[The annual report front cover contains a color graphic
and the following text:]
Annual Report 2000
Community Bancorp, Inc.
Parent Company of Community National Bank
[The following text appears on the inside front cover.]
Table of Contents
Selected Consolidated Financial Data - - - - - - - - - - - 1
Message to Stockholders and Friends - - - - - - - - - - - - 2
Consolidated Balance Sheets - - - - - - - - - - - - - - - - 3
Consolidated Statements of Income - - - - - - - - - - - - - 4
Consolidated Statements of Comprehensive Income - - - - - - 5
Consolidated Statements of Stockholders' Equity - - - - - - 6
Consolidated Statements of Cash Flows - - - - - - - - - - - 7
Notes to Consolidated Financial Statements - - - - - - - - 8
Report of Independent Public Accountants - - - - - - - - - 25
Management's Discussion and Analysis of
Financial Condition and Results of Operations - - - - - - 26
Directors & Officers - - - - - - - - - - - - Inside back cover
Selected Consolidated Financial Data
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Total assets $374,867,511 $327,996,575 $300,886,831 $273,550,527 $250,002,458
Total deposits 307,128,832 276,422,308 254,408,735 232,788,534 217,181,869
Total net loans 173,216,873 161,318,593 137,242,930 136,624,294 126,866,560
Allowance for loan losses 2,812,392 3,041,873 2,981,012 3,215,559 3,481,705
Total interest income 24,964,665 21,840,725 20,659,783 19,169,951 17,761,102
Total interest expense 9,354,592 7,829,668 7,675,112 6,895,222 6,367,758
Net interest income 15,610,073 14,011,057 12,984,671 12,274,729 11,393,344
Gains (losses) on sales of securities -- -- -- 8,587 (9,460)
Provision for possible loan losses -- -- -- -- --
Net income 4,532,119 3,915,217 3,805,761 3,429,859 3,152,098
Earnings per share 0.77 0.66 0.65 0.58 0.51
Dividends per share 0.209 0.182 0.162 0.143 0.127
[Five-year bar graphs for the following categories appear in this space.
Data for the graphs was obtained from the above table.]
Total Assets (in millions)
Net Income (in millions)
Earnings Per Share (in dollars)
Total Deposits (in millions)
Total Net Loans (in millions)
Net Interest Income (in millions)
-1-
To Our Stockholders and Friends
The year 2000 was the most successful year in the history of Community
Bancorp, Inc. and its subsidiary Community National Bank, and we are
pleased to present you with our Annual Report. Record earnings were
again achieved, during a year in which the Company continued to invest
in its future.
Net income for the year ended December 31, 2000 rose to $4,532,119,
representing an increase of 15.8% over $3,915,217 recorded in 1999.
Earnings per share totaled $.77 for the current year, compared to $.66
for 1999. Cash dividends declared were $.209 per share in 2000, up from
$.182 in 1999, and the Company's capital ratios at year-end far exceeded
all regulatory requirements. The continued strong performance of
Community National Bank once again brought us recognition as a "Blue Ribbon"
bank by one of the top bank rating firms.
After extensive planning, Community National Bank established an Investment
Management and Trust Department during the first quarter of 2000. Utilizing
the skills of a seasoned investment manager, this new department became well-
established during its first year of operation, and we expect it to produce
significant fee income in the future while working with customers to help
them achieve their financial goals. The Bank's two new branches in
Framingham and Sudbury, opened during 1999, continued to grow in 2000 as we
strive to expand our penetration in those new markets. Our Internet-based
Online Banking program experienced strong growth during the year, serving
over 2,600 customers by year-end and generating approximately $900,000 in new
consumer loan business. Finally, an upgraded mainframe computer system allowed
us to achieve even greater internal efficiency during the year. Additional
projects are planned for 2001 that will further streamline our internal
operations and enhance our ability to service our customers' needs.
Sound, conservative banking practices and effective planning for the future have
provided a solid foundation for the Company's continued success as a locally-
owned, independent community bank. As the financial services industry continues
to evolve, our challenge is to monitor the changes taking place and capitalize
on the resulting opportunities they present. We are already building on 2000's
accomplishments, performance and momentum, and we look to the future with
confidence and enthusiasm. On behalf of the Board of Directors, management and
staff, we wish to thank our stockholders for their continued support.
Sincerely,
/s/ James A. Langway /s/ Dennis F. Murphy, Jr.
- -------------------- -------------------------
James A. Langway Dennis F. Murphy, Jr.
President and Chief Executive Officer Chairman of the Board
-2-
Consolidated Balance Sheets
December 31, 2000 and 1999
2000 1999
----------- -----------
ASSETS
Cash and due from banks $ 16,472,547 $ 21,010,959
Federal funds sold 31,136,266 6,924,026
Securities available for sale at fair value (Note 3) 50,110,202 41,808,065
Securities held to maturity (fair value $92,302,813
in 2000 and $84,164,551 in 1999) (Note 3) 92,441,522 86,225,017
Mortgage loans held for sale 295,742 332,686
Loans (Notes 4 and 10) 176,029,265 164,360,466
Less allowance for loan losses (Note 4) 2,812,392 3,041,873
----------- -----------
Total net loans 173,216,873 161,318,593
Bank premises and equipment, net (Note 5) 6,234,641 6,342,891
Other assets, net (Note 1) 4,959,718 4,034,338
----------- -----------
Total assets $374,867,511 $327,996,575
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (Note 6):
Noninterest bearing $ 75,969,408 $ 68,082,062
Interest bearing 231,159,424 208,340,246
----------- -----------
Total deposits 307,128,832 276,422,308
----------- -----------
Securities sold under repurchase agreements 33,463,166 21,766,424
Other liabilities (Note 8) 2,460,642 1,496,572
----------- -----------
Total liabilities 343,052,640 299,685,304
----------- -----------
Commitments (Notes 9 and 12) -- --
Stockholders' equity: (Note 1)
Preferred stock, $2.50 par value, 100,000 shares
authorized, none issued or outstanding -- --
Common stock, $2.50 par value, 12,000,000 shares
authorized, 6,398,436 shares issued,
5,914,441 shares outstanding, (5,921,824 shares
outstanding at December 31, 1999) 15,996,090 7,998,045
Surplus 101,378 638,619
Undivided profits 18,052,893 22,116,681
Treasury stock, at cost, 483,995 shares,
(476,612 at December 31, 1999) (2,414,762) (2,217,972)
Accumulated other comprehensive income (loss) 79,272 (224,102)
----------- -----------
Total stockholders' equity 31,814,871 28,311,271
----------- -----------
Total liabilities and stockholders'
equity $374,867,511 $327,996,575
=========== ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
-3-
Consolidated Statements of Income
Years ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Interest income:
Interest and fees on loans $15,452,495 $13,947,164 $13,167,815
Interest and dividends on securities:
Taxable interest 7,096,447 6,427,831 5,790,375
Nontaxable interest 628,313 566,334 482,473
Dividends 91,360 74,865 64,106
Interest on federal funds sold 1,696,050 824,531 1,155,014
---------- ---------- ----------
Total interest income 24,964,665 21,840,725 20,659,783
---------- ---------- ----------
Interest expense:
Interest on deposits 7,661,268 6,801,917 6,649,308
Interest on federal funds purchased and
securities sold under repurchase
agreements 1,693,324 1,027,751 1,025,804
---------- ---------- ----------
Total interest expense 9,354,592 7,829,668 7,675,112
---------- ---------- ----------
Net interest income 15,610,073 14,011,057 12,984,671
---------- ---------- ----------
Provision for loan losses (Note 4) -- -- --
---------- ---------- ----------
Net interest income after provision
for loan losses 15,610,073 14,011,057 12,984,671
---------- ---------- ----------
Noninterest income:
Merchant credit card processing
assessments 1,559,355 1,296,041 1,194,584
Service charges 635,823 589,697 590,255
Other charges, commissions and fees 1,110,542 1,169,175 1,107,893
Gains on sales of loans, net 89,458 71,661 224,388
Gains on sales of securities, net -- -- --
Other 92,867 89,172 83,367
---------- ---------- ----------
Total noninterest income 3,488,045 3,215,746 3,200,487
---------- ---------- ----------
Noninterest expense:
Salaries and employee benefits (Note 8) 6,093,676 5,632,576 5,176,505
Data processing and ATM network 1,113,844 1,010,383 953,841
Occupancy, net 829,817 761,857 609,638
Furniture and equipment 416,133 370,549 385,150
Credit card processing 1,430,434 1,258,102 1,097,664
Printing, stationery and supplies 244,622 280,008 259,901
Professional fees 415,696 420,423 387,635
Marketing and advertising 276,315 326,348 311,551
Other 1,241,280 1,076,763 1,015,040
---------- ---------- ----------
Total noninterest expense 12,061,817 11,137,009 10,196,925
---------- ---------- ----------
Income before income tax expense 7,036,301 6,089,794 5,988,233
Income tax expense 2,504,182 2,174,577 2,182,472
---------- ---------- ----------
Net income $ 4,532,119 $ 3,915,217 $ 3,805,761
========== ========== ==========
Earnings per common share (Note 1) $ 0.77 $ 0.66 $ 0.65
Weighted average number of shares
outstanding 5,912,731 5,909,600 5,876,720
========== ========= =========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
-4-
Consolidated Statements of Comprehensive Income
Years ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Net income $ 4,532,119 $ 3,915,217 $ 3,805,761
---------- ---------- ----------
Other comprehensive income:
Unrealized securities gains (losses)
