Second Quarter Report June 30, 2015

Second Quarter Report June 30, 2015

Dear Shareholders:
For the three months ended June 30, 2015, net income increased to $350,000, or $0.70 per share, compared with second quarter 2014 net income of $343,000, or $0.69 per share.  Net interest income increased $31,000 compared with the second quarter of 2014 primarily due to a $71,000 increase in interest earned on loans.  Noninterest income increased $56,000 compared with the same time period last year and was mainly attributed to additional income earned on Trust department activities and a gain on sale of investment securities.  Noninterest expenses increased $89,000 compared with second quarter 2014.

Year-to-date net income totaled $671,000, or $1.33 per share, compared with $690,000, or $1.38, reported for the first half of 2014.  Net interest income decreased $12,000 year-to-date, and noninterest income increased $90,000 year-to-date.  However, noninterest expense also increased by $128,000 in 2015 compared with the first six months of 2014.

Loan balances increased nearly 18% during the first half of 2015 and represented a noteworthy start for 2015. New loan production totaled $13.9 million with $9.4 million in commercial loans and leases and $3.3 million in residential mortgages.  The bank’s loan portfolio continues to become a more significant driver of earnings, which is important as spreads are expected to tighten when interest rates increase.  Mobile banking was added during the second quarter as the bank continues expanding its retail product offerings.

On behalf of the Board of Directors and employees, I thank you for your support and loyalty.

Sincerely,
Nelson L. Person
President & CEO