2023 Community Bank Case Study Competition Journal

2023 COMMUNITY BANK CASE STUDY COMPETITION

Figure 4: CBTC Asset Growth Rates vs. Peer Group 4

same period due to less than average growth in real estate (8.4%) and commercial (13.6%) loans and decreases in individual (25.5%) and agricultural (41.6%) loans (FFIEC). Capital Levels and Planning CBTC experienced consistent Tier 1 Capital growth over the past five years increasing 43% over that time (Figure 5). CBTC’s Tier 1 Capital ratio averaged 16.0% over the last five years, which has been higher than its peer group, which averaged 11.8% over the last five years (Figure 6). Book Capital decreased 47.3% in 2022 due to unrealized losses in CBTC’s bond portfolio. CBTC does not anticipate selling any investments.

25

20

15

10

5

Growth Rate %

CBTC

0

CBTC PG 5 CBTC PG 5 CBTC PG 5 CBTC PG 4

PG 4

-5

2018

2019

2020

2021

2022

-10

Figure 5: CBTC Tier 1 Capital

$120,000

$100,000

$80,000

$60,000

$40,000

Tier 1 Capital in $1000's

$20,000

$-

2018

2019

2020

2021

2022

CBTC experienced a minor decrease in assets in 2018 and a larger increase in 2022, mainly due to all but one of its PPP loans being paid off or forgiven (Figure 4). CBTC had a lower asset growth rate (42.5%) than its peer group (62.8%) for those years (Figure 4). CBTC’s investment portfolio grew (140.0%) over the past five years. This growth was largely due to the increases in U.S. Treasury and Agency Securities (56.0%) and Municipal Securities (84.7%). Net loans and leases have increased only 5.4% over the

Rather, the bank can hold all securities to maturity to avoid realizing losses. Since CBTC is a subchapter S-Corporation, its capital plan is flexible. The amount of annual dividends that CBTC distributes to shareholders fluctuates based on the capital needs of the bank. The bank can also dividend more profits to shareholders when it does not need additional capital.

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