arising during period 513,579 (434,930) (173,276)
Income tax (expense) benefit on securities
gains (losses) arising during period (210,205) 178,018) 71,390
---------- ---------- ----------
Net unrealized securities gains
(losses) arising during period 303,374 (256,912) (101,886)
---------- ---------- ----------
Less: reclassification adjustment for
securities (gains) included in income -- -- --
Income tax expense on securities
(gains) included in income -- -- --
---------- ---------- ----------
Net reclassification adjustment for
securities (gains) included in
net income -- -- --
---------- ---------- ----------
Other comprehensive income (loss) 303,374 (256,912) (101,886)
---------- ---------- ----------
Comprehensive income (Note 1) $ 4,835,493 $ 3,658,305 $ 3,703,875
========== ========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
-5-
Consolidated Statements of Stockholders' Equity
Years ended December 31, 2000, 1999 and 1998
Accumulated
Other
Common Undivided Treasury Comprehensive
Stock Surplus Profits Stock Income
----- ------- ---------- -------- -------------
Balance, December 31, 1997 $ 7,998,045 $ 414,120 $16,418,790 $(2,529,552) $ 134,696
Net income -- -- 3,805,761 -- --
Cash dividends declared
($.162 per share) -- -- (949,690) -- --
Reissuance of 36,662 shares
of treasury stock -- 109,986 -- 164,979 --
Change in accumulated other
comprehensive income (Note 1) (101,886)
- -------------------------- --------- ------- --------- --------- ---------
Balance, December 31, 1998 7,998,045 524,106 19,274,861 (2,364,573) 32,810
Net income -- -- 3,915,217 -- --
Cash dividends declared
($.182 per share) -- -- (1,073,397) -- --
Purchase of 70 shares of
treasury stock -- -- -- (630) --
Reissuance of 32,718 shares
of treasury stock -- 114,513 -- 147,231 --
Change in accumulated other
comprehensive income (Note 1) -- -- -- -- (256,912)
- -------------------------- --------- ------- ---------- --------- -------
Balance, December 31, 1999 7,998,045 638,619 22,116,681 (2,217,972) (224,102)
Net income -- -- 4,532,119 -- --
Two-for-one stock split
effected in the form of a
100% stock dividend 7,998,045 (638,619) (7,359,426) -- --
Cash dividends declared
($.209 per share) -- -- (1,236,481) -- --
Purchase of 36,348 shares of
treasury stock -- -- -- (327,132) --
Reissuance of 28,965 shares
of treasury stock -- 101,378 -- 130,342 --
Change in accumulated other
comprehensive income (Note 1) 303,374
- -------------------------- --------- ------- ---------- --------- -------
Balance, December 31, 2000 $15,996,090 $101,378 $18,052,893 $(2,414,762) $ 79,272
========== ======= ========== ========= =======
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
-6-
Consolidated Statements of Cash Flows
Years ended December 31, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Net income $ 4,532,119 $ 3,915,217 $ 3,805,761
Adjustments to reconcile net income to net
cash provided by operating activities:
Decrease in mortgage loans held for sale 36,944 997,592 843,044
Depreciation and amortization 974,945 1,063,584 1,027,577
Amortization of investment securities
discounts and premiums, net 81,136 (47,149) (101,712)
(Prepaid) deferred income taxes (25,646) 91,991 (6,691)
Increase (decrease) in other liabilities 643,537 82,050 (192,937)
Increase (decrease) in taxes payable 122,817 83,454 (183,595)
Increase (decrease)in interest payable 54,196 62,346 (56,143)
(Increase) decrease in other assets, net (541,490) (313,921) 125,161
(Increase) in interest receivable (473,882) (365,378) (146,039)
---------- ---------- ----------
Total adjustments 872,557 1,654,569 1,308,665
---------- ---------- ----------
Net cash provided by operating activities 5,404,676 5,569,786 5,114,426
---------- ---------- ----------
Cash flows used in investing activities:
Purchases of securities held to maturity (19,024,788) (23,815,119) (62,344,812)
Purchases of securities available for sale (13,160,212) (22,967,923) (5,482,625)
Maturities and principal repayments of
securities held to maturity 12,837,780 24,648,691 31,590,326
Maturities and principal repayments of
securities available for sale 5,261,021 12,410,077 12,499,965
Net change in federal funds sold (24,212,240) 10,075,974 (2,400,000)
Net change in loans (11,944,251) (24,090,657) (564,601)
Sales of other real estate owned 45,000 -- 170,000
Acquisition of premises and equipment (866,695) (1,672,117) (1,773,032)
---------- ---------- ----------
Net cash used in investing activities (51,064,385) (25,411,074) (28,304,779)
---------- ---------- ----------
Cash flows from financing activities:
Net change in deposits 30,706,524 22,013,573 21,620,201
Net change in securities sold under
repurchase agreements 11,696,742 2,018,928 6,110,432
Net change in federal funds purchased -- -- (3,000,000)
Purchase of treasury stock (327,132) (630) --
Reissuance of treasury stock 231,720 261,744 274,965
Dividends paid (1,186,557) (1,042,411) (918,869)
---------- ---------- ----------
Net cash provided by financing activities 41,121,297 23,251,204 24,086,729
---------- ---------- ----------
Net (decrease) increase in cash and due from banks (4,538,412) 3,409,916 896,376
Cash and due from banks at beginning of year 21,010,959 17,601,043 16,704,667
---------- ---------- ----------
Cash and due from banks at end of year $16,472,547 $21,010,959 $17,601,043
========== ========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
Supplemental Disclosures:
- ------------------------
1. Cash paid for interest was $9,300,396, $7,767,322 and $7,731,255 in 2000, 1999 and 1998,
respectively.
2. Cash paid for income taxes was $2,165,000, $2,091,123 and $2,278,267 in 2000, 1999 and 1998,
respectively.
3. Real estate acquired through, or deeds in lieu of, foreclosure was $0, $10,359 and $0 in
2000, 1999 and 1998, respectively.
-7-
Notes to Consolidated Financial Statements
1. Significant Accounting Policies
Basis of consolidation
The accompanying consolidated financial statements include the accounts
of Community Bancorp, Inc. (the "Company"), a Massachusetts corporation
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended, and its wholly-owned subsidiary, Community National Bank,
(the "Bank"), a national banking association. The Bank has formed Community
Securities Corporation and Community Benefits Consulting, Inc. as wholly-owned
subsidiaries. All intercompany balances and transactions have been eliminated
in consolidation.
At present, the Company conducts no activities independent of the Bank.
The Bank has ten offices and is engaged in substantially all of the business
operations normally conducted by an independent commercial bank in
Massachusetts. Banking services offered include the acceptance of checking,
savings, and time deposits, and the making of commercial, real estate,
installment and other loans. The Bank also offers official checks, safe
deposit boxes, Internet banking and bill payment services, investment
management and trust services and other customary banking services to its
customers.
Use of estimates
The preparation of financial statements in conformity with accounting
standards generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash and due from banks
Cash and due from banks consists of cash on hand, amounts due from banks and
interest-bearing deposits. Included in cash and due from banks as of
December 31, 2000 and 1999 is approximately $1,179,000 and $7,588,000,
respectively, that is subject to Federal Reserve withdrawal restrictions.
Securities
Debt securities that the Company has the positive intent and ability to hold
to maturity are reported at amortized cost. Securities purchased to be held
for indefinite periods of time and not intended to be held until maturity are
classified as "available for sale" securities. Securities classified as
available for sale are reported at fair value with unrealized gains and losses
excluded from earnings and reported net of taxes in accumulated other
comprehensive income. Securities held for indefinite periods of time include
securities that management may use in conjunction with the Company's asset/
liability management program and that may be sold in response to changes in
interest rates, prepayment risks or other economic factors. When securities
classified as available for sale are sold, the adjusted cost of each specific
security sold is used to calculate gains or losses on sale, which are included
in earnings.
Dividend and interest income, including amortization of premiums and discounts,
is included in earnings for all categories of investment securities. Discounts
and premiums related to debt securities are amortized using a method that
approximates the level-yield method, adjusted for estimated prepayments in
the case of mortgage-backed securities. Realized gains and losses on security
transactions are computed using the specific identification method.
Loans
Loans are stated at the amount of unpaid principal, net of unearned discounts
and unearned net loan origination fees. It is the policy of the Company to
discontinue the accrual of interest on loans when, in the judgment of
management, the ultimate collectibility of principal or interest becomes
doubtful. The accrual of interest income generally is discontinued when a
loan becomes 90 days past due as to principal or interest. When interest
accruals are discontinued, unpaid interest credited to income in the current
year is reversed and interest accrued in prior years is charged to the
allowance for loan losses. Management may elect to continue the accrual
of interest when the estimated net realizable value of collateral is sufficient
to cover the principal balance and accrued interest. Otherwise, interest
income is subsequently recognized only to the extent cash payments are received.
