitors and manages the Company’s interest rate risk exposure and attempts to structure the balance sheet to maximize net interest income while controlling its exposure to interest rate risk. The Company's ALCO is made up of the Executive Officers and certain Vice Presidents of the Bank representing major business lines. The ALCO formulates strategies to manage interest rate risk by evaluating the impact on earnings and capital of such factors as current interest rate forecasts and economic indicators, potential changes in such forecasts and indicators, liquidity and various business strategies. The ALCO meets at least quarterly to review financial statements, liquidity levels, yields and spreads to better understand, measure, monitor and control the Company’s interest rate risk. In the ALCO process, the committee members apply policy limits set forth in the Asset Liability, Liquidity and Investment policies approved and periodically reviewed by the Company’s Board of Directors. The ALCO's methods for evaluating interest rate risk include an analysis of the effects of interest rate changes on net interest income and an analysis of the Company's interest rate sensitivity "gap", which provides a static analysis of the maturity and repricing characteristics of the entire balance sheet. The ALCO Policy also includes a contingency funding plan to help management prepare for unforeseen liquidity restrictions, including hypothetical severe liquidity crises.
Current wording
Interest Rate Risk and Asset and Liability Management - Management actively monitors and manages the Company’s interest rate risk exposure and attempts to structure the balance sheet to maximize net interest income while controlling its exposure to interest rate risk. The Company's ALCO is made up of the Executive Officers and certain Vice Presidents of the Bank representing major business lines. The ALCO formulates strategies to manage interest rate risk by evaluating the impact on earnings and capital of such factors as current interest rate forecasts and economic indicators, potential changes in such forecasts and indicators, liquidity and various business strategies. The ALCO meets at least quarterly to review financial statements, liquidity levels, yields and spreads to better understand, measure, monitor and control the Company’s interest rate risk. In the ALCO process, the committee members apply policy limits set forth in the Asset Liability, Liquidity and Investment policies approved and periodically reviewed by the Company’s Board of Directors (together the ”ALCO Policy”). The ALCO's methods for evaluating interest rate risk include an analysis of the effects of interest rate changes on net interest income and an analysis of the Company's interest rate sensitivity "gap", which provides a static analysis of the maturity and repricing characteristics of the entire balance sheet. The ALCO Policy also includes a contingency funding plan to help management prepare for unforeseen liquidity restrictions, including hypothetical severe liquidity crises.
Previous wording
Under the Company’s interest rate sensitivity modeling, in a rising rate environment NII initially trends upward as the short-term asset base (cash and adjustable-rate loans) quickly cycle upward while the retail funding base (deposits) lags the market. If rates paid on deposits must be increased more and/or more quickly than projected due to competitive pressures, the expected benefit of rising rates would be reduced. In a falling rate environment, NII is expected to trend slightly downward compared with the current rate environment scenario for the first year of the simulation as asset yield erosion is not fully offset by decreasing funding costs. Thereafter, net interest income is projected to experience sustained downward pressure as funding costs reach their assumed floors and asset yields continue to reprice into the lower rate environment. The prolonged inverted yield curve and an increased need for higher cost funding has resulted in a more liability sensitive balance sheet because in the rising rate environment there may be an initial delay in relief from deposit pricing.
Current wording
Under the Company’s interest rate sensitivity modeling, in a rising rate environment NII initially trends upward as the short-term asset base (cash and adjustable-rate loans) quickly cycles upward while the retail funding base (deposits) lags the market. If rates paid on deposits must be increased more and/or more quickly than projected due to competitive pressures, the expected benefit of rising rates would be reduced. In a falling rate environment, NII is expected to trend slightly downward compared with the current rate environment scenario for the first year of the simulation as asset yield erosion is not fully offset by decreasing funding costs. Thereafter, net interest income is projected to experience sustained downward pressure as funding costs reach their assumed floors and asset yields continue to reprice into the lower rate environment.
Previous wording
As of September 30, 2024, the Company had outstanding $12,887,000 in principal amount of Junior Subordinated Debentures due December 15, 2037, which bear interest at a quarterly floating rate equal to 3-month CME SOFR, as adjusted by a spread adjustment factor of 0.26161, plus 2.85%. The quarterly floating rate in effect on the debentures was 8.496% for the March 2024 payment, 8.441% for the June 2024 payment, and 8.451% for the September payment.
Current wording
As of March 31, 2025, the Company had $12,887,000 in principal amount of Junior Subordinated Debentures due December 15, 2037, which bear interest at a quarterly floating rate equal to 3-month CME SOFR, as adjusted by a spread adjustment factor of 0.26161, plus 2.85%. The quarterly floating rate in effect on the debentures was 7.47% for the March 2025 payment, compared to a floating rate of 8.50% for the March 2024 payment.
Previous wording
Residential mortgage loans represented 27.3% of the Company’s loan balances as of September 30, 2024, compared to 28.5% as of December 31, 2023. The Company maintains a residential mortgage loan portfolio of traditional mortgage products and does not offer higher risk loan products, such as option adjustable-rate mortgage products, high loan-to-value products, interest only mortgages, subprime loans and products with deeply discounted teaser rates. Residential mortgages with loan-to-value ratios exceeding 80% are generally covered by PMI. A 90% loan-to-value residential mortgage product without PMI is only available to borrowers with excellent credit and low debt-to-income ratios and has not been widely originated. As of September 30, 2024, junior lien home equity products made up 13.2% of the residential mortgage portfolio with maximum loan-to-value ratios (including prior liens) of 80%. The Company also originates some home equity loans with loan-to-value ratios greater than 80% under an insured loan program with stringent underwriting criteria.
