Business Context and Reporting Period
Company: Community Bancorp. (CMTV)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and Six Months Ended June 30, 2026
Business Overview: Community Bancorp. is a smaller reporting company and non-accelerated filer headquartered in Derby, Vermont. It operates primarily through its wholly-owned subsidiary, Community National Bank, focusing on commercial, residential, and municipal lending within the northern New England market.
Key Financial Metrics
| Metric | Q2 2026 (3 Months) | Q2 2025 (3 Months) | YTD 2026 (6 Months) | YTD 2025 (6 Months) |
|---|---|---|---|---|
| Net Income | $4,687,784 | $4,059,776 | $9,056,887 | $7,585,231 |
| Earnings Per Share (Diluted) | $0.84 | $0.72 | $1.62 | $1.34 |
| Total Assets (Period End) | $1,172,748,714 | N/A | $1,172,748,714 | N/A |
| Total Loans (Period End) | $970,535,252 | N/A | $970,535,252 | N/A |
| Total Deposits (Period End) | $981,654,196 | N/A | $981,654,196 | N/A |
| Net Interest Income | $11,247,806 | $9,894,542 | $22,195,687 | $19,332,864 |
| Credit Loss Expense | $720,967 | $407,046 | $1,112,473 | $732,100 |
| Return on Average Assets | 1.53% | 1.38% | 1.47% | 1.29% |
| Return on Average Equity | 15.83% | 15.62% | 15.63% | 15.05% |
| Book Value Per Share | $21.58 | N/A | $21.58 | N/A |
Material Changes vs. Prior Period
- Profitability: Net income increased 15.5% year-over-year for Q2 2026 and 19.4% for the six-month period, driven by higher net interest income and non-interest income.
- Asset Composition: Total assets decreased 8.9% from December 31, 2025, primarily due to a $110.4 million reduction in federal funds sold and overnight deposits. Conversely, the loan portfolio grew by $5.2 million, led by increases in residential and commercial & industrial loans.
- Deposits: Total deposits declined $89.0 million (8.3%) from year-end 2025. Money market funds saw the largest drop ($61.5 million), while time deposits increased by $4.1 million.
- Interest Rates: Net interest margin (tax-equivalent) improved to 3.95% in Q2 2026 from 3.64% in Q2 2025. The average yield on interest-earning assets increased 18 basis points, while the cost of interest-bearing liabilities decreased 13 basis points.
- Provisioning: Credit loss expense rose significantly, increasing 77.1% in Q2 and 52.0% YTD compared to 2025. This was attributed to an additional reserve for an individually analyzed commercial loan and changes in economic forecasts.
Guidance, Outlook, and Risks
- Management Commentary: Management attributes the increase in net income to loan growth at higher rates and adjustable-rate loans repricing. The decrease in deposits is described as typical seasonal runoff, particularly from government agency and non-arbitrage accounts.
- Capital Position: As of June 30, 2026, the Bank was considered "well capitalized" under regulatory standards. The Company's Common Equity Tier 1 capital ratio was 13.46%, well above the 7.00% minimum requirement including the conservation buffer.
- Dividends: The Board declared a quarterly cash dividend of $0.25 per common share, payable August 1, 2026. A subsequent dividend of $0.25 per share was declared on July 15, 2026.
- Risks and Contingencies:
- Credit Risk: Non-accrual loans increased to $8.2 million (0.85% of total loans) from $7.0 million at year-end 2025. The allowance for credit losses (ACL) to total loans ratio increased to 1.22%.
- Interest Rate Risk: The Company utilizes an Asset Liability Committee (ALCO) to manage interest rate risk. Simulations indicate that a 200 basis point rise in rates would decrease Net Interest Income (NII) by 1.2%, while a 200 basis point drop would decrease NII by 0.1%.
- Liquidity: Borrowing capacity through the Federal Home Loan Bank of Boston (FHLBB) was $140.9 million as of June 30, 2026.
Investor Verification Checklist
- Deposit Runoff: Verify the sustainability of the $89 million deposit decline, specifically the 32.9% drop in money market funds, and its impact on future funding costs.
- Credit Quality Trends: Monitor the increase in non-accrual loans and the specific commercial loan relationship that drove the 77% increase in credit loss expense.
- Securities Portfolio: Review the $16.5 million decrease in Available-for-Sale (AFS) securities and the $12.1 million in unrealized losses to assess potential liquidity constraints or future OCI volatility.
- Expense Management: Track the 7.5% increase in non-interest expenses, particularly the rise in salaries, employee benefits, and administrative service contracts.
- Regulatory Capital: Confirm that capital ratios remain well above regulatory minimums despite the increase in credit loss provisions.