-8-
Interest on loans is accrued and included in income as earned based upon
contractual interest rates applied to outstanding principal balances.
Nonrefundable loan origination fees and related costs are deferred and
amortized as an adjustment to the related loan yield over the contractual
life of the loan. When loans are sold or fully repaid, any unamortized
fees, discounts and costs are recognized in income. Mortgage loans held
for sale are carried at the lower of aggregate cost or fair value. Gains
and losses on sales of mortgages are recognized at the time of sale.
A loan is considered to be impaired when it is probable, based on current
information and events, that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement.
All loans are individually evaluated for impairment, except for smaller
balance homogenous residential and consumer loans which are evaluated in
aggregate, according to the Company's normal loan review process, including
overall credit evaluation, nonaccrual status and payment experience. Loans
identified as impaired are further evaluated to determine the estimated extent
of impairment. Impaired loans are measured based on the present value of
expected future cash flows, discounted at each loan's effective interest
rate, or the fair value of the collateral for certain collateral-dependent
loans. For collateral-dependent loans, the extent of impairment is the
shortfall, if any, between the collateral value, less costs to dispose of
such collateral, and the carrying value of the loan.
The allowance for loan losses is based on management's estimate of the amount
required to reflect the risks in the loan portfolio, based on circumstances
and conditions known or anticipated at each reporting date. The methodology
for assessing the appropriateness of the allowance consists of a review of the
following three key elements:
- The valuation allowance for loans specifically identified as impaired
- The formula allowance for the various loan portfolio classifications
- The unallocated allowance
The valuation allowance reflects specific estimates of potential losses on
individual impaired loans. When each impaired loan is evaluated, if the
difference between the net present value of the loan (or fair value of the
collateral if the loan is collateral-dependent) is lower than the recorded
loan balance, the difference represents the valuation allowance for that loan.
The formula allowance is a percentage-based reflection of historical loss
experience and assigns required allowance allocations by loan classification
based on fixed percentages of all outstanding loan balances and commitments
to extend credit. The formula allowance employs a risk-rating model that
grades loans based on their general characteristics of credit quality and
relative risk. When a loan's credit quality becomes suspect, it is placed
on the Company's internal "watch list" and its allowance allocation is
increased. For the remainder of the loan portfolio, appropriate allowance
levels are estimated based on judgments regarding the type of loan, economic
conditions and trends, potential exposure to loss and other factors.
In addition to the valuation allowance and the formula allowance, there is an
unallocated allowance that recognizes the estimation risks associated with the
valuation and the formula allowance calculations, and that reflects management's
evaluation of various conditions, the effects of which are not directly
measurable in determining the formula and valuation allowances. The unallocated
allowance is adjusted for qualitative factors including, among others, general
economic and business conditions, credit quality trends, loan volumes and
concentrations and specific industry conditions within portfolio segments.
There are inherent uncertainties with respect to determining the adequacy of
the allowance for loan losses. Because of these inherent uncertainties,
actual losses may differ from the amounts reflected in these consolidated
financial statements. Factors considered in evaluating the adequacy of the
allowance includes previous loss experience, current economic conditions and
their effect on borrowers, the performance of individual loans in relation to
contract terms, and the estimated fair values of underlying collateral.
Losses are charged against the allowance when management believes the
collectibility of principal is doubtful.
In accordance with SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities", the Company capitalizes
the rights to service mortgage loans for others and assesses those rights for
impairment based on the fair value of those rights. The loan servicing asset,
included in other assets, represents the estimated present value of the
interest rate differential resulting from the sale of loans with servicing
rights retained. This amount is amortized over the estimated lives of the
underlying loans sold. The loan servicing asset totaled $187,066 and $223,795
at December 31, 2000 and 1999, respectively. At December 31, 2000 and 1999,
the Company was servicing mortgage
-9-
loans for others of approximately $88,944,000 and $96,238,000, respectively.
Amortization of these servicing rights totaled $66,475 and $55,591 for the
years ended December 31, 2000 and 1999, respectively.
Bank premises and equipment
Land, buildings, leasehold improvements and furniture and equipment held for
banking purposes are stated at cost, less accumulated depreciation and
amortization. Depreciation is computed principally on the straight-line
method over the shorter of the estimated useful lives of the assets or the
related lease term. Expenditures for maintenance, repairs and renewals of
minor items are charged to expense as incurred.
Premises and equipment are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Based on its review, the Company does not believe that any
material impairment of its long-lived assets has occurred. Long-lived
assets to be disposed of are reported at the lower of the carrying amount
or fair value less cost to sell.
Securities sold under repurchase agreements
The Company sells securities under open-ended repurchase agreements with
certain customers. The principal balance of the repurchase agreements
changes daily. Specific securities are not sold and securities are not
transferred to the name of the customers. Instead, the customer has an
interest in a portion of the U.S. Government securities held in the Company's
investment portfolio. The Company also sells term repurchase agreements that
generally mature within 365 days from the transaction date.
Income taxes
The Company records income taxes under the liability method. Under this method,
deferred tax assets and liabilities are established for the temporary
differences between the accounting basis and the tax basis of the Company's
assets and liabilities. Deferred taxes are measured using enacted tax rates
that are expected to be in effect when the amounts related to such temporary
differences are realized or settled. The Company's deferred tax asset is
reviewed quarterly and adjustments are recognized in the provision for income
taxes based on management's judgments related to its realizability.
Earnings per share
The Company adopted SFAS No. 128, "Earnings Per Share", effective December
31, 1997. SFAS No. 128 requires the presentation of "basic" earnings per
share, which excludes the effect of dilution, and "diluted" earnings per
share, which includes the effect of dilution. The Company's "basic" and
"diluted" earnings per share computations are identical in 2000, 1999 and
1998, as there are no securities outstanding that are potentially dilutive.
Earnings per share is based on the weighted average number of shares
outstanding during the year.
Common stock split
On April 4, 2000 the Company's Board of Directors authorized a two-for-one
stock split effected in the form of a 100% stock dividend, which was
distributed on April 28, 2000 to stockholders of record as of April 3,
2000. As a result of the stock split, the accompanying consolidated
financial statements reflect an increase in the number of outstanding
shares of common stock and the transfer of the par value of the additional
shares from surplus and undivided profits. All share and per-share amounts
have been restated to reflect the retroactive effect of the stock split.
Comprehensive income
The Company adopted SFAS No. 130, "Reporting Comprehensive Income", effective
January 1, 1998. Components of comprehensive income are net income and all
other non-owner changes in equity. SFAS No. 130 requires that an enterprise
(a) classify items of other comprehensive income by their nature in the
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the statement of financial position.
-10-
Reclassifications
Certain amounts in prior year's financial statements have been reclassified
to be consistent with the current year's presentation. The reclassifications
have no effect on net income.
Recent accounting pronouncements
The Company adopted American Institute of Certified Public Accountants
("AICPA") Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"), effective
January 1, 1999. SOP 98-1 requires computer software costs associated with
internal-use software to be expensed as incurred until certain capitalization
criteria are met. The adoption of SOP 98-1 did not have any material impact
on the Company's financial statements or results of operations.
The Company adopted AICPA Statement of Position 98-5, "Reporting on the Costs
of Start-Up Activities" ("SOP 98-5"), effective January 1, 1999. SOP 98-5
requires all costs associated with pre-opening, pre-operating and
organizational activities to be expensed as incurred. The adoption of
SOP 98-5 did not have any material impact on the Company's financial
statements or results of operations.
In March 2000, the Emerging Issues Task Force reached a consensus on Issue
No. 00-2, "Accounting for Web Site Development Costs," ("EITF Issue No. 00-2")
to be applicable to all Web site development costs incurred for fiscal
quarters beginning after June 30, 2000. The consensus states that for
specific Web site development costs, the accounting for such costs should
be based generally on a model consistent with AICPA SOP 98-1. The adoption
of EITF Issue No. 00-2 did not have any material effect on the Company's
financial statements or results of operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting
and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts)
be recorded on the balance sheet as either an asset or liability measured
at its fair value. The Statement requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge
accounting criteria are met. Special accounting for qualified hedges
allows a derivative's gains and losses to offset related results on the
hedged item in the income statement, and requires that a company must
formally document, designate and assess the effectiveness of the
transactions that receive hedge accounting. SFAS No. 133, as amended by
SFAS No. 137, is effective for fiscal years beginning after June 15, 2000.
The Company has adopted SFAS No. 133 as of January 1, 2001 and there was no
material impact on the Company's financial statements or results of operations
upon adoption.
2. Business segments
The Company has adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information", which established standards for
reporting information about operating segments in annual financial
statements. Operating segments are defined as components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision-maker, or decision making group,
in deciding how to allocate resources and in assessing performance. The
adoption of SFAS No. 131 did not have any material effect on the Company's
primary financial statements or results of operations.