Current wording
Residential mortgage loans represented 27.8% of the Company’s loan balances as of March 31, 2025, compared to 27.4% as of December 31, 2024. The Company maintains a residential mortgage loan portfolio of traditional mortgage products and does not offer higher risk loan products, such as option adjustable-rate mortgage products, high loan-to-value products, interest only mortgages, subprime loans and products with deeply discounted teaser rates. Residential mortgages with loan-to-value ratios exceeding 80% are generally covered by PMI. A 90% loan-to-value residential mortgage product without PMI is only available to borrowers with excellent credit and low debt-to-income ratios and has not been widely originated. As of March 31, 2025, junior lien home equity products made up 13.8% of the residential mortgage portfolio with maximum loan-to-value ratios (including prior liens) of 80%. The Company also originates some home equity loans with loan-to-value ratios greater than 80% under an insured loan program with stringent underwriting criteria.
Previous wording
The Company continues to experience solid growth in the commercial & industrial and CRE loan portfolios, which is consistent with its strategic focus on commercial lending. The commercial lending portfolio consists of commercial & industrial, purchased, CRE and municipal loans, which collectively comprised 72.4% of the Company’s loan portfolio as of September 30, 2024, compared to 71.2% as of December 31, 2023. As of September 30, 2024, the largest components of the CRE portfolio were $124.6 million in owner-occupied CRE and $154.3 million in non-owner occupied CRE.
Current wording
The Company experienced solid growth in the CRE loan portfolios, which is consistent with its strategic focus on commercial lending. Commercial & industrial, purchased, CRE and municipal loans collectively comprised 71.9% of the Company’s loan portfolio as of March 31, 2025, compared to 72.3% as of December 31, 2024. The largest components of the CRE portfolio were $128.3 million in owner-occupied CRE and $151.9 million in non-owner occupied CRE as of March 31, 2025, compared to $125.5 million and 154.6 million, respectively, as of December 31, 2024.
Previous wording
Risk in the Company’s commercial & industrial and CRE loan portfolios is mitigated in part by government guarantees issued by federal agencies such as the SBA and RD. As of September 30, 2024, the Company had $20.2 million in guaranteed loans with guaranteed balances of $12.7 million, compared to $26.5 million in guaranteed loans with guaranteed balances of $17.6 million as of December 31, 2023. PPP loans with outstanding balances of $54 thousand as of September 30, 2024, and $84 thousand as of December 31, 2023, are included in these totals, all of which carry a 100% guarantee through the SBA, subject to borrower eligibility requirements.
Current wording
Risk in the Company’s commercial & industrial and CRE loan portfolios is mitigated in part by government guarantees issued by federal agencies such as the SBA and RD. As of March 31, 2025, the Company had $25.3 million in guaranteed loans with guaranteed balances of $17.1 million, compared to $25.5 million in guaranteed loans with guaranteed balances of $17.2 million as of December 31, 2024. PPP loans with outstanding balances of $33 thousand as of March 31, 2025, and $43 thousand as of December 31, 2024, are included in these totals, all of which carry a 100% guarantee through the SBA, subject to borrower eligibility requirements.
Previous wording
The Company works actively with customers early in the delinquency process to help them to avoid default and foreclosure. Commercial & industrial and CRE loans are generally placed on non-accrual status when there is deterioration in the financial position of the borrower, payment in full of principal and interest is not expected, and/or principal or interest has been in default for 90 days or more. However, such a loan need not be placed on non-accrual status if it is both well secured and in the process of collection. Residential mortgages and home equity loans are considered for non-accrual status at 90 days past due and are evaluated on a case-by-case basis. The Company obtains current property appraisals or market value analyses and considers the cost of carrying and selling collateral in order to assess the level of specific allocations required. Consumer loans are generally not placed in non-accrual but are charged off by the time they reach 120 days past due. When a loan is placed in non-accrual status, the Company reverses the accrued interest against current period income and discontinues the accrual of interest until the borrower clearly demonstrates the ability and intention to resume normal payments, typically demonstrated by regular timely payments for a period of not less than six months. Interest payments received on non-accrual or impaired loans are generally applied as a reduction of the loan book balance.
Current wording
The Company works actively with customers early in the delinquency process to help them to avoid default and foreclosure. Commercial & industrial and CRE loans are generally placed on non-accrual status when there is deterioration in the financial position of the borrower, payment in full of principal and interest is not expected, and/or principal or interest has been in default for 90 days or more. However, such a loan need not be placed on non-accrual status if it is both well secured and in the process of collection. Residential mortgages and home equity loans are considered for non-accrual status at 90 days past due and are evaluated on a case-by-case basis. The Company obtains current property appraisals or market value analyses and considers the cost to carry and sell collateral to assess the level of specific allocations required. Consumer loans are generally not placed in non-accrual but are charged off by the time they reach 120 days past due. When a loan is placed in non-accrual status, the Company reverses the accrued interest against current period income and discontinues the accrual of interest until the borrower clearly demonstrates the ability and intention to resume normal payments, typically demonstrated by regular timely payments for a period of not less than six months. Interest payments received on non-accrual loans are generally applied as a reduction of the loan book balance.
Showing the first 40 of 52 pairs. Open the source sections for the rest.