Second Quarter Report June 30, 2018

Second Quarter Report June 30, 2018

Dear Shareholders:

Net income for the quarter ended June 30, 2018 totaled $390,000, or $0.76 per share. This represents an increase of $11,000 compared with net income of $379,000, and earnings per share of $0.73 for the quarter ended June 30, 2017.  The increase in earnings primarily resulted from higher levels of interest income generated by strong loan demand.

Second quarter net interest income growth of $46,000 resulted from a $174,000 increase in interest and fees on loans, which was offset by a $60,000 decrease in interest from investment securities and a $65,000 increase in interest expense due to rising interest rates. Lending continued to be a significant income generator during the second quarter as loan growth totaled $4.9 million, or nearly 5%.  Loan production totaled $9.1 million with $4.0 million in commercial real estate loans and $4.1 million in residential mortgage loans.  Consumer lending has also increased notably with 74% increased originations compared with the first six months of 2017.

Strong loan growth has been achieved over the previous several years while maintaining sound credit quality with few delinquencies or watchlist credits. Ongoing enhancements are regularly made to risk management and regulatory compliance efforts.

Noninterest income increased during the second quarter compared with the first quarter of this year largely due to a $70,000 market value increase in the Company’s equity securities portfolio. Last quarter, it was noted that greater volatility in reported earnings is anticipated with the associated recent accounting standard change.

Year-to-date net income totaled $664,000 compared with $705,000 reported at mid-year 2017. A dividend payment of $0.50 per share for the second quarter was paid July 2.  Please do not hesitate to contact me if you would like additional information or have any questions.

Sincerely,

Nelson L. Person
President & CEO