The Company has identified its reportable operating business segment as
"Community Banking". The Company's community banking segment consists of
commercial and retail banking. The community banking segment is managed
as a single strategic unit and derives its revenues from a wide range of
banking services, including investing and lending activities and the
acceptance of demand, savings and time deposits. Nonreportable operating
segments of the Company's operations which do not have similar
characteristics to the community banking operations and do not meet the
thresholds requiring separate disclosure are included in the "Other"
category in the disclosure of business segments below. The nonreportable
segment represents the holding company financial information. (Note 11)
-11-
The accounting policies used in the disclosure of business segments are the
same as those described in the summary of significant accounting policies
(Note 1). The consolidation adjustments reflect certain eliminations of
intersegment revenue, cash and investments in the subsidiary. Reportable
segment-specific information, and the reconciliation to consolidated financial
information, are as follows (dollars are in thousands):
Community Other Adjustments
Banking Other and Eliminations Consolidated
--------- ---------- ----------------- ------------
December 31, 2000
Investment securities $142,552 $ -- $ -- $ 142,552
Net loans 173,217 -- -- 173,217
Total assets 374,868 32,098 (32,098) 374,868
Total deposits 307,656 -- (527) 307,129
Total liabilities 343,628 283 (858) 343,053
Net interest income 15,599 11 -- 15,610
Provision for loan losses -- -- -- --
Total noninterest income 3,488 1,597 (1,597) 3,488
Total noninterest expense 12,061 366 (365) 12,062
Net income 4,527 4,532 (4,527) 4,532
December 31, 1999
Investment securities $128,033 $ -- $ -- $ 128,033
Net loans 161,319 -- -- 161,319
Total assets 327,997 28,558 (28,558) 327,997
Total deposits 277,053 -- (631) 276,422
Total liabilities 300,351 247 (913) 299,685
Net interest income 14,000 11 -- 14,011
Provision for loan losses -- -- -- --
Total noninterest income 3,216 1,420 (1,420) 3,216
Total noninterest expense 11,136 352 (351) 11,137
Net income 3,910 3,915 (3,910) 3,915
December 31, 1998
Investment securities $118,744 $ -- $ -- $ 118,744
Net loans 137,243 -- -- 137,243
Total assets 300,887 25,683 (25,683) 300,887
Total deposits 254,775 -- (366) 254,409
Total liabilities 275,821 218 (617) 275,422
Net interest income 12,978 7 -- 12,985
Provision for loan losses -- -- -- --
Total noninterest income 3,200 1,284 (1,284) 3,200
Total noninterest expense 10,187 343 (333) 10,197
Net income 3,808 3,806 (3,808) 3,806
-12-
3. Securities
The amortized cost and fair values of securities at December 31, 2000 and
1999 were as follows:
2000
--------------------------------------------------------
Gross Gross
Securities Held Amortized Unrealized Unrealized Fair
to Maturity Cost Gains Losses Value
--------------- --------- ---------- ---------- -----
U.S. Government obligations $ -- $ -- $ -- $ --
U.S. Government agencies
and corporations 41,315,639 15,009 199,275 41,131,373
Obligations of states and
political subdivisions 16,273,263 244,910 24,242 16,493,931
Mortgage-backed securities 34,852,620 60,814 235,925 34,677,509
------------ ---------- ---------- ----------
$ 92,441,522 $ 320,733 $ 459,442 $ 92,302,813
============ ========== ========== ===========
Gross Gross
Securities Held Amortized Unrealized Unrealized Fair
Available for Sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
U.S. Government obligations $ -- $ -- $ -- $ --
U.S. Government agencies
and corporations 29,871,868 309,898 4,904 30,176,862
Mortgage-backed securities 18,834,380 89,566 260,362 18,663,584
Other securities 1,269,756 -- -- 1,269,756
------------ ---------- ---------- ----------
$ 49,976,004 $ 399,464 $ 265,266 $ 50,110,202
============ ========== ========== ===========
1999
--------------------------------------------------------
Gross Gross
Securities Held Amortized Unrealized Unrealized Fair
to Maturity Cost Gains Losses Value
--------------- --------- ---------- ---------- -----
U.S. Government obligations $ -- $ -- $ -- $ --
U.S. Government agencies
and corporations 34,464,097 -- 814,076 33,650,020
Obligations of states and
political subdivisions 12,579,893 5,623 322,109 12,263,408
Mortgage-backed securities 39,181,027 20 929,924 38,251,123
------------ ---------- ---------- ----------
$ 86,225,017 $ 5,643 $ 2,066,109 $ 84,164,551
============ ========== ========== ===========
Gross Gross
Securities Held Amortized Unrealized Unrealized Fair
Available for Sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
U.S. Government obligations $ 3,997,985 $ 11,395 $ -- $ 4,009,380
U.S. Government agencies
and corporations 25,805,725 138 191,819 25,614,044
Mortgage-backed securities 11,158,381 48,651 247,747 10,959,285
Other securities 1,225,356 -- -- 1,225,356
------------ ---------- ---------- -----------
$ 42,187,447 $ 60,184 $ 439,566 $ 41,808,065
============ ========== ========== ===========
-13-
The amortized cost and fair value of securities at December 31, 2000 by
contractual maturity are shown in the following table. Actual maturities
may differ from contractual maturities because issuers may have the right
to call or prepay obligations with or without call or prepayment penalties.
Securities Held to Maturity Securities Available for Sale
--------------------------- -----------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- ----- --------- -----
Within one year $ 3,160,235 $ 3,175,220 $11,984,710 $11,995,191
One to five years 34,464,327 34,265,673 17,887,158 18,181,671
Five to ten years 7,621,751 7,610,086 -- --
Ten to fifteen years 12,342,589 12,574,325 -- --
Mortgage-backed securities 34,852,620 34,677,509 18,834,380 18,663,584
Other securities -- -- 1,269,756 1,269,756
----------- ---------- ---------- ----------
$92,441,522 $92,302,813 $49,976,004 $50,110,202
========== =========== ========== ==========
Securities with a book value of $53,387,000 and $38,587,000 at December 31,
2000 and 1999, respectively, were pledged to secure public funds on deposit
and for other purposes. There were no sales of securities in 2000 or 1999.
4. Loans
The composition of the loan portfolio at December 31, 2000 and 1999 was
as follows:
2000 1999
---- ----
Commercial and industrial $ 24,206,232 $ 23,418,982
Real estate - residential 76,945,192 66,788,010
Real estate - commercial 57,869,786 58,484,839
Real estate - residential
construction 2,076,838 1,454,210
Loans to individuals 14,165,381 13,544,009
Other 765,836 670,416
----------- -----------
Total loans $176,029,265 $164,360,466
============ ===========
The Company's lending activities are conducted primarily in central
Massachusetts, where commercial loans, commercial real estate loans, single
family and multifamily residential loans and a variety of consumer loans
are originated. The Company generally requires collateral when extending
credit and, with respect to loans secured by real estate, Company policy
requires appropriate appraisals and repayment sources. The ability and
willingness of the Company's borrowers to honor their repayment commitments
are impacted by many factors, including the level of overall economic
activity within the borrowers' geographic areas.
A summary of changes in the allowance for loan losses for the years ended
December 31, 2000, 1999 and 1998 follows:
2000 1999 1998
------ ------ ------
Balance at beginning of year $3,041,873 $2,981,012 $3,215,559
Provision for possible losses -- -- --
Charge-offs (470,934) (112,538) (303,525)
Recoveries 241,453 173,399 68,978
---------- --------- ---------
Balance at end of year $2,812,392 $3,041,873 $2,981,012
========= ========= =========
Total impaired loans at December 31, 2000 and 1999 that required a related
allowance were $143,000 and $91,695, respectively, and the allowance
allocated to such loans was $30,000 and $41,250 respectively. In addition,
at December
-14-
31, 2000 and 1999, the Company had impaired loans of $415,354 and $592,954,
respectively, that did not require a related allowance. Interest payments
on impaired loans are recorded as principal reductions if the remaining
loan balance is not expected to be repaid in full. If full collection of
the remaining loan balance is expected, interest payments are recognized
as interest income on a cash basis. Impaired loans averaged $685,623 and
$858,968 during 2000 and 1999, respectively. The Company recorded interest
income on impaired loans of $37,370, $100,081 and $82,456 during 2000, 1999
and 1998, respectively.
At December 31, 2000 and 1999, accruing loans 90 days or more past due
totaled $1,940 and $0, respectively, and nonaccruing loans totaled $558,354
and $684,649, respectively. Troubled debt restructurings were $57,611 and
$0 at December 31, 2000 and 1999, respectively, and were included in impaired
loans. The reduction of interest income associated with nonaccrual and
restructured loans for the years ended December 31, 2000, 1999 and 1998 was as
follows:
2000 1999 1998
---- ---- ----
Interest income per original terms $ 83,654 $ 154,141 $ 146,326
Income recognized 37,370 100,081 82,456
-------- -------- --------
Foregone interest income $ 46,284 $ 54,060 $ 63,870
======== ======== ========
5. Bank Premises and Equipment
A summary of bank premises and equipment at December 31, 2000 and 1999 follows:
Estimated
2000 1999 Useful Life
---------- ---------- -----------
Land $ 1,069 062 $ 1 069 062
Buildings 5,008,907 4,832,435 30 - 40 years
Land and leasehold improvements 664,901 634,377 1 - 15 years
Furniture and equipment 3,723,277 4,057,775 3 - 10 years
---------- -----------
10,466,147 10,593,649
Less accumulated depreciation and
amortization 4,231,506 4,250,758
---------- -----------
$ 6,234,641 $ 6,342,891
========== ===========
Total depreciation and amortization expense for the years ended December 31,
2000, 1999 and 1998 was $974,945, $906,015 and $834,209, respectively.
6. Deposits
A summary of deposits at December 31, 2000 and 1999 follows:
2000 1999
---- ----
Demand deposits $ 75,969,408 $ 68,082,062
Money-market deposits 34,688,800 32,523,219
NOW and FlexValue deposits 43,511,182 32,372,157
Cash management investment deposits 27,839,064 17,444,396
Savings deposit 38,470,706 36,672,396
Time certificates of deposit in
denominations of $100,000 or more 30,611,400 25,347,341
Other time deposits 56,038,272 63,980,737
----------- -----------
$307,128,832 $276,422,308
=========== ============
-15-
The following is a summary of original maturities of time deposits as of
December 31, 2000:
<CAPTION
2001 $ 69,794,592
2002 7,170,541
2003 3,750,479
2004 1,301,163
2005 4,632,897
-----------
$ 86,649,672
============
7. Income Taxes
The components of income tax expense for the years ended December 31, 2000,
1999 and 1998 are as follows:
2000 1999 1998
---- ---- ----
Current:
Federal $ 2,050,453 $ 1,644,242 $ 1,713,257
State 479,375 438,344 475,906
---------- ---------- ----------
Total current 2,529,828 2,082,586 2,189,163
---------- ---------- ----------
Deferred:
Federal (19,067) 68,392 (10,307)
State (6,579) 25,599 3,616
---------- ---------- ----------
Total (prepaid) deferred (25,646) 91,991 (6,691)
---------- ---------- ----------
Total $ 2,504,182 $ 2,174,577 $ 2,182,472
========== ========== ==========
The difference between the income tax provision computed by applying the
statutory federal income tax rate of 34% to income before income taxes and
the actual income tax provision is summarized below:
2000 1999 1998
---- ---- ----
Income tax expense
at statutory rates $ 2,392,342 $ 2,070,524 $ 2,035,999
State income taxes, net of
federal income tax benefit 312,045 304,883 316,485
Tax-exempt interest (209,009) (206,274) (175,993)
Other, net 8,804 5,444 5,981
---------- ---------- ----------
$ 2,504,182 $ 2,174,577 $ 2,182,472
========== ========== ==========
The Company has recorded in other assets a net deferred tax asset of
$553,328. Realization is dependent on the generation of sufficient
taxable income in future years. Although realization is not assured,
management believes it is more likely than not that the full amount of
the net deferred tax asset will be realized. However, the amount
realizable could be reduced if estimates of future taxable income are
reduced.
-16-
At December 31, 2000 and 1999, the Company's net deferred tax asset, included
in other assets in the accompanying consolidated balance sheets, consisted of
the following components:
2000 1999
---- ----
Gross deferred tax asset:
Provision for possible loan losses $ 874,255 $ 893,647
Employee benefits and other
compensation arrangements 327,280 323,512
Other 19,883 14,197
--------- ---------
1,221,418 1,231,356
Gross deferred tax liability:
Accelerated tax depreciation (133,516) (181,020)
Other (534,574) (312,446)
--------- ---------
(668,090) (493,466)
--------- ---------
Net deferred tax asset $ 553,328 $ 737,890
========= =========
8. Employee Benefits
The Company has a defined benefit pension plan covering all eligible
employees. The benefits are based on years of service and the employees'
compensation as defined in the Plan agreement. The Company's funding
policy is to make annual contributions to the Plan equal to at least the
minimum amount required for actuarial purposes. Contributions are intended
to provide not only for benefits attributed to service to date, but also
for those to be earned in the future.
The following table sets forth the Plan's funded status and amounts
recognized in the Company's consolidated balance sheets at December 31,
2000 and 1999:
2000 1999
---- ----
Change in benefit obligation:
Benefit obligation at beginning of year $(3,315,486) $(3,751,742)
Service cost (230,182) (249,962)
Interest cost (251,629) (233,992)
Actuarial (loss) gain (265,815) 636,872
Benefits paid 230,725 283,338
--------- ---------
Benefit obligation at end of year (3,832,387) (3,315,486)
--------- ---------
Change in plan assets:
Fair value of assets at beginning of year 3,317,895 2,998,392
Actual return on plan assets 78,121 194,640
Employer contributions 312,508 408,201
Benefits paid (230,725) (283,338)
--------- ---------
Fair value of plan assets at end of year 3,477,799 3,317,895
--------- ---------
Funded status (354,588) 2,409
Unrecognized net loss 745,348 288,507
Unrecognized prior service cost 8,276 9,656
Unrecognized net asset (26,861) (35,814)
--------- ---------
Prepaid benefit cost $ 372,175 $ 264,758
========= =========
-17-
The following weighted-average assumptions were used in accounting for the
Company's pension plan for the years ended December 31, 2000, 1999 and 1998:
2000 1999 1998
---- ---- ----
Discount rate 7.25% 7.50% 6.50%
Expected return on plan assets 8.00% 8.00% 8.00%
Rate of compensation increase 4.00% 4.00% 4.00%
Net periodic benefit cost for the years ended December 31, 2000, 1999 and
1998 included the following components:
2000 1999 1998
---- ---- ----
Service cost $ 230,182 $ 249,962 $ 247,666
Interest cost 251,629 233,992 226,980
Expected return on plan assets (272,190) (244,119) (228,798)
Amortization of prior service cost 1,380 1,380 1,380
Amortization of transition obligation (8,953) (8,953) (8,954)
Recognized net loss 3,043 26,977 --
--------- --------- ---------
Net periodic benefit cost $ 205,091 $ 259,239 $ 238,274
========= ========= =========
The Company has an Employee Stock Ownership Plan ("ESOP") that enables eligible
employees to own common stock. Annual cash contributions of $70,000 were made
to the ESOP in 2000, 1999 and 1998.
The Company has a 401(k) Plan that covers all eligible employees. The Company
matches a percentage of each participant's annual contribution to the plan as
determined by the Board of Directors each year. Compensation expense recorded
in 2000, 1999 and 1998 related to this plan was approximately $81,400 $85,800
and $81,400, respectively.
The Company has a post-retirement medical plan covering all eligible employees,
for which an accrued liability of $30,775 and $18,811 was recorded at December
31, 2000 and 1999, respectively. The net periodic benefit cost of this plan was
$13,890 in 2000 and $12,397 in 1999.
9. Commitments
The Company leases branch offices and equipment under noncancelable agreements
expiring at various dates through 2008 that require various minimum annual
rentals. Rental expense totaled approximately $262,000, $246,000 and $185,000,
for 2000, 1999 and 1998, respectively. The total future minimum rental
commitments at December 31, 2000 aggregate $1,198,346. Rental commitments
for each of the next five fiscal years and thereafter are as follows:
2001 $252,654
2002 235,220
2003 195,872
2004 166,400
2005 126,800
Thereafter 221,400
The Company is not party to any legal proceedings. The Bank is involved in
various routine legal actions arising in the normal course of business, none
of which is believed by management, based on its knowledge of the pertinent
facts and opinions of legal counsel, to be material to the financial
condition or operations of the Company.
-18-
10. Loans to Related Parties
The schedule below discloses indebtedness of certain parties related to
the Company:
Balance Balance
January 1 New Loans Repayments December 31
---------- --------- ---------- -----------
1999 $ 5,540,830 $2,039,431 $ 1,706,514 $ 5,873,747
2000 $ 5,873,747 $2,906,641 $ 1,262,575 $ 7,517,813
These loans were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with unrelated persons and do not involve more than normal
risk of collectibility.
