Community Bancorp boosts loans and NII despite deposit outflows; dividend and buybacks continue

Community Bancorp./VT (OTCMKTS: CMTV)

Quick read: Management is steering the bank toward loan growth and higher net interest income while navigating deposit outflows and liquidity shifts. Capital remains strong, the board approved a dividend and share buybacks continued. Key drivers: loan portfolio expansion, higher yields on loans, reduced wholesale borrowings and a meaningful swing in cash/overnight balances.

What's happening inside

* Loan growth: loans increased to $941,762,995 (up from $927,940,805 at 12/31/24) - management is focused on CRE and residential lending.
* Deposit shifts: total deposits fell to $932,965,859 from $1,001,644,758, with large decreases in overnight and money market balances.
* Liquidity move: cash & equivalents plunged to $14,527,099 from $110,940,202 (ending cash decrease of $96,413,103 YTD) as the bank paid down BTFP borrowings and rebalanced funding.
* Funding: borrowed funds down to $55,800,000 from $72,600,000; more reliance on core deposits and FHLB advances; repurchase agreements $46,227,938.
* Capital & shareholder actions: shareholders' equity rose to $106,343,407 (book value per share $18.69). Board declared $0.24/share dividend and repurchased 27,812 shares in Q2 under an active buyback program.
* Risk management: Allowance for Credit Losses (ACL) increased to $10,549,531 and covers ~121.6% of nonaccrual loans; management continues active loan review and ALCO monitoring.

Key financials - select figures (Q2 2025 or period shown)

* Total assets: $1,166,586,233 (06/30/2025)
* Loans: $941,762,995
* Deposits: $932,965,859
* Net income (Q2): $4,059,776; EPS Q2: $0.72
* Net income (6 months): $7,585,231; EPS 6 months: $1.34
* Total interest income (Q2): $14,850,616; interest expense: $4,956,074; net interest income: $9,894,542
* Non-interest income (Q2): $2,058,711 (includes $548,308 from CFS Partners)
* Non-interest expense (Q2): $6,667,400
* Credit loss expense (Q2): $407,046; ACL: $10,549,531
* AFS securities fair value: $158,882,445 with total unrealized losses $16,124,376 (June 30, 2025)
* Shares outstanding (Aug 4, 2025): 5,601,316

Income statement - positives

* Strong NII expansion: net interest income rose materially year-over-year (Q2 NII $9.89M vs $8.10M prior year) driven by higher loan volumes and repricing.
* Better margins: net interest margin improved (tax-equivalent basis), helped by lower reliance on expensive wholesale funding.
* Revenue mix: non-interest income grew (+16% YoY for the quarter), boosted by higher income from CFS Partners after the company's share increased to 50% of CFSG results.
* Profitability: net income up 48.8% YoY for the quarter; ROAE and ROAA improved.

Income statement - negatives / risks

* Rising operating costs: non-interest expense increased (Q2 expense $6.67M vs $6.27M prior year), with higher employee benefits, occupancy and miscellaneous costs.
* Credit provisioning: credit loss expense rose (Q2 $407k vs $332k prior year) and ACL increased to $10.55M - signaling caution on asset quality despite coverage metrics.
* Securities mark-to-market: AFS portfolio carries $16.1M of unrealized losses (primarily Agency MBS) - interest rate sensitivity remains a latent risk.
* Liquidity concentration: sharp drop in cash/overnight balances and declines in money market/interest-bearing transaction accounts create short-term funding pressure that required repayment of prior facilities and use of other advances.

Bottom line / takeaways

* Management has driven top-line improvement through loan growth and higher yields, delivering stronger profitability for Q2 and the first half of 2025.
* The bank remains well-capitalized and shareholder-friendly (dividend + buybacks), but must manage rising operating costs, increased ACL provisioning and the consequences of deposit rebalancing and unrealized securities losses.
* Watch next quarters for: deposit stabilization, trend in non-interest expense, performance of CRE/residential loan segments, and changes in AFS unrealized losses as rates and prepayment behavior evolve.

Data source: Community Bancorp. SEC Form 10‑Q for period ended June 30, 2025 (figures shown as reported).