11. Condensed Financial Information of Community Bancorp, Inc.
The following tables disclose certain parent-company-only financial
information at December 31, 2000 and 1999, and for each of the three
years in the period ended December 31, 2000:
Balance Sheets
2000 1999
---- ----
Assets:
Cash and cash equivalents $ 527,417 $ 631,460
Investment in subsidiary, at equity 31,239,102 27,645,540
Other assets 331,209 281,306
---------- ----------
Total assets $ 32,097,728 $ 28,558,306
=========== ==========
Liabilities and stockholders' equity:
Other liabilities $ 282,857 $ 247,035
---------- ----------
Total liabilities 282,857 247,035
---------- ----------
Stockholders' equity:
Preferred stock, $2.50 par value, 100,000
shares authorized, none issued or outstanding -- --
Common stock, $2.50 par value, 12,000,000 shares
authorized, 6,398,436 shares issued,
5,914,441 shares outstanding, (5,921,824 shares
outstanding at December 31, 1999) 15,996,090 7,998,045
Surplus 101,378 638,619
Undivided profits 18,052,893 22,116,681
Treasury stock at cost, 483,995 shares
(476,612 shares at December 31, 1999) (2,414,762) (2,217,972)
Accumulated other comprehensive income (loss) 79,272 (224,102)
---------- ----------
Total stockholders' equity 31,814,871 28,311,271
---------- ----------
Total liabilities and stockholders' equity $32,097,728 $28,558,306
=========== ==========
-19-
Statements of Income
Years ended December 31,
------------------------------------------
2000 1999 1998
---- ---- ----
Income:
Dividends from subsidiary bank $ 1,236,481 $ 1,073,397 $ 949,690
Other income 371,680 357,592 341,027
----------- ----------- ----------
Total income 1,608,161 1,430,989 1,290,717
----------- ----------- ----------
Expenses:
Other 366,231 352,237 343,499
----------- ----------- ----------
Total expenses 366,231 352,237 343,499
----------- ----------- ----------
Income before undistributed net income of
subsidiary bank 1,241,930 1,078,752 947,218
Equity in undistributed net income of
subsidiary bank 3,290,189 2,836,465 2,858,543
----------- ----------- ----------
Net income $ 4,532,119 $ 3,915,217 $ 3,805,761
=========== =========== ===========
Statements of Cash Flows
Years ended December 31,
-----------------------------------------
2000 1999 1998
---- ---- ----
Cash flows from operating activities:
Net income $ 4,532,119 $ 3,915,217 $ 3,805,761
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed net income
of subsidiary bank (3,290,189) (2,836,465) (2,858,543)
Increase in other assets (49,903) (30,996) (30,821)
Increase in other liabilities 35,823 29,356 32,538
---------- ---------- ----------
Total adjustments (3,304,269) (2,838,105) (2,856,826)
---------- ---------- ----------
Net cash provided by operating activities 1,227,850 1,077,112 948,935
---------- ---------- ----------
Cash flows from financing activities:
Purchase of treasury stock (327,132) (630) --
Reissuance of treasury stock 231,720 261,744 274,965
Dividends declared (1,236,481) (1,073,397) (949,690)
---------- ---------- ----------
Net cash used in financing activities (1,331,893) (812,283) (674,725)
---------- ---------- ----------
Net (decrease) increase in cash
and cash equivalents (104,043) 264,829 274,210
Cash and cash equivalents at beginning of year 631,460 366,631 96,421
---------- ---------- ----------
Cash and cash equivalents at end of year $ 527,417 $ 631,460 $ 366,631
========== ========== ===========
Cash and cash equivalents consist of a money market demand deposit account
on deposit with the subsidiary bank.
The approval of the Comptroller of the Currency is required for a national
bank to pay dividends if the total of all dividends declared in any calendar
year exceeds the bank's net profits (as defined) for that year combined with
its retained net profits for the preceding two calendar years. During 2001,
Community National Bank can, under this formula, declare dividends to
Community Bancorp, Inc. of approximately $6,127,000, plus an additional
amount equal to the Bank's net profit for 2001, up to the date of any such
dividend declaration, without the approval of the Comptroller of the Currency.
-20-
12. Financial Instruments With Off-Balance-Sheet Risk
The Company is party to financial instruments with off-balance-sheet risk in
the normal course of business. These financial instruments primarily consist
of commitments to extend credit and standby letters of credit. Loan commitments
are made to accommodate the financial needs of the Company's customers. Standby
letters of credit commit the Company to make payments on behalf of customers
when certain specified future events occur. They are primarily issued to
guarantee other customer obligations. Both arrangements have credit risk
essentially the same as that involved in extending loans to customers and
are subject to the Company's normal credit policies. Collateral typically
is obtained based on management's credit assessment of the customer. Loan
commitments and standby letters of credit usually have fixed expiration
dates or other termination clauses. Some commitments and letters of credit
expire without being drawn upon. Accordingly, the total commitment amounts
do not necessarily represent future cash requirements of the Company.
The Company's maximum exposure to credit loss for loan commitments (unfunded
loans and unused lines of credit) and standby letters of credit outstanding
at December 31, 2000 and 1999 was as follows:
2000 1999
---- ----
Commitments to extend credit:
Fixed-rate (6.99% to 10.50%) $ 504,621 $ 1,378,747
Adjustable rate 46,344,615 40,544,958
Standby letters of credit $ 469,287 $ 246,693
=========== ===========
Commitments to extend credit on a fixed-rate basis expose the Company to a
certain amount of interest rate risk if market rates of interest
substantially increase during the commitment period.
The Company has also sold mortgage loans with recourse in the event of the
default of the borrower. Loans sold with recourse are accounted for as sales
in the accompanying financial statements, with provisions made for anticipated
losses under the recourse provisions. At December 31, 2000 and 1999, the
outstanding balance of such mortgages totaled approximately $47,818 and
$194,000, respectively.
Fees associated with the Company's off-balance-sheet financial instruments are
minimal; therefore, the fair value of off-balance-sheet financial instruments
is not material.
13. Regulatory Capital
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and
possibly additional discretionary, actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices.
The Bank's capital amounts and classifications are also subject to
qualitative judgments by the regulators about components, risk weightings
and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier 1 capital (as defined in
the regulations) to risk-weighted assets (as defined), and of Tier 1 capital
(as defined) to average assets (as defined). Management believes, as of
December 31, 2000, that the Company and the Bank met all capital adequacy
requirements to which they are subject.
As of December 31, 2000 and 1999, the most recent notification from the Office
of the Comptroller of the Currency categorized the Bank as "well capitalized"
under the regulatory framework for prompt corrective action. To be
categorized as "well capitalized", the Bank must maintain total risk-based,
Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table.
There are no conditions or events since that notification that management
believes have changed the Bank's category.
The Company's and the Bank's actual capital amounts and ratios at December 31,
2000 and 1999 are presented in the following table (dollars are in thousands):
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
--------------- ----------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
December 31, 2000:
Company (consolidated):
Total capital
(to risk-weighted >
assets) $34,213 17.16% $15,947 - 8.00% N/A N/A
Tier 1 capital
(to risk-weighted >
assets) 31,717 15.91% 7,974 - 4.00% N/A N/A
Tier 1 capital >
(to average assets) 31,717 9.12% 13,915 - 4.00% N/A N/A
Bank:
Total capital
(to risk-weighted > >
assets) 33,637 16.87% 15,947 - 8.00% $19,934 - 10.00%
Tier 1 capital
(to risk-weighted > >
assets) 31,141 15.62% 7,974 - 4.00% 11,960 - 6.00%
Tier 1 capital > >
(to average assets) 31,141 8.95% 13,915 - 4.00% 17,394 - 5.00%
December 31, 1999:
Company (consolidated):
Total capital
(to risk-weighted >
assets) $30,815 16.80% $14,676 - 8.00% N/A N/A
Tier 1 capital
(to risk-weighted >
assets) 28,513 15.54% 7,338 - 4.00% N/A N/A
Tier 1 capital >
(to average assets) 28,513 9.07% 12,571 - 4.00% N/A N/A
Bank:
Total capital
(to risk-weighted > >
assets) 30,157 16.43% 14,676 - 8.00% $18,345 - 10.00%
Tier 1 capital
(to risk-weighted > >
assets) 27,847 15.18% 7,338 - 4.00% 11,007 - 6.00%
Tier 1 capital > >
(to average assets) 27,847 8.86% 12,571 - 4.00% 15,713 - 5.00%
-22-
14. Disclosures about Fair Value of Financial Instruments
In December 1991, the FASB issued SFAS No. 107, "Disclosures About Fair Value
of Financial Instruments". This statement requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. In that regard, the derived fair
value estimates cannot be substantiated by comparison to independent markets
and, in many cases, could not be realized in immediate settlement of the
instrument. SFAS No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying
value of the Company. The following methods and assumptions were used by
the Company in estimating its fair value disclosures for financial instruments:
Cash and due from banks and federal funds sold: The carrying amounts reported
in the balance sheet for cash and due from banks and federal funds sold
approximate those assets' fair values.
Securities (including mortgage-backed securities, securities held to maturity
and securities available for sale): Fair values for securities are based on
quoted market prices, where available. If quoted market prices are not
available, fair values are based on quoted market prices of comparable
instruments.
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
values. The fair values for certain one-to-four family residential
mortgages are based on quoted market prices of similar loans sold in
conjunction with securitization transactions, adjusted for differences
in loan characteristics. The fair values for credit card loans and other
consumer loans are based on carrying values, as the loans reprice
frequently at current market rates. The fair values for other loans
(e.g., commercial real estate and rental property mortgage loans, and
commercial and industrial loans) are estimated using discounted cash
flow analysis, using interest rates currently being offered for loans
with similar terms to borrowers of similar credit quality. The carrying
amount of accrued interest receivable approximates its fair value.
Off-balance-sheet instruments: The fair value of lending commitments discussed
in Note 12 is not considered material nor has it been reflected in the
estimation of the fair value of the related loans.
Deposit liabilities: The fair values disclosed for demand deposits (e.g.,
interest and noninterest checking, passbook savings and certain types of
money market accounts) are, by definition, equal to the amount payable on
demand at the reporting date (i.e., their carrying amounts). The carrying
amounts for variable-rate, fixed-term money market accounts and certificates
of deposit approximate their fair values at the reporting date. Fair values
for fixed-rate certificates of deposit are estimated using a discounted cash
flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly maturities on time
deposits.
Short-term borrowings: The carrying amounts of federal funds purchased,
borrowings under repurchase agreements and other short-term borrowings
approximate their fair values.
Commitments to extend credit/sell loans: The fair value of commitments is
estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the present
creditworthiness of customers. For fixed-rate loan commitments and
obligations to deliver fixed-rate loans, fair value also considers the
difference between committed rates and current levels of interest rates.
Values not determined: SFAS No. 107 excludes certain financial instruments
from its disclosure requirements, including real estate included in banking
premises and equipment, the intangible value of the Bank's portfolio of loans
serviced (both for itself and for others) and related servicing network and
the intangible value inherent in the Bank's deposit relationships (i.e. core
deposits) among others. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Bank.
-23-
The carrying amount and estimated fair values of the Bank's financial
instruments at December 31, 2000 and 1999 are as follows:
2000
-----------------------------
Carrying Estimated
Amount Fair Value
------------ -----------
Financial instrument assets:
Cash and due from banks $ 16,472,547 $ 16,472,547
Federal funds sold 31,136,266 31,136,266
Securities 142,551,724 142,413,015
Loans, including held for sale, net 173,512,615 176,915,858
Financial instrument liabilities:
Deposits 307,128,832 307,295,190
Short-term borrowings 33,463,166 33,463,166
1999
-----------------------------
Carrying Estimated
Amount Fair Value
------------ -----------
Financial instrument assets:
Cash and due from banks $ 21,010,959 $ 21,010,959
Federal funds sold 6,924,026 6,924,026
Securities 128,033,082 125,972,616
Loans, including held for sale, net 161,651,279 163,282,691
Financial instrument liabilities:
Deposits 276,422,308 276,851,881
Short-term borrowings 21,766,424 21,766,424
-24-
Report of Independent Public Accountants
[The following report appears on Arthur Andersen LLP letterhead]
Report of Independent Public Accountants
To the Board of Directors and Stockholders
of Community Bancorp, Inc.:
We have audited the accompanying consolidated balance sheets of Community
Bancorp, Inc. (a Massachusetts corporation) and subsidiary as of December 31,
2000 and 1999, and the related consolidated statements of income,
comprehensive income, stockholders' equity and cash flows for the three
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Community Bancorp,
Inc. and subsidiary as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for the three years then ended, in conformity
with accounting principals generally accepted in the United States.
/s/ Arthur Andersen LLP
Boston, Massachusetts
January 18, 2001
-25-
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Summary
The Company recorded net income of $4,532,119 for the year ended December 31,
2000, representing an increase of $616,902 or 15.8% over $3,915,217 recorded in
1999. Earnings per share of $.77 for the current year compared to $.66 for the
year ended December 31, 1999. The improvement in net income resulted primarily
from increases in net interest income and noninterest income, partially offset
by an increase in noninterest expense.
Deposits of $307,128,832 at December 31, 2000 increased by $30,706,524 or 11.1%
from $276,422,308 at December 31, 1999. The increase occurred in both interest
bearing and noninterest bearing deposit categories.
Loans of $176,029,265 at December 31, 2000 increased by $11,668,799 or 7.1% from
$164,360,466 at December 31, 1999. The increase took place primarily in the
residential mortgage and installment loan categories. Noncurrent loans
(nonaccrual loans, troubled debt restructurings and loans 90 days or more past
due but still accruing) totaled $560,294 and $684,649 at December 31, 2000 and
1999, respectively.
Assets of $374,867,511 at December 31, 2000 represented a $46,870,936 or 14.3%
increase over $327,996,575 at December 31, 1999.
2000 Compared to 1999
Interest income for the year ended December 31, 2000 was $24,964,665,
representing an increase of $3,123,940 or 14.3% over $21,840,725 for the year
ended December 31, 1999, primarily due to a $33,309,935 or 11.5% increase in
average earning assets, and higher average interest rates, during 2000. The
weighted average taxable equivalent yield on net earning assets was 7.82% and
7.61% in 2000 and 1999, respectively. Interest expense of $9,354,592 in 2000
represented an increase of $1,524,924 or 19.5% from $7,829,668 in 1999,
primarily due to a $23,599,941 or 10.4% increase in average interest bearing
liabilities, and higher average interest rates, during 2000. The weighted
average cost of interest bearing liabilities was 3.75% in 2000 and 3.46% in
1999. Net interest income for 2000 was $15,610,073, representing an increase of
$1,590,016 or 11.4% compared to $14,011,057 recorded in 1999.
Noninterest income for the year ended December 31, 2000 was $3,488,045,
representing an increase of $272,299 or 8.5% from $3,215,746 in 1999. This
increase resulted primarily from increases in merchant credit card processing
assessments, service charges and gains on sales of loans, partially offset by a
reduction in other charges, commissions and fees.
Noninterest expense for the year ended December 31, 2000 of $12,061,817
represented an increase of $924,808 or 8.3% from $11,137,009 recorded during
1999. This increase was the result of increases in salaries and employee
benefits, data processing and ATM network, occupancy, credit card processing and
other expense, partially offset by reductions in printing, stationery and
supplies, professional fees and marketing and advertising expense. Many of the
non-inflationary increases in noninterest expense were the result of costs
associated with the operation of two new Community National Bank offices opened
during the second quarter of 1999, the establishment by the Bank of an
Investment Management and Trust Department during the second quarter of 2000,
and the continued investment in technology to enhance customer service and
product delivery systems.
There was no provision for loan losses in 2000 or 1999, reflecting management's
continuing evaluation of the adequacy of the allowance for loan losses and its
belief that the allowance is adequate. Management will continue its ongoing
assessment of the adequacy of the allowance for loan losses during 2001 and may
adjust the provision for loan losses if necessary.
Income tax expense of $2,504,182 for the year ended December 31, 2000 compared
to $2,174,577 for 1999, resulting from an increase in taxable income during the
current period. The Company's effective tax rate declined slightly to 35.6% in
2000 from 35.7% in 1999 due to favorable tax rates on certain investment income.
Net income of $4,532,119 for the year ended December 31, 2000 represented an
increase of $616,902 or 15.8% over $3,915,217 recorded in 1999. Earnings per
share of $.77 in 2000 represented an increase of $.11 from $.66 in 1999.
-26-
1999 Compared to 1998
Interest income for the year ended December 31, 1999 was $21,840,725,
representing an increase of $1,180,942 or 5.7% over $20,659,783 for the year
ended December 31, 1998, primarily due to a $22,224,584 or 8.3% increase in
average earning assets, partially offset by lower average interest rates, during
1999. The weighted average taxable equivalent yield on net earning assets was
7.61% and 7.81% in 1999 and 1998, respectively. Interest expense of $7,829,668
in 1999 represented an increase of $154,556 or 2.0% from $7,675,112 in 1998,
primarily due to a $17,199,159 or 8.2% increase in average interest bearing
liabilities, partially offset by lower average interest rates, during 1999. The
weighted average cost of interest bearing liabilities was 3.46% in 1999 and
3.67% in 1998. Net interest income for 1999 was $14,011,057, representing an
increase of $1,026,386 or 7.9% compared to $12,984,671 recorded in 1998.
Noninterest income for the year ended December 31, 1999 was $3,215,746,
representing an increase of $15,259 or .5% from $3,200,487 in 1998. This
increase resulted primarily from increases in merchant credit card processing
assessments and other charges, commissions and fees, much of which was offset by
a reduction in gains on sales of loans. The decrease in gains on sales of loans
resulted from a significant reduction in the volume of residential mortgages
originated for sale in the secondary market during 1999 as compared to 1998.
Noninterest expense for the year ended December 31, 1999 of $11,137,009
represented an increase of $940,084 or 9.2% from $10,196,925 recorded during
1998. This increase was the result of increases in all primary noninterest
expense categories.
There was no provision for loan losses in 1999 or 1998, reflecting management's
continuing evaluation of the adequacy of the allowance for loan losses and its
belief that the allowance is adequate.
Income tax expense of $2,174,577 for the year ended December 31, 1999 compared
to $2,182,472 for 1998, resulting from an increase in nontaxable income and
decrease in taxable income during the current period. The Company's effective
tax rate declined to 35.7% in 1999 from 36.4% in 1998 due to favorable tax rates
on certain investment income.
Net income of $3,915,217 for the year ended December 31, 1999 represented an
increase of $109,456 or 2.9% over $3,805,761 recorded in 1998. Earnings per
share of $.66 in 1999 represented an increase of $.01 from $.65 in 1998.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed by management to
be adequate to absorb inherent losses in the loan portfolio, including
commitments to extend credit (i.e. lines of credit). The allowance is charged
when management determines that the repayment of the principal on a loan is in
doubt. Subsequent recoveries, if any, are credited to the allowance. The
allowance is maintained at an adequate level through the provision for loan
losses, which is a charge to operating income. At December 31, 2000 the
allowance was $2,812,392, representing 1.6% of total loans, compared to
$3,041,873, representing 1.9% of total loans at December 31, 1999.
Securities
The Company's securities portfolio consists primarily of obligations of the U.S.
Treasury, U.S. Government sponsored agencies, mortgage-backed securities and
obligations of various municipalities. These assets are used in part to secure
public deposits and as collateral for repurchase agreements. Total securities
were $142,551,724 at December 31, 2000, representing an increase of $14,518,642
or 11.3% from $128,033,082 at December 31, 1999. Total securities averaged
$127.6 million for 2000, representing an increase of $8.4 million or 7.0% over
$119.2 million for 1999. All mortgage-backed securities in the Company's
securities portfolio have been issued by U.S. Government sponsored agencies.
Management believes no other-than-temporary impairment has occurred with regard
to any security in the securities portfolio. There were no sales of securities
during 2000.
-27-
Liquidity and Capital Resources
The Company's principal sources of liquidity are customer deposits, amortization
and pay-offs of loan principal and the amortization and maturities of
securities. These sources provide funds for loan originations, the purchase of
securities and other activities. Deposits are considered a relatively stable
source of funds. At December 31, 2000 and 1999, deposits were $307.1 million
and $276.4 million, respectively. Management anticipates that deposits will
increase moderately during 2001.
Of the Company's $142.6 million in securities at December 31, 2000, $15.2
million or 10.6% mature within one year. As a nationally chartered member of
the Federal Reserve System, the Bank has the ability to borrow funds from the
Federal Reserve Bank of Boston by pledging certain of its investment securities
as collateral. Also, the Bank is a member of the Federal Home Loan Bank of
Boston which provides additional borrowing opportunities. There were no
borrowings from the Federal Home Loan Bank of Boston at December 31, 2000 or
1999.
Bank regulatory authorities have established a capital measurement tool called
Tier 1 leverage capital. A 4.00% ratio of Tier 1 leverage capital to assets now
constitutes the minimum capital standard for most banking organizations. At
December 31, 2000 and 1999, the Company's Tier 1 leverage capital ratio was
8.46% and 8.69%, respectively. Regulatory authorities have also implemented
risk-based capital guidelines requiring a minimum ratio of Tier 1 capital to
risk-weighted assets of 4.00% and a minimum ratio of total capital to risk-
weighted assets of 8.00%. At December 31, 2000, the Company's Tier 1 and total
risk-based capital ratios were 15.91% and 17.16%, respectively. At December 31,
1999, the Company's Tier 1 and total risk-based capital ratios were 15.54% and
16.80%, respectively. The Bank is categorized as "well capitalized" under the
Federal Deposit Insurance Corporation Improvement Act of 1991 (F.D.I.C.I.A.).
Effective April 28, 2000, the Company's Board of Directors approved a two-for-
one stock split of the Company's common stock, par value $2.50, effected in the
form of a 100% stock dividend.
Asset/Liability Management and Interest Rate Risk
The Company has an Asset/Liability Management Committee which oversees all
asset/liability management activities. The committee establishes general
guidelines each year and meets regularly to review the Company's operating
results, to measure and monitor interest rate risk and to make strategic changes
when necessary. It is the Company's general policy to reasonably match the rate
sensitivity of its assets and liabilities in an effort to prudently manage
interest rate risk. A common benchmark of this sensitivity is the one year gap
position, which is a reflection of the difference between the speed and
magnitude of rate changes of interest rate sensitive liabilities as compared
with the Bank's ability to adjust the rates of its interest rate sensitive
assets in response to such changes. The Company's positive one year cumulative
gap position at December 31, 2000, which represents the excess of repricing
assets versus repricing liabilities, was 2.11% expressed as a percentage of
total assets.
Year 2000
As of December 31, 2000, the Company had experienced no Year 2000 related
problems. All mission critical and non-mission critical systems have performed
correctly. The Company is aware of no credit problems on the part of its
borrowers, no deposit balance reductions, and no disruptions of utility or other
third-party services related to the Year 2000 issue, and the Company experienced
no Year 2000 related loss of revenue.
-28-
[The following text appears on the inside back cover]
DIRECTORS & OFFICERS
- --------------------
COMMUNITY BANCORP, INC. AND COMMUNITY NATIONAL BANK
- ---------------------------------------------------
Chairman of the Board
- ---------------------
Dennis F. Murphy, Jr.
President and Treasurer of D. Francis Murphy Insurance Agency, Inc.
Directors:
- ---------
Alfred A. Cardoza
Retired
Jennie Lee Colosi
President and Treasurer of E. T. & L. Construction, Inc.
Antonio Frias
President and Treasurer of S & F Concrete Contractors, Inc.
I. George Gould
Chairman of the Board of Gould's, Inc.
Horst Huehmer
Retired
Donald R. Hughes, Jr.
Treasurer and Clerk of Community Bancorp, Inc.,
Executive Vice President of Community National Bank
James A. Langway
President and Chief Executive Officer
of Community Bancorp, Inc. and Community National Bank
David L. Parker
Chairman of the Board of Larkin Lumber Company
Mark Poplin
President and Treasurer of Poplin Supply Company
David W. Webster
President of Knight Fuel Company, Inc.
Officers:
- --------
James A. Langway
President and Chief Executive Officer
Donald R. Hughes, Jr.
Treasurer and Clerk
COMMUNITY NATIONAL BANK
- -----------------------
Officers
- --------
President and Chief Executive Officer
James A. Langway
Executive Vice President
Donald R. Hughes, Jr.
Auditor
Patricia North-Martino
Administrative Officer
Joy A. Pare'
Commercial Banking
- ------------------
Senior View President
John P. Galvani
Vice Presidents
Christal M. Bjork
Daniel L. Heney
Anton Lahnston
Assistant Vice President
Gregory A. Pauplis
Commercial Loan Officer
Jennifer D. Vasquezi
Compliance/Legal/Personnel
- --------------------------
Senior Vice President
Grace L. Blunt, Esq.
Assistant Vice President
Diane L. LeBlanc
Financial Control
- -----------------
Senior Vice President
Robert E. Leist
Investment Management & Trust
- -----------------------------
V.P. & Investment Officer
R. Richard Wilson
Investment Officer
Paul Travis
Operations/EDP/Electronic Banking
- -------------------------------------
Senior Vice President
Janet A. Lyman
Vice President
James P. Vasquezi
Assistant Vice President
Margaret M. Vasquezi
Loan Servicing Officer
Michelle M. Temple
Operations Officer
Susan B. Gillespie
Retail Banking
- --------------
Senior Vice President
Richard K. Bennett
Vice Presidents
Jeffrey C. Barske
Rocco A. Vallande
Assistant Vice Presidents
Linda Benway
Kelli Mason
Branch Officers
Joan Brigham
Sean English
Rita M. Janeiro
M. Jean Mickle
Gail A. Plank
Lois A. Seymour
Nicole L. Sousa
Consumer Loan Officer
Suzanne Polagruto
Credit Officer
AnnMarie Callahan
Facilities Officer
Raymond A. Murphy
Mortgage Officer
Lynda L. D'Orlando
Mortgage Underwriting Officer
Sandra M. Borella
Security Officer
Clark Hooper
The Company's Securities and Exchange Commission filing on Form 10-K is
available to our stockholders upon request.
[The following text appears on the back cover.]
Community Bancorp, Inc.
Parent company of Community National Bank
[Community National Bank's logo appears in this space]
17 Pope Street
Hudson, Massachusetts 01749
tel 978-568-8321
fax 978-568-7129
877-CNB-DIRECT
Acton
270 Great Road
tel 978-263-8376
fax 978-266-2610
Boxborough
629 Massachusetts Avenue
tel 978-264-9092
fax 978-266-2600
Concord
1134 Main Street
tel 978-369-5421
fax 978-371-6600
Framingham
39 Edgell Road
tel 508-875-1333
fax 508-370-3885
Hudson South
177 Broad Street
tel 978-568-8813
fax 978-568-2610
Internet Branch
www.combanc.com
cnb-mail@combanc.com
Loan Center
12 Pope Street, Hudson
tel 978-568-2468
fax 978-562-9984
Marlborough Center
96 Bolton Street
tel 508-485-5003
fax 508-229-4602
Marlborough East
500 Boston Post Road
tel 508-485-3599
fax 508-229-4601
Stow
159 Great Road
tel 978-461-1600
fax 978-461-1610
Sudbury
450 Boston Post Road
tel 978-443-1620
fax 978-443-1626
ATM LOCATIONS:
New England Sports Center
Donald Lynch Blvd., Marlborough
Solomon Pond Mall
Donald Lynch Blvd., Marlborough
Washington Square Plaza
Rt. 85, Hudson
Equal Opportunity Lender
Member